mario draghi says the central bank is ready to provide more liquidity if needed. but has once again put pressure on governments to act. >> we reached a contingency where political choices have become predominant over monetary instruments that we can use in the near feature. >> the bank of england sends sterling sharply lower. >>> but the bank of japan holds back on further action in case future eurozone troubles erupt. >>> it's the final countdown in greece. people prepare to head to polls on sunday potentially deciding their fate in the eurozone. >>> very good morning to you. welcome to the program. major central banks have begun outlining their positions after coordinated action to support markets citing g-20 sources. if the greek election result triggered a market rout, central banks would step in to prevent a credit squeeze. >>> the bank of england will restart its emergency liquidity facility or extended collateral term repo facility next week on the 20th of june. the bank of england says it will hold one august shun per month until further offering 5 billion

. >> do not rely on us to sell beer and crisis -- the ecb's mario draghi speaks out as spain's bank's boulder. >> russia and china meet to discuss regional issues. >> china getting a unique experience as venous passes in front of the sun. -- venus passes in front of the sun. from the head of europe's central bank, mario draghi, who said it was not up to the ecb to fill the vacuum left by governments failing to tackle the eurozone debt crisis. >> these comments dashed hopes the ec would cut interest rates at today's monthly meeting to boost the economy, and they piled the pressure on europe's leaders to get a grip on the crisis. but today, the european commission has been presenting new plans to deal with failing banks, but they will take years to come into force. >> with the crisis intensifying above all in spain, that could be much too late. >> the ecb boss is resisting growing pressure from the financial sector. not only did he leave the key lending rate unchanged, mario draghi also made it clear that it is the politicians who have to get europe out of this financial crisis. >> and

mario draghi is out saying the central bank we can't fill this policy vacuum now that sounds a little like ben bernanke he talking to congress if we're looking at trends but also he's pushing for some countries to forgo national sovereignty pushing for centralized bank supervision and regulation he says that's the big takeaway from banking disasters like banking now let's bring mike shylock in to talk about this though because he's going to bring us a dose of reality amidst these calls from euro kratz technocrats whatever you want to call him now mike said look better known as misha's investment advisor for sick of pacific capital also writes the very popular blog is global economic analysis so mission thanks so much for being on the show today oh a pleasure to be on the show you know here it is may thirty first of. chicago everything is green it's raining here today you can probably see the trees on my back window there it looks very beautiful what what a nice report to get to to give us some context before we get to somewhere that's a lot more bleak then dealing with rain is spain i

but we know what mario draghi is already thinking. he told us last week he's fed up he's frustrated that the european central bank has pretty much done all the leg work to try to save the euro. let's remind everybody, it's pumped in or made available close to a trillion euros of cheap loans for the banking system, and he says the e.c.b. cannot fill the vacuum of all these politicians basically not doing anything. they've got to get off their behinds and actually act on this. he's fed up with that, so it's going to be interesting to see what he has to say later on today, but we'll bring that to you here. >> on this family show. >> on this lovely family show. i'll have more on the "world business report" in about 20 minutes. >> we're staying with the eurozone countries, because let's wants forget greece. they could rely at least on one time in hard times, and it would be the tourism industry. even here, business is in sharp decline, as public strikes have stopped ferries taking passengers to the fwreek islands. many fear that prolonged

president mario draghi suggested the center by is ready to easy's out monetary conditions on the bank of england as well they have build their plans to inject one point five billion dollars into this system so as you can see it's gays and also i want to mention the stock futures in the u.s. that we say gaining right now so it's late says it was so state masses and streamlined government spending as part of the so-called growth to create a public ten billion euros will be sold in about a month to slash the country's debt which is one hundred and twenty percent of g.d.p. now the government has also approved measures to boost consumer confidence crippled by tax allowance and upstairs he packages and as far as oil is concerned we've got it getting right now the u.s. or breakout go for the first time in several ways as crude futures traded level against the equivalent amount of gas is to tell you about also want to talk about the russian a. to be ready because most what we had lead to downgrades we had spent in cyprus the netherlands as well but as far as the russian economy is concerned i

we're still waiting to hear what mario draghi has to say. just saw? >> a little bit worse. the details are kind of very interesting, actually, because manufacturing is still doing well, durables still doing well. all of the declines we've seen in total business. don't ask me. let's ask eminent economist luke crandall. preeminent fed watcher and one of only two members of the cnbc fed survey advisory board. thanks for joining us. and i know that last title is the most important one to you. >> absolutely. >> let's talk about productivity both from an economic standpoint and for what it does for fed policy. >> well, one of the things that stands out is the downward revision. year-over-year basis. that's really just an echo of what we learned last week from the revisions because labor compensation was revised down a lot. it implies that employment trends were weaker than we thought coming into this. that was one of the big disappointments last week. that set the stage for the disappointing reaction to economic numbers. the fact that q4 and q1 lo

after the meeting, ecb president mario draghi held a news conference and explained the background of the decision. >> economic growth in the euro area remains weak, with heightened insecurity weighing on confidence and sentiment, giving rise to increased downside risk to the economic outlook. >> the european debt crisis is now affecting commercial banks in germany. moody's investor service has cut its credit ratings on six german financial institutions. the rating agency cites higher risks of a worsening inequality of the bank's assets. >>> the downgrades include germany's second largest letter commerce bank. moody's says the risks of contagion from the eurozone crisis could dampen the economic outlook even more. they also noted that the banks have limited capacity to absorb losses out of their earnings. moody's said that compared with other european banks, the impact of the debt problems on german lenders has been minimized, but market watchers think the downgrades are largely due to the fact that german banks hold state bonds issued by ailing countries. another factor is the huge a

president mario draghi said some bank members had wanted a cut, leaving the door open for it to happen soon. the e.c.b. is under pressure to lower rates and add liquidity support for sick banks. but, draghi wants european governments to first do something substantial about greece and spain. >> when you think about the state of the u.s. economy, the state of the u.s. banks, and the state of the u.s. debt markets compared to those in europe, you would think that europe would have an easier monetary policy than the u.s. and it's the other way around. >> reporter: tomorrow, u.s. fed chairman ben bernanke appears before congress. markets hope he'll give some hints about what happens next with u.s. rates. suzanne pratt, "n.b.r.," new york. >> reporter: i'm darren gersh. still ahead, jobs and the presidential election in the key swing state of virginia. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: as investors shrugged off worries about europe's economy, they got better news on the u.s. economy. the federal reserve's beige book survey of regional econom

. >> mario draghi arguments the national powers of regulating banks be transferred to the central europeanhority. he also criticizes some of the eu governments for underestimating the scale of the banking crises in their countries. he says banking changes should only be one part of revamping the entire structure of the monetary union. let's hope these types of initiatives could save spain. it is closer to the brink of bankruptcy, and the job situation has gone from bad to worse. >> the government in madrid is trying hard to cut its big budget deficit. one measure is cutting subsidies to the coal sector, but unions say this can mean up to 30,000 layoffs. >> that has led to massive demonstrations. >> the march through the center of madrid was somewhat less than peaceful. police arrested at least two people, and there were several injuries. 100,000 took part in the protest against planned job cuts in the coal mining industry. they are afraid the colorado mines will be shut down entirely. 40,000 jobs have been cut in the past decade. -- they are afraid the mines will be shut down entirely. >>

. >> reporter: lately, however, the e.c.b., led by mario draghi, has been criticized for failing to step up and doing more solve europe's economic crisis. european short-term interest rates are at 1%. while that's low, the fed has kept u.s. rates close to zero for nearly four years. on top of that, bernanke and company have enlarged their role: buying bonds and expanding their balance sheet. it's all in an effort to drive- down long-term rates, and jumpstart the fragile recovery. still, with big parts of europe falling back into recession, economists say it's only a matter of time before the e.c.b. copies a page from the fed's playbook. >> the e.c.b. probably in concert with the i.m.f., the e.u. and most importantly germany will probably work together to provide a monetary backstop to sovereign debt, to provide a firewall and, or blanket bailout for the banks. >> reporter: before any of that is likely to happen, most market pros expect the e.c.b. will at least cut rates this summer, perhaps by as much as 0.5%. zanne pratt,n.b.r.," new york. >> susie: tomorrow we'll wrap up our series on

in fact, the boss, mario draghi, of the e.c.b. just told us the e.c.b. has been a crucial key player during the crisis. they've made available a trillion euros, and they'll continue doing so if needed. bank of england announced extraordinary measures, saying it will pump in or make available $125 billion to banks as long as those banks promise and guarantee they'll pass the money on to households and businesses. let's just have a listen to what the experts told me earlier about this global strategy. >> it's not unusual to see the world's central banks, it's the recession, and crisis, and i imagine we've got an outcome in the markets to panic at the start of next week. we would see the kind of majors we've seen before. >> and the measures he's talking about, again, central banks pumping cheap money back into the system and cutting interest rates where a central bank actually has the room to cut interest rates. >> and with greece, whatever the outcome, it seems they're thinking of some kind of sweeteners. >> this is an interesting story, some saying it cou

into a situation where you have a default and you get technocrats non-elected officials such as mario draghi who runs the e.c.b. ex goldman. and people like mario monti who's now running italy who is another non elected official in a position where they just kick the can down the road but eventually you can kick the can down the road for a long time but you're going to hit a wall and i think we've reached the point or the wall is right in front of us right now for our stunt the book is planet ponzi but let me ask you this question what in the economy is not a ponzi scheme or ponzi the pension systems are a ponzi scheme the entire notion you know focusing g.d.p. growth on these underlying fraudulent ponzi schemes is a ponzi scheme what is not a ponzi were it where is there any city of tranquility and this chaos well it's interesting that you should say that. probably not right now but i think that we're reaching a point that there's no more elasticities so i think basically the rubber bands about to snap and i think that people are going to have to do something i read in the papers this weeke

botched opening of the ipo. >> futures have given up earlier gains after comments from ecb president mario draghidraghi is saying he sees increasing risks in the eu euroscene and that hiegtsenning remains weak. the european bank has left its benchmark unchanged. jim, they have cut rates, baugt government bonds, liquefied banks. he's clearly saying i'm not going to let the politicians off that easy. >> remember, they put their -- can you believe they put the two rate hikes last year? how stupid are they? they don't deserve the respect of saying that they're not doing stupid things. they don't deserve it. they have got the world under their thumb. and once again, they talk about growth next year. there's really nothing here to hang your hat on. we're all hoping that there would be something called lessing that would keep the spanish banks, solve it. at the same time, germany would give in. i don't know, guys, have you heard anything? >> i don't know, it's still going on. i was curious to hear if there's questions about deposit out flows. we get the numbers with quite a bit of distance. they know. t

presiding over the economics department or as a top professor at mit and two of his top students were mario draghi and ben bernanke and then later. mervyn king would go on to share an office with ben bernanke so we have through the top guys through the top central western bankers all coming from the same era of the same philosophy and kind of under the same tool it's to agree well and to your point in an article in bloomberg talking about how easy that swap deal was done in november with mervyn king getting all these guys on the phone making a quick decision here's what he said if we could bring that up he said the november thirty plan could be created in announce quickly because quote we trust each other he told reporters the following day in his role as chairman of the bankers group for some that trust has a common source three of the six banks as you point out bob are led by economists who studied or taught at the massachusetts institute of technology so there is kind of this mit mafia that you think may explain that chumminess but what do you think are the most compelling examples of their des

what you see as the fundamental problem in the eurozone debt regardless of what angela merkel or mario draghi your anyone else says they are not solving or addressing what you see is the deflationary death spiral so lay that out for us why is this the core problem. well the problem is that you have just a bunch of countries that went into too much debt and you have the creditors that are unwilling to take any kind of negotiated settlement and so these countries that zero to much and can't pay it are slowly winding out now what happens when you have a depletion are spiral death spiral is you're kind you owe too much money right you can't pay it so you try to cut different things you do austerity measures to cut services and what have you in order to pay off these debts now when you start doing that as a country you start cutting services and he services means that you start laying off people start laying off people you collect less revenue and state and therefore as you collect less revenue it becomes increasingly harder and harder to pay off the debt and so you start to do even more austerity

is reportedly contemplating and mario draghi is thinking of reducing the bank deposit rate to zero or even lower we'll talk about it plus u.s. cities and states are strapped for cash they are three trillion dollars in debt according to the federal reserve and stockton a city in california has become the latest to crumble under the way it is reportedly the nation's largest city to seek bankruptcy protection which which it is slated to do so is there an alternative model of doing business for cities to avoid these tragedies well we're going to tell you about that thousand. as saying as city hall let's get to today the capital account. all right you heard me at the top of the show barclays has been ordered to pay hundreds of millions of dollars to settle charges of attempting to manipulate two global benchmark interest rates ok barclays according to reuters has admitted to trying to make lie bore look artificially low to avoid signaling the bank's distress to markets during the financial crisis this went on from two thousand and five to two thousand and nine according to the c f t c one

mario draghi announced that and ecb on friday.etty clear the ecb has put already a rate cut in the pipeline. unless it changes dramatically. sentiment indicates if it continues in that vein which is very likely then we will see a rate cut by the ecb at the next meeting probably at the next meeting with a very slim chance they will push it further down the road. very likely already in july. as to bond purchases in the bond market, the ecb has got sort of what they get on their agenda is we will step into the bond market with bond purchase when we need to when the market conditions are disorally or are risking to be disorally or threatening to be disorderly. they will not and cannot come in to the market by saying, you know what? we want to bring spanish yields down to 6%. the moment the market knows that this is out there and it's pretty quick indication that that kind of thing happens it's like throwing money into the ocean, it's like a waste of time, the ecb is not interested in a certain level of yields, a certain level of the f

i think what mario draghi did at the end of last year helped the bond markets in europe.e thing to help will the stock market. it's another thing to help the actual economy. to help employment. and we're seeing that once again in the united states, the employment situation is very, very weak. so the fed is not capable of fixing that and to the extent that they keep building up liquidity in the economy, they'll make more difficult to unwind that liquidity without inflation in the future. >> and you're there at the conference. the big question is what kind of regulations we'll get down the pike here in the u.s. to comply with bass i will 3. should tougher regulation right now be a way to piks the economy or are you worried it will undermine growth? >> i think there's a real risk that it will -- and even more so in europe than in the united states. it will make harder for the companies to get credit. in the u.s., the nonbanks will begin to and already are filling in the gaps when banks are not there. but tighter backing regulation in the u.s. will make it particularly tough

mario draghi saying the bank stood ready to support the eurozone's banking system. >> the ecb has thee of providing sound banking in return for adequate collateral. this is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term. >> european markets rising on this news. the early trading volume has been heavy. right now greece has barely turned into the red, down by about a half a percent. italy up by better than 2.25% and other markets higher. the euro is gaining ground at 1.26. draghi pointing out europe will have to make political choices to strengthen the euro saying the shared country needs strengthened foundations. cnbc's steve liesman, the markets have been moving on every rumor. >> really exciting day yesterday, the dow jones industrial at 3:04 p.m., where were you, joe, watching cnbc at that moment? >> yes. >> you were watching at market at that time? i might have been watching nbc or espn. >> you mean like a golf thing. >> could be. >> if you had been tuning in to cnbc you see that little pop, 100 points up on the

in europe, the man in charge of europe instead of the fed, can mario draghi back it up? how will he do that? five stocks in just about every portfolio. we are back in a flash to the downside today with caterpillar, ge, bank of america, hp and united technology all making list to the downside. ou picked up back in the '80s. tdd#: 1-800-345-2550 like a lot of things, the market has changed, tdd#: 1-800-345-2550 and your plans probably have too. tdd#: 1-800-345-2550 so those old investments might not sound so hot today. tdd#: 1-800-345-2550 at charles schwab, we'll give you personalized recommendations tdd#: 1-800-345-2550 on how to reinvest that old 401(k) tdd#: 1-800-345-2550 and help you handle all of the rollover details. tdd#: 1-800-345-2550 so talk to chuck tdd#: 1-800-345-2550 and bring your old 401(k) into the 21st century. tdd#: 1-800-345-2550 >>> the market beginning to lose traction down here at the new york stock exchange. we're currently on the dow down about 70 points. and it would appear in broad terms falling. let's get a market check now from jackie deangel

and the head of the european central bank mario draghi warned the euro currency system is unsustainable and european leaders must clarify the future. >> how is the euro going to be, to look like in a certain number of years from now. what is the union vision that you have a certain number of years from now? and i think the sooner this is specified the better it is. >> holman: the sun may set on the euro soon, in greece. the deeply indebted nation holds new elections on june 17, d could abandon a financial bailout and leave the euro altogether. the news from europe did little to help the mood on wall street. and, a new report suggested u.s. economic growth in the first quarter u.s. was slower than first estimated. in response, the dow jones industrial average lost 26 points to close at 12,393. the nasdaq fell ten points to close at 2,827. in syria, the government today blamed rebel gunmen for the massacre in houla last weekend. itaid as my as00 rebel fighters attacked security checkpoints, then slaughtered more than 100 civilians. the u.s. called that claim a blatant lie. and, in denmark

i talk frequently to central bankers in europe, including mario draghi. we try to pronounced would ever -- provide whatever help we can. we did coordinate earlier in the tradition of the dollar swaps to other central banks, which have been useful in reducing pressures in dollar funding markets and allowing european banks to continue lending in dollars, including two u.s. borrowers. at this point, we are consulting frequently. we are prepared to work together if that can be done constructively. but at this point we are mostly in consultation now. >> peter bonds, fox news. you talked about trying to get help from the other branches of government. that leads to questions about the fiscal cliff. have you seen any evidence that a lack of progress on resolving the fiscal cliff issue is having an impact on the economy right now? is it slowing economic growth right now? job creation, as we saw last year during this same debate -- if you have not seen it yet, when might we start to see it hit the economy and hurt the economy? >> is still a bit early, but ase econo

i talked frequently to central bankers, including mario draghi and others. we tried to provide whatever support we can. we coordinated earlier in the parisian of the dollar swaps to other central banks which have been useful in reducing funding markets and allowing european banks to lend in dollars including u.s. bar wars. -- navarro -- borrowers. we're working to see if that can be done constructively but at this point we are mostly in consultation mode. >> you talked about trying to get help with some other branches of government so that leads to questions about the fiscal cliff. have you seen any evidence that the lack of progress on resolving the fiscal cliff issue is having an impact on the economy? is it slowing growth? job creation as we saw last year during this same debate to? if you have not seen it, when might we start to see it hit the economy? >> is a bit early but as we move forward in the year, we anticipate that the uncertainty associated with the fiscal cliff will have economic effect. we heard anecdotes in the meeting about firms that might

cut, they have the option of pumping more liquidity into the system but many economists believe mario draghike action because we're talking about banking union, fiscal union. they cut rates but everything is okay, they don't feel as much pressure so they do less. >> we talked to someone who is standing by at the cme, joe keniken, he expects them to extend market twist. how effective is operation twist? >> i don't know. >> i haven't gotten a sense that anyone know. >> bernanke doesn't know how far off he is of the number. what is the value of the guidance. is that a 50-basis point cut? what about twist? nobody really knows in this huge avalanche of rates we don't know if it's effective. the reason i laugh, though, becky, it would certainly do something, right, in that it would be effective in not upsetting the market. just giving them something. its way they let our expectations, fur owed survey showed 60% of the market willing to do something. >> you have to let them down at some point? >> you think you let them down ahead of the meeting, not at the meeting. maybe some others have some other

to ask you about europe and about the conversation that you think ben bernanke is having with mario draghibably two conversations. one conversation is contingency planning, if there is a funding event, what do the central banks do to add liquidity. probably the bigger conversation is between governments so it's between the treasury, tim geithner and his counterparts in europe because at some point to the extent that this crisis will be dealt with, it will have to do with governments actually spending money, writing checks, and that's not a liquidity question, it's a solvency question. >> do you think the fed today fully understands the counter party impacts on the banks that it regulates in terms of what could potentially happen in europe? you were there. >> that is a great question. if you look at the bas numbers, the bas has comprehensive international banking statistics numbers and if you look at the direct lending exposures of the u.s. banks to europe, they're small, and then there's this other category called derivatives and guarantees, and that's a much bigger number. now the banks w

>> i think that the central bankers this week, mario draghi, mervyn king in kick did not say anythingem to say. which is if liquidity was short and if it was a run on bank, well stand behind them and do something to provide liquidity. that's essentially the role of a central bank. there was no surprise there. i thought the reaction of the market yesterday to their comments and the g-20 allegedly was actually probably short-term a bit irrational. ultimately, the greek election has the potential to go fairly dramatically either way. you could have a socialist victory, which would lead to market instability and another poker game, this time between athens and berlin. ultimately, though, i think that poker game would not lead to everyone holing their position. you would get a compromise, just like you did between ms. merkel and mr. rakoli two weeks ago. i think they would find a way to dispense the funds. even on a negative scenario in the election, i think you're ultimately in more sour muddle through in europe rather than cataclysmic event. >> you don't see it as a -- a vote is a binary