planning to raise taxes to to compensate for the losses in budget revenues what about the central bank are you favor because what we have the lowest taxes in europe lowest income tax at least it is the central bank in favor of raising taxes no no no we are not like ours in taxes of course but you see you have somehow balance your budget you have free options number one you know to cut your spending in number two to increase your i mean yes and number three to borrow. i believe the first position is but it is best so if you're in a position to rationalize somehow you're spondon to have better structure for expenditures and to cut the some extra expenditures you have and that's the reason for you not to write race anything from the market and not guys your taxes thank you thank you very much the only problem is that it's election year and that governments don't like to tell tales to cut extensions shoes that will actually stay on the porch and they get this was alex sable your guy a top aide on the far life and he's the first deputy chairman of the russian central bank that's it but after all if

central bank. have a spotlight is now. hello again the welcome to sparkle i.v. interview show on our i love you know and today my guest on the program is for your pride. the year has been particularly challenging for the world to come christine legarde the i.m.f. managing director says the financial crisis has shattered gears i would love pushing it to the break another recession but russia relatively speaking has fared pretty well delivering growth and a balanced budget but still the risks ahead are real and russia remains vulnerable to external shocks like for example falling and as you propose so how will the country get ca two thousand and twelve we're asking first deputy chairman of the russian central back i don't see how you can. despite global economic instability russia has prospered in two thousand and eleven official say the end you inflation is at historic low it down to seven percent while judy. p's up almost five percent consumer loan rates have dropped significantly reaching the pre-crisis levels and deficit rates have risen the central bank also has the world's third largest for

that the reality is we don't know the reality of the situation because you have zombie banks that have been propped up you have a central banks that have been so involved so how do you know the reality of the situation so that case let's switch over from the european central bank to the federal reserve and right now they're rolling out these new rules they want to increase capital liquidity for our banks because they say that you need to be ready in case another financial crisis hits but do we even know what would really be necessary for them to be prepared once again but no we don't i mean in my view and in the people that i've spoken to i mean it's counter-intuitive but i was interviewing economist yesterday and he was telling me that when he modeled and banks putting in place the basel three capital requirements he actually saw that speeding up a financial crisis which is obviously counterintuitive that you have banks that are moving towards doing the right thing and that that would actually increase the chances of a financial crisis but he was saying that's what you get after decades of you know banking that has gon

the austerity is very very bad in some ways you know we have better here that the fed has been more accommodating more expansionary the european central bank by a long shot but the financial sector is not as dominant in europe is the case here but but looking at here if you just look at the role of debt do you see a similarity of benefiting the banks at the expense of everybody else and adding more debt to all the taxpayers. the dead is only part of the story i mean the point here is that you kept you kept the banks in business in the united states and allowed them to keep going as their current practice it would have been very bad for the economy had the banks collapsed but we could have kept them in business and told them you're not going to keep doing business the same way we could have put serious caps on compensation we could've said ok you're going to be broken up you're not going to have you know j.p. morgan is you don't want to have trillion dollar bank morgan stanley is you know a trillion dollar bank goldman sachs who said you're breaking up that's a condition of the bailout we didn't do that we just had in the cab yeah and i wan

you from london. we'll talk about america and jobs and central banks banding together to help the american economy. you should be investing in the santa claus on the horizon. >>> beefier recipe for success. the "wall street journal report" begins right now. >>> take a look at what's making news as we head into a new week on wall street. the unemployment rate dropped sharply in the month of november to the lowest level since march of 2009. the rate now stands the 8.6%. that's down from 9% in october. the economy created 120,000 new jobs, slightly below expectations, but numbers for the previous two months were actually revised upward to show a gain of an additional 72,000 jobs. the lower unemployment rate could reflect a drop in participation among those without jobs. in a surprise move, six of the world's largest central banks took joint action this week to ease liquidity crisis for european banks. the move by the central banks making it easier and cheaper for those european banks to get u.s. dollars and fund their operations. >>> well, that news sent the market skyrocketing on wednesday. the dow in

administration has said, that the central bank of iran is the century it -- central money launderer for terror and for the republic of iran, and our amendment says if you do business with the central bank of iran, you may not do business with the united states. it is forced to trigger every financial institution in the world between the shrinking iranian economy and the $14 trillion u.s. economy, but we worked with the administration, especially senator menendez. in the item which says the president can delay sanctions, and we put a catchall kind of get out of free national- security waiver. but after the and administration one these six sessions, -- won these concessions, they turned right around and oppose senator mÉndez in a hearing. it was said that we do not believe that you should support it at all even though it has the waivers as indicated by senator mÉndez, and not one senator stood with them. >> it was fascinating to see that 100 to 0 vote. whistle-stop is so unusual in these times, as you said. in secretary brighteners letter, he also mentioned -- as secretary geithner's letter said, the evidence that the obama administration, what they were

has said that the central bank of iran is the central money laundering for terror and for nuclear proliferation by the islamic republic of iran. and the menendez-kirk amendment says if you do business with the central bank of iran, you may not do business with the united states. it's forcesed to trigger every financial institution in the world to choose between the $300 billion iranian slinking economy and the u.s. economy. but we worked with the administration, especially senator menendez, he put two critical waivers in the amendment that said if oil prices are constricted, the president can delay sanctions. and then we put a catch-all kind of get out of jail free card national security waiver. but surprisingly, after the administration won these concessions from senator menendez and i, they turned right around and opposed senator menendez in an open hearing. and secretary geithner wrote to the congress saying we don't think that you should support the menendez-kirk amendment at all even though it has the waivers a and not one senator stood with them. >> it is fascinating to see that 100-0 vote a week ago thursday. it's so unusual in these times. i think secretary geit

you ever think about it? >> no, not really. >> reporter: what about the role of the european central bank, have you ever thought yes, it's important for germany's future and europeans future. there are some things going on current that is not in line with the contract. that's important. >> reporter: some argue germany must learn toen abouted the rules. >> when we're dealing with pathological times such as the great financial crisis of 2008 and '09 and the disturbance we got in the euro zone, one has to start looking for more flexibility. there is not a rule book that simply says there's one gas pedal and there is one brake pedal and that's all ye shall use. >> reporter: new ecb president mario draghi is just one month into the job, too soon to know whether he'll stick to his mandate as his pred saecessor d or push it to its boundaries in order to solve the crisis. diana magnay, cnn. >>> fascinating story. >>> let's tell you what happened on the asian markets this day as we begin the final couldn'tdown towards what could be an historic eu decision. the caution definitely is returning to the markets, not just in

bank. switzerland japan. are taking together with you to be an central bank were taking concerted efforts to put liquidity in the market the inside some by accident because obviously this is of major concern to everybody in the world and russia being only our neighbor but also being the major source of energy to europe which means that you have the biggest and probably also the best clients they have an obvious interest in not letting degrading the european economy the united states thinks exports to russia can double over the next five years off. how much can you expose to russia will also go up i see several. bigger than to just in russia becoming a member of the w t o. for example that is part of those accession conditions it's. a completely new set of rules which respect to a specified suspect to fit a sentry norms for a for food is also very important what we having concluded proceed back to the old the motive sector where russia had been taking a you know that the measures and now well that we have come to and to a compromise on the that certainly contributes to more trade although i see is that it wil

to continue in its current form or not but ultimately it's mario draghi at the european central bank who's really you know pulling the levers here let's go back to the markets role in all of this i know we just saw a few days ago a bunch of the banks from a number of countries europe britain japan and canada and of course the united states. kind of joined together joined forces just to make sure that they'd have the ability to get money when they needed it when this happened really interesting when you watch the markets they. loved it it was great news what do you think the market's role is in all of this. well what's interesting is to take a look at what we learned on wednesday we learned that central banks are willing to sort of do what it took to offer liquidity as much as they could to stem this crisis we also learned republicans might be on board with extending the payroll tax cut we learned that that a.d.p. jobs report showed private sector hiring so there were a lot of things on wednesday that contributed to the market rallying what's going to be key here because people like to talk about how

central bank which has continued to bail them out basically choosing winners and losers choosing the banks to be winners choosing the rest of society to drown how is this different then feudalism where you as centrally have feudal lords that own the debt of everybody else. well i think if you have always had a better idea how to run the masses than the than the politicians and the bankers and of how to run the capitalist system it's much more complex creature and you can be sure the outcomes funnily enough has been modeling around playing with the possibility of bringing what the bezel accords might mean for is that actually got influenced and actually had an impact and it ended up accelerating the right of a process rather than they saw the writing one so you know the complexity of the system is so great that the what sound like right idea using a bit more responsible banking up to today severe sponsible banking and actually probably extend the length of the process rather than a chain you write it while three in your predictions will actually make prices more likely not good news but i want to look at debt really quickly before we run out of time here i want to look at it on the gover

you will. >> the markets had a big jump this week after thecoordinated move by central banks around the world to remove liquidity. do you think we're primed for a year-end rally? >> we're in a seasonally strong period. i think we'll get more of that on the back of what you just said. at the minimum, band-aids, and maybe eventually the move toward some sort of temporary solution in europe. that's a good thing because people are very worried about the real down side if europe falls apart. on top of that, what we've been talking about. the economy. it's doing a little better. you put those things together, and i think if these -- i'll call them relatively low prices on stocks. basically the path of least resistance is up. we should get more of it. >> what about europe? here in london, it certainly feels quiet on the ground in terms of consumption, in terms of people in stores. but going back toothe central banks's move to ease liquidity this week, does it frighten you because they may know something we don't? is it just a move to unenclosing the system? what's your take on europe right now? >> i

central bank so the i.m.f. is turning into a central bank and the federal reserve is turning into a hedge fund everything is more about six actually right now all right jim rickards i want you to stick around right here there's so much more i want to get to i just really quickly want to explain to our viewers and our word of the day what exactly this reserve ratio business is with china. right it's time now for word of the day why break down a financial term or concept for a very smart viewer just but perhaps not the financial expert you know not the jim records in the audience and today it is reserve requirements and light of the discussion that i've been having with our guests and also of course today's big news. kind of kicking things off this morning the country bank they're lowering the reserve ratio for banks for the first time back in two thousand and eight it is a move to ease to try to defend the chinese economy from the weaker global outlook and we want to put this ok so this news about the reserve ratio the reserve requirements what exactly are there are they well let's look at him in terms of the u.s. central banking system the federal reserve to explain let's t

talked about in the news right now so in this article about china's currency the you want being up late on a stronger central bank guidance that was received in a weaker dollar abroad the wall street journal writes that you want is that four percent against the dollar this year and seven point seven since june of two thousand and ten when china and its currency pegged to the dollar and vowed to make the you want more flexible so there you see it but what exactly is a currency peg well it is a countries or governments exchange rate policy of pegging the central banks exchange to another country's currency so you may ask what is the point of doing it well here's the reasons why if you peg a currency artificially high it means you're a country that's trying to encourage foreign money to come into your economy you're trying to attract capital and if you pay your currency artificially low it means that you're trying to encourage exports you want your country your industries to export more now when a country pegs its currency artificially low as is argued in the case of china currently which still loosely pegs its curr

sanctions to include the iranian central bank. where do you stand on negotiations? thank you. >> well, steven, first, you know, with respect to actions regarding iran, we are very clearly making known our concerns. you know, we submitted a formal request for the return of our lost equipment as we would in any situation to any government around the world given iran's behavior to date, we do not expect them to comply, but we are dealing with all of these provocations and concerning actions taken by iran in close concert with our closest allies and partners starting with the u.k.. we obviously believe strongly in a diplomatic approach. we want to see the iranians engage, and as you know, we have attempted to bring about that engagement over the course of the last three plus years. it has not proven effective, but we're not giving up on it, and with respect to any actions on further sanctions, we have been very tough and not only did we work hard to get international sanctions through the united nations, but we, along with close partners like the u.k., like the e.u., an

and the road is ending is it in here ok it's a dead end maybe but you know we have heard of dollar funding agreement with the central banks so i guess my question to you is you know this money is going to starve european banks more than the funding itself is this a signal that regardless of what's going on with these banks the fed and other central banks all over the world are just simply not going to let a european bank or a u.s. bank for that matter fail. well i'm not sure which choice with letting it fail and there's enough effort if you don't know if you can accomplish anything so put enough effort forth you can prevent group events from feeling put realize this is in harry potter is not a magic wand that we have to prevent the european brain from feeling the stresses of the spirit of the world other parents and other central banks other countries and eventually other taxpayers so the distress does not disappear it's simply shifted possibly dispersed but there's such concentration of distress in the system because both so for and so while you could stress that. countries should move from one point to another point to

as you say, the central bank's action is showing how grave it is, and it's telling you that european s haven't got on top of it and germany is absolutely central here and has been criticized again and again for doing too little too late. >> do you think germany has done too little too late? >> i think germany has done too little too late. it's by far the most dominant decision maker. even france is having to give in to germany. if you see a panic that threatens italy with default which is where it could go next, not just italy, then you're threatened with a serious breakup of the eurozone, not just maybe greece leaving, but italy leaving. then can the european union hold together if its core integration project, the political as well as economic project starts to crumble. >> in ten seconds or so, do you have a date for that? how long could the eu survive without the single currency if it were to crumble? >> it would need a huge political will to keep the eu on the road. we haven't seen that skill and maturity in the last few years. >> thank you so much, kirstie hughes, from oxnard uni

i think it's a little bit, you know, quibling -- >> why austerity? i can see a european central bankscal policies, because if you do austerity -- >> i am opposed to it personally, and i think the germans are acting against their self sbrks but if that's the price they demand the europeans will have to say we have to do it. >> i agree with both of you. the sa austerity thing is bad economics -- >> i want to make a broader point. it does seem to me, to zoom out to 30,000 feet, we have insufficient corrupt governance in the u.s. and european continent, and that leads to massive crisis of capital which then produce conditions of emergency and then undermined democratic accountability. it's locked in a circle, and we find ourselves in the positions, and we say it's so bad that we have to do x, y, and z. >> in europe now, it's like having a house burn down and the arsonists sending a bill for services rendered. >> well, merkel did impose a much tougher hair cut on the banks -- >> hair cut is the term that we use to refer to the loss that the bondholder takes. for every dollar you are getti

but what's interesting now that the global central banks led by the fed said "do you trust us?" and if they don't trust the world central banks collectively we have a problem. but i think it was successful in that what you have right now massive amount of liquidity around the world sitting on the sidelines with very cheap equity markets. so any time there's a little bit of positive news you see this explosion in stock markets because it's so cheap and there's so much money just sitting there ready to move. >> brown: catherine mann, what would you add to about why the markets just took off like that? >> well, the markets are basically run by algorithmic trading these days. nobody's making investments in the stock market thinking they're getting a long-term investment in the company they're buying a stock for. so all we're looking at is trading on news. this was big news so when the market openings here in the united states, the market just responded to that news in a very positive way. i think, though, that one of the downsides of this additional liquidity being put into the globa