the corporations often don't even understand what the hell the consultants are talking about the bottom line is if a corporation truly cared about the environment or society in general they would have to create an acronym to explain all the good they're doing they'd just be doing it tonight let's talk about that by following young twitter at the rest. and that is going to do it for now i'm liz wall have a great night. i

would rather as questions to people in positions of power instead of speaking on their behalf and that's why you can find my show larry king now right here on our t.v. question. there i marinate this is boom bust and these are the stories that we're tracking for you today. we're talking a merger in markets today on the show that's for sure author blogger and barber 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 well 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 think this is the heads of the 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 how much you know it really cost 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 and 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 well 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's 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 hot money with the capital flows that are actually quite volatile 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 night before last of course 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 bala tile 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

in many respects the surprise about argentina is actually that there hasn't been a financial crisis with the pace over 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 argentine debt of course of course has already been defaulted on and a lot of it is still you know subject to the decision of courts of legal process. so i don't know you know there probably aren't 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 is 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 that basically acts as 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 a duty to kill a crisis that at the time everybody thought was only about mexico in ninety ninety seven 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 markets 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 and financial stability expectations and i think this is in pods the jew to pass success the last twenty years have been so successful for the budget markets complex that actually new problems of now 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 its economy 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 are to back in financial markets . and what this is about really is about the i mean there isn't 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 assists 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 during the 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 its 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 at the bell stick around. wealthy british style. time to rightly. market why not. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune in to conjure reports on our.

play. cross-talk rules in effect that means you can jump in anytime you want.

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 vapor 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 that's what most analysts say that was a true emerging markets crisis today doesn't look the same and i mean 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 and china was a very kind of important but not a terribly dominant economy in the merging market world in one nine hundred ninety

one ninety five today of course we all know how significant it is in terms of its material and commodity imports in terms of its supply chains which it's at the middle of it 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 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 when we all 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 developed economies what about demographics in developed economies specifically you address this in your book the age says the age

of aging now birth rates are falling and the number of pensioners is on the rise everywhere everywhere with 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 and civil 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 of 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 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 wouldn't 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 study 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 the bag 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 our praise but when the crisis struck a direct hit in two thousand and eight in particular in the two thousand and nine i have to say from then 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 afterward 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. and i think he you know if he goes down in history which you certainly will as as a as the chairman of the federal reserve at the most important time of crisis in western or 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 when 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 with several bags 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. the 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 phoners that basically own the 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 it down 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 if 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 and j.p. morgan after the financial crisis bought these these warehouses and. got all of the physical commodities in they created essentially an artificial shortage for delivery by moving the metals and the aluminum from one side of the warehouse to the other just moving it around and. cream has to lead 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 we're still warehouses to stop charging rent for goods that have not been moved within the past sixty days so you're probably have sixty days of 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 spot price is right and 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 stock mahdi's market now. it's really hard to say because when you have markets that are are dominated by manipulation it's really difficult to know what's going to happen once

the manipulation goes away we want to regulate those markets remove the source of problems you know what's the true value of the much more than the. yeah the trigger man in the true problem that you might create by trying to solve the last problem 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 but. that's another emerging market of a lot of people you know t. is absolutely delicious i only get there when watching downton abbey rather that's all the time you have are those are now you can see all segments featured in today's show on you tube and you tube dot com slash boom bust our key west. 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 aaron aides at edward and it's from all of us here driven

by us thank you so much for watching we'll see you next time south. coast time has a new alert animation scripts scare me a little bit. there is breaking news tonight and we are continuing to follow the breaking news. alexander's family cry tears of the wife and a brave thing. that has had regard at the core of what is around online is a story made sort of movies playing out in real life. today

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