a stranger. there i merit aid this is boom bust and these are the stories that we're tracking for you today. we're talking a murder in markets today on the show that's for sure author blogger and corporate former chief economist at u.b.s. george magnus joined me earlier today from our london studio where he explained why and what is going on in the emerging economies it was a fantastic interview and you're won't want to miss that check that out then in today's big deal and harrison i've got something pretty important to all you coffee drinkers out there the market for your morning addiction is being messed with we'll tell you all about it so let's not waste not a second sign after the show. if

you've been listening to the heads of u.s. media today all you've probably heard about is president obama's state of the union address from last night in which the president put his priorities for twenty fourteen right out on center stage some of which included minimum wage for government workers. president also made some news in his speech on the issue of the minimum wage he approached it in a sort of lull type wrong to attack you know increasing the minimum wage that federal contractors would get an increase immediately to ten dollars and ten cents an hour president obama trying to turn the tide ahead of the midterm elections in november today talking up his proposal to increase the minimum wage. however

outside of the u.s. no one and i mean no one is talking about the state of the union address or minimum wage in fact while the u.s. remains absorbed with its own domestic affairs the financial markets are deeply concerned and focused on emerging markets countries like argentina china india and turkey now here's what's happening in china back in november the communist party had its third plenum a powwow of top dog chinese political leaders the chinese basically told us the days of export led growth are over done they are now switching to an agenda that's all about chinese consumers and chinese consumer demand that is a very big deal and countries that export commodities are getting hit hard very hard by this very big deal meanwhile in turkey a corruption probe earlier this month has thrown the country into turmoil the turkish lira fell to an all time low against the us dollar and finally finally the turkish central bank caved last night and hiked interest rates way up against the

wishes of the turkish president and then there's argentina argentina and we're not talking about the tango dance not that pretty dance the government says inflation is ten percent today while private markets estimate it's more like twenty five percent and the currency the peso has depreciated on the black market to reflect this inflation yeah so that's where you know it really costs to make matters worse two years ago argentina expropriated a major argentina oil producer from its spanish owner repsol putting a chill on foreign investment with u.s. dollar reserves dwindling argentina has for it has been forced to devalue its own currency not good stuff going on now stocks in emerging markets are down over twenty percent and currencies from mexico to south africa to russia are under heavy selling pressure so there you have it. we're in the midst of what may be the next crisis and the us media is navel gazing completely oblivious to what's going on but yeah let's talk more about minimum wage in the traffic in atlanta.

continuing our theme on emerging markets we spoke to economist and author george magnus earlier today about what's going on in the emerging economies right now we also discuss what's happening in the u.s. in the u.k. where housing fueled recoveries are in full swing magnus is a former chief economist at u.b.s. and author of the books uprising and the age of aging i started off by asking him to explain why turkey's currency has been depreciating here's what he said. you know it didn't all start three or four days ago or even you know a couple of weeks ago when people were starting to get a little bit excited about the fact that the federal reserve was going to start changing its monetary policy and so-called tapering a which is to say withdrawing

some of the quantitative easing that have been in place for the last five years although that's an important factor because it's how it's affected turkey in a kind of negative way as it has done a lot of other emerging countries too but the turkey is specific problem is that for too long now it's been running excessively rapid money supply credit growth weak savings so the balance of payments position of the country has become rather big it's about seven percent of g.d.p. the deficit and seventy five or eighty percent of that deficit is financed with a short hop money with capital flows that are actually quite volatile and so the problem is people expected that the central bank of circle would raise interest rates they've persistently not done so and partly political pressure and then might be for loss of cause kind of an eleventh hour repentance and they did raise

interest rates the effect was short lived but you know there was a short lived positive effect but very quickly that positive effect was dissipated and that the turkish lira is kind of now back to where it was before the interest rate hike. now speaking of our volatile capital flows argentina there's another emerging market that has seen its currency depreciate significantly and and according to some private market estimates inflation is running at twenty five percent now the question is will argentina deflate on its obligations. well it's got for us because it's done so before. so i don't know i think you know ins in many respects the surprise about argentina is actually that there hasn't been a financial crisis with the pace of us and fall of father. you know earlier than it has so in

a way the surprise was that it's taken so long and again as with turkey it seems like the tapering the u.s. monetary policy change you know seems to have been the catalyst along with developments that are going on in china as well. so. a lot of debt of course of course has already been defaulted on a lot of it is still you know subject to the decision of courts of legal process. so i don't know you know that probably on a lot of foreign holders of argentine debt that care too much about what happens but. the the big problem really will be i think you know inside the country with inflation which is you suggested you know was or is being you know officially or unofficially quite high of the people recognize and there was reports of shortages in the shops and people wanting foreign currency but can't get it and

so on so domestic stabilities is probably something that you know we need to keep an eye on in argentina now i'm going to kind of circle back to turkey here on the surface the problems in argentina and turkey they don't seem to be related but people are calling the volatility in these markets and emerging markets crisis is it an emerging markets crisis. well i think it is ok because i think that every crisis needs or has a lightning rod. basically you know this is a kind of a conduit. for generic problems throughout the emerging or developing country universe so if you remember you know back in ninety ninety four we had to kill a crisis that at the time everybody thought was only about mexico in one thousand nine hundred seventy there was an asian crisis that in its early stages everybody

thought it was only about thailand in two thousand and seven we had a kind of great financial crisis beginning and everybody said it was only about subprime so this crisis is only about argentina or it's only about turkey but i think this is just the manifestation of a you know the most obvious manifestation of an emerging market problem and it's true as you pointed out that argentina and turkey and india and china brazil i mean they all have their own scripts they all have very very specific problems which are very peculiar to those particular countries that could be can all make financial political or a mix but actually in my view all of the emerging countries many of the big ones really including russia have reached a point in their economic development where the hiatus now there's a gap in terms of economic growth expectations for national stability expectations and i think this is in pots the jus to past success the last twenty years have been

so successful for the budget markets complex that actually new problems of no risk about how to sustain progress and that's really about changes in institutions and political change much more difficult than what happened twenty years ago now speaking of large a margin markets china is looking to rebalance at the commie away from export and capital investment led growth that means less demand for commodities obviously is that the so-called emerging market craze is a direct result of this shift in chinese policy. it's also very strongly related to it actually because you know we all talk about almost every day about the impact of you know u.s. monetary policy of tapering but actually chinese bond yields have been rising very quickly liquidity is pretty tight and the chinese had to back in financial markets . and what this is about really is about the i mean there is

a kind of an internal struggle going on in china between the people's bank of china and the china these banking regulatory commission about how to contain the excesses of the shadow banking system and the credit system it's not clear that anybody is actually in charge but the fundamental problem is that china has decelerating growth increasing reliance on credit to keep seven or eight percent g.d.p. growth going and the longer that this excess credit creation persists the worse the adjustment in china's economy will be the more difficult it will be for the chinese leadership to implement some of the reforms which they propose so in a way you know jubal last ten or fifteen years china has been very emerging market story it's the only emerging country to have significantly raised its share of

global g.d.p. and so many countries from you know india and indonesia and asia to eastern europe and to latin america have now become so dependent on chinese demand whether it's for commodities or forward manufactures or whatever that of course when china goes through kind of a little bit of an economic turbulence which it's starting to go through it's bound to affect everybody else and it is and i think that's something that's not going to go away in a hurry. time now for a quick break but when we come back more from my interview with george magnus and then in today's big deal at a harrison and i discuss what a big deal coffee is especially when it's the market is being messed with you won't want to miss that but as we had to this quick break here's a look at some of today's closing numbers of the bell stick around.

we welcome aaron eight and abby martin truly terrific oh show me our team at work. is going to give you the numbers and you're the one star never i'll give you the information you make the decision only about i'll bring you the. revolution of the mind it's a revolution of ideas and consciousness. with the sense that the extreme right probably would be described as angry i think i'm a strong. or single. we're

back now with more from my interview with economist and author george magnus now we spoke a little bit about china before the break but we've been getting reports of state sponsored companies in china hitting the skids due to bad debt yet everyone and i mean everyone is talking about the fed zipper i asked magnus of china is the real concern here take a look. what i think it is because because china is so

much more important in the world now than it was in the one nine hundred ninety s. if you remember in the one nine hundred ninety s. we had a kind of a generic emerging markets crisis and that's what most analysts say that was a true emerging markets crisis today doesn't look the same and it's of course. important to recognize that in some ways emerging countries are much stronger than they were the one nine hundred ninety s. but in some ways life is moved on china was a very kind of important but not a terribly dominant economy in the merging market world in one nine hundred ninety one hundred ninety five today of course we will know how significant it is in terms of its material and commodity imports in terms of its supply chains which is at the at the middle of in terms of its f.b.i. flows and in terms of the capital that it kind of sends out to the rest of the world and and some of it may be in terms of dollar quiddity may be coming back to

china now because of the condition of chinese banks so. i think it's a much understated phenomenon in the global economy and for emerging countries and we will focus a lot on the fed but you know an equal focus deserves to be on what's going on in china it's less transparent so perhaps more difficult to focus on but very very important. now let's switch to our developed economies what about demographics in developed economies specifically do you address this in your book the age scuse me age of aging now birth rates are falling and the number of pensioners is on the rise everywhere everywhere what this slow growth. yes it will i mean you know there are two ways of looking at the demographic problem which by the way is not just something that is prevalent in all western countries but also in some of the major emerging countries including russia and

china. so the problem is partly who's going to look after grandma ok so that's something we all have as individuals and every family has that issue but from an economic point of view the real issue is that this is a unique problem in human history so we've never had a coincidence before of falling or weak fertility symbol tiniest expansion in longevity or life expectancy and the impact of this of course is that the working age population typically defined as people aged between fifty and sixty four is either now shrinking all stagnating in the united states for example it's stuck meeting or growing very slowly in germany italy japan it's shrinking so the problem is the cohorts of people aged over fifty sixty four of course are growing in fact doubling over the next twenty twenty five years and the working age

population is stagnant befalling so the the dependency ratio of older citizens on working age people is going to rise enormously that is a huge drag on economic growth and of course on affordability affordability of pension income for individuals and all of the obligations of governments when it comes to health care or pensions now i want to hone in on the u.k. and the u.s. because they have had similar economic policies now ben bernanke here he's chair in his last meeting as head of the federal reserve just today as this very day how do you think he did during his tenure as chairman of the fed. i think you know on balance he did well and was the right man. in a difficult job at the right time i think i won say that i would give him a complete ten out of ten. because he was also in situ at

a time when he was championing the era that we now know is the great moderation which was supposed to be this wonderful you know period of low inflation and stable steady growth which we now know was a kind of a figment of our imagination he did champion that and that was wrong and he didn't really see. i'm not saying that a lot of people did but he certainly was not it before front of people that basically saw the financial crisis coming even though there were economists who did and back because central banks central bank which is the bank of international settlements had been warning the central banks for at least five years that there was something ugly brewing in the credit sector and in the housing market so on those two grounds i think ben bernanke he doesn't deserve praise

but why in the crisis struck it in two thousand and eight in particular and two thousand and nine i have to say from them i could hardly fault the chairman of the federal reserve or the outgoing chairman of the federal reserve for his conduct communications his behavior the way that he managed the effort i am see the policies that he implemented at a time it should be said when the federal government was basically withdrawing its responsibility from economic management so i think what that's about really is the over reliance on monetary policy that we've developed over the last few years. well i think he you know if he goes down in history which you certainly will as as a the chairman of the federal reserve the most important time of crisis and western in the american economy of the western world i think you'll get good reviews i think he performed very well i and what about q.e.

was quantitative easing the right policy prescription in the u.s. and the u.k. . that's a good question and we'll carry on debating that for a long time but my feeling is that when q.e. was introduced at the beginning. it was designed to on block the blocked arteries of credit which were the product of the financial crisis be the sudden sort of heart stopping moment where liquidity basically dried up. and i think we did a good job in re engineering as it were of the arteries of credit of the lead to mediation of backing functions the problem was i think where the central banks decided that q.e. would be a good idea to try to promote economic growth and i think in that respect q

we has kind of outlived its usefulness. we could say that the burden of policy making could have been shared more equally between the central banks and governments and we could also say that the longer we pursued q.e. the more the negative consequences accumulated interest income. that came out of the united states economy was equal to the size of president obama's stimulus program in two thousand and nine so a lot of people you know income formation which is a problem but a lot of western countries have has been undermined because of q.e. in a way it's had negative effects in terms of income distribution because it's boosted asset prices and basically it's only the the top one percent of income earners or well photos that basically only assets as prices have gone up so these of the negatives of q.e. and you know in many ways q.e. it's kept zombie companies alive and it's kept zombie banks in zombie businesses

and i think a lot of the negative effects of q.e. you know are things that we've only learned as we've gone along so you know i kind of welcome the moment now in the united states where q. is gradually being withdrawn. but i think at the beginning it did serve a very useful purpose. that was george magnus author of the age of eighteen time now for today's big deal. ted harrison joins me now for a coffee to our that's right we're talking coffee quick ed if you had to name one commodity that comes exclusively out of emerging markets what would it be because it would be coffee there we go coffee coffee straight coffee it is now the yummy yummy addictive beverage that nine out of ten people can start their day without is the world's most widely consumed mind altering drug and i'm one of those drug users

hitting us the one in the u.s. alone more than eighty percent of adults use caffeine but while you're enjoying your morning cup of joe the last thing you're probably thinking about is where your coffee comes from you're just trying to get a job well the answer predominantly indonesia africa central and south america however is what we've been sitting in a warehouse right here in the u.s. for the past couple months before it ever ever hits your cup now recently the new york stock exchange has revised its storage rules for coke and coffee in order to impose limits on how long warehouses can charge rent when the delivery or transfer of a stock is delayed now apparently the coffee industry has taken a page from the metals market and is copying the controversial business model of collecting rents while intentionally delaying delivery of physical supplies and what do you think about this i think it's pure market manipulation we saw this. in the metals market as you were saying that basically companies like goldman j.p.

morgan after the financial crisis bought these warehouses and. got all of the physical commodities and they created essentially an artificial shortage for delivery right by moving the metals and the aluminum from one side of the warehouse to the other just moving it around and. cream is to late which is clear market manipulation however the exchanges they're now taking action after coffee hoarding activity has gone on for at least the past two years it's time now to step up the exchanges new rules which go into effect on april first force of warehouses to stop charging rent for goods that have not been moved within the past sixty days so you're probably have sixty day old coffee one hundred i would ask you how do you think this will impact the futures market for coffee it's hard to say because you know the price of coffee has been declining along with a lot of other commodities and so we saw through december that the prices decline just very recently they've increased slightly so we might actually see some

increase in the futures. but a decrease in the in the spot price right now here's another thing whenever you create more regulation you often see arbitrage opportunities by savvy financier's do you think that we might see this very thing happen with the soft mahdi's market now. it's really hard to say made because when you have markets that are are dominated by manipulation it's really difficult to say you know what's going to happen once the manipulation goes away what you regulate those markets move the source of problems you know what's the true value of what's more than the problem through to the right yeah the true demand of the true problem that you might create by trying to solve people's problems we see tons of that all the time also i want to ask you are you a coffee drinker yourself really only would i really need this extra about t.v.

that's by logically and that's another emerging market with a lot of the people drug you know tea is absolutely delicious i'm i only get that when watching downtown abbey. that's all the time we have in there now you can see all segments in today's show on you tube at youtube dot com slash boom bust r.t. we also love love hearing from you so please check out our facebook page at facebook dot com slash boom bust r.t. you can also tweet us at edward and it's from all of us here a group of us thank you so much for watching we'll see you next time shall.

very kind. there's a plug in that has sex with the earth there's no legs let's listen. legs plenty. plenty. of.

oh should we characterize events playing out in ukraine a legitimate democratic movement or a small number of highly motivated radicals who are seen violent regime change is this movement is peaceful as western media claims and is ukraine hopelessly divided west against each. one of the new a little more than a lot of these new policies i think you're right you know. little. pleasure to have you with us here on our team today on recession.

coming up on our t.v. state of the union did the president say anything groundbreaking last night are was he upstaged by a congressman who threatened to throw a reporter off a balcony more on that coming up. and on capitol hill leaders from the major u.s. intelligence agencies are meeting to discuss global threats with congress it's no surprise they're talking terrorism but there's also concern over leakers like ad words no doubt more on that in just a moment. and we'll take a look at the shocking number of people dying in police custody and local u.s. jails lives lost due to the failure of staff to administer routine yet critical medicines we'll hear stories from family.