tv [untitled] June 13, 2012 1:30pm-2:00pm EDT
here with r t why from moscow had by its kind of number two voices his backing for syrian rebels over their fight against the government in a new video released a week after washington claimed he'd been killed. there's growing condemnation of polish hooligans after they attacked russian football fans during euro twenty twelve in warsaw it led to bloody classes and the arrest of around one hundred fifty locals. and while julian assange awaits britain supreme court decision on whether it will reopen his extradition case the u.k. molls a new bill that could prevent presidential whistleblowers from speaking out. next
it's to washington for the latest edition of capital account with born this start. good afternoon and welcome to capital account i'm more in the store here in washington d.c. these are your headlines for tuesday june twelfth jones well it is the day two thousand and twelve the eurozone debt crisis plot thickens today as spanish government borrowing costs soared to their highest since the launch of the euro so maybe the bond market agrees with our guest from yesterday to address bank bailout ensures this pain is insolvent italy is swept up in the mess too with the tally and bond yields leaping up so with the low hanging sentiment group seemingly picked what does this mean for the euro for the dollar and of course for gold we'll talk about it and as markets and the media weigh euro zone policy decisions and the
stakes the upcoming greek elections does take a break from what government is doing to talk about what individuals are doing to address this crisis. that ad you just saw the lure tourists to greece was not paid for by the government it was frowned funded to raise money for from all over the world we'll talk to one of the founders of the initiative that made this possible in the second half of our show plus can and should the u.s. tax code attempt to bolster jobs and innovation in alternative energy senators were talking about it on capitol hill today but commodities expert dr stephen leeb is here to tell us if the u.s. is already being left in the dust compared to other countries when it comes to renewable energy development and what this means if we truly do face oil scarcity
let's get to today's capital account. so by late yesterday the spanish so called solution the bank bailout had already turned back into a crisis it is evident in spanish bond yields that we saw a spike today to a record dragging italian bond yields with them they they were up to and of course greece is next on the docket we have elections this sunday so uncertainty really seems to be the name of the game and in terms of policy solutions and to what extent the private sector will buy into them that is a big question mark so one is as uncertainty were reconciled with other factors
mean for currencies and commodities especially oil and gold let's talk to the expert dr stephen leeb joins us today he's chairman and c.e.o. of leave capital management and author of red alert how china's growing prosperity threatens the american way of life and he is an expert on all things commodities oil and gold particularly so first dr leave i want to start with the euro though because first i want to bring up a chart for our audience of the euro's trading range viz a viz a dollar this is over the past eight years and what's really remarkable is that despite the incredible weakness in the euro all of the bearish news in sentiment surrounding the currency you know it's hardly a decade old it's still within its trading range so it's low but it's within the range we've seen over the past eight years or so dr levy what does that say about the u.s. dollar. it says that the dollar and the euro or both both basically very
very weak currencies and it's sort of been a race to the bottom lately that europe you're always been winning that race but it's only a matter of time i think before chairman bernanke he puts his foot on the pedal again and. three and i think more and if you would show and i do know that chart between the euro and the dollar and actually the euro i think it's flat in the middle of its range which was what eighty to one sixty something like that so it really is indicative of currencies going nowhere but gold if you were to put gold up there over the last seven or eight years you just see you know basically a straight not nearly snap not completely straight up but you see an incredibly strong bull market and you know this is been the story of the you know since the beginning of this century real assets despite a lot of dips along the way and we're in the middle of a dip right now have really sailed along whereas paper assets have been dismal
a disaster and i just don't see any way around that i mean germany is trying to fight it tooth and nail right now and trying to. argue austerity is the solution to everything but i mean this is just creating vicious circles and just to comment on today's action and one of the things that could have sparked the market is german bond yields jumped twelve basis points today now that may not seem like a lot lot is when they're in the air. but if you look at the worst performing bond market in europe today it wasn't really the spanish market though that got headlines because you're so close to you know they had drop dead level of around seven percent the german market was really badly badly pressed and i think that's terribly significant because suddenly i think that germans are going to become aware that they're not an island in themselves if spain goes if something happens to italy greece etc. germany's going to be stuck holding probably over
a trillion dollars in debt that will be payable pennies or nickels on the dollar and they're going to have their own kind of depression i think the germans are actually looking in the wrong mirror right now they should be looking in a mirror that starts at nine hundred thirty not one that starts in one nine hundred twenty and i think they would get the message that the real enemy here is depression yes and deflation and they're very very important to realize we think that deflationary spiral in europe and i guess the question that comes out with the german bond yields is what people are thinking about and terms of safe havens and the traditional ones which have been some of these government treasuries and bonds and of course gold which you mentioned gold does not fit into that race to the bottom that you talked about with the euro and the dollar and currency in gold considered a hedge against the currency a liability where is it headed in that regard. i think gold has had a dramatically higher i don't think there's any doubt about it well there's always doubt but i mean in my opinion i just don't think there are any real currencies in
this world i think once you do see growth start again and you will i mean you know you have to step back a couple of feet and realize that the kind of growth we're seeing worldwide now is not only anomalous it's probably the least we've had since at least the great depression on a five year period it may be even worse than that yet if you look at oriel oil right now it's still close to one hundred dollars you look at copper it's three dollars and forty cents now compare three forty ninety nine cents which is what copper average during the ninety's compare ninety five dollar oil to twenty dollar or which is what oil average during the one nine hundred ninety s. and you see the kind of dilemma we're in any return to growth is likely to send these commodity prices just soaring and the only way you're going to be able to ration scarce commodity use is with a currency like gold you're not going to ration them by just printing more. dollars and more euro's that's just
a race to the bottom it's who has the better printing presses yeah so i think that gold is going to be a total ass out of choice here it's just that we've got to get through this period of turbulence ok a couple questions i want to get into along those lines i want to get to commodities and the end of the super cycle that some predict that you sound like you have a different point of view about but first i want to remind our audience and you to let you know something our guest john butler said about a week ago about how gold isn't considered here when capital which is what a lot of banks are needing to ramp up to meet tougher capital right now as capital and he commented on reports that there is studying accounting for gold as a tier one capital i want to play a little bit of what he had to say and then get your reaction the banks themselves are going to the yes and they're asking for the cheer one collateral capital basket to be expanded to include additional assets because of course that will make it easier for them to acquire more secure one capital and raise their capital ratios which is what the regulators say they want so they're pushing for this they think
gold should be a cheer one capital. so dr lee when you talk about gold being treated more like money what a fact a fact when this happens gold was considered tear one capital because as we've seen in the past to in times when gold declines it's in times when banks need to raise capital to meet outstanding liabilities denominated in those found currencies you're talking about. you're you nailed it i mean that is exactly the case that's why i think gold is sitting around sixteen hundred rather than twenty five hundred today because there has been some liquidation to raise money and gold you know basically what's left but i think making gold here one capital is a matter of when whether i mean it just doesn't make sense not to have it is tier one capital in the world in which currencies are being debased right and left and if you believe in commodity scarcity on any level lauren you have to argue for goal because you cannot you know allocate commodities among countries unless you have
hard currencies everybody just be inflating their way to you know hyper inflationary land indefinitely so yes gold i think has to be part of the monetary system whether or not the decides this time or next year to make it to or one capital incidentally the rumors were with one hundred percent waiting. it's really not that material because it's going to happen it's an epochal it's a question of timing it's a question of when whether let's talk about what else is inevitable when it comes more broadly to commodities and super cycles i want to show our viewers a chart of the super cycles and where we are now in the commodities boom some are predicting dr leave that we are at the end of the massive boom in commodities that our viewers are looking at on this chart analysts are predicting a slowdown in demand stemming from this global economic slump we're seeing in particular slowing demand from some of the largest commodities consumers china and
other emerging markets however supply side factors aren't taken into account in this calculation and production costs have increased substantially so where do you think this super cycle is heading. well i mean if you look at these cycles and they're usually about seventeen years i think this one will be longer but even if it were just seventeen years it really started in two thousand so that would still give us about four more years of rising commodity prices and usually the last part of the cyclists extremely dramatic so i you know i don't see any basis in history for saying that the super cycle has ended you raise a very very good point about commodity costs but we've seen copper has gone down and i so i said earlier that just take copper as an example copper is fallen from i don't know four thirty four forty two around three thirty but three thirty is three and a half times the average price of copper in the one nine hundred ninety s. yet because of a small relatively small drop you see major commodity companies b.h.p.
rio cutting their capital expenditures by capital expenditure budgets for exactly the reasons you said commodity costs are rising dramatically and they're rising because we've already produced so much of these so much much copper so much think it's cetera that to get you know more you're really dealing with very very low grades so companies that are answering to shareholders unlike china which doesn't answer to anybody but their own government companies like b.h.p. which who answer to shareholders you know they cannot justify these high capital expenditure budgets which is what they need to get that low grade or so when you get some sort of recovery in the world right now i mean watch out i mean you could easily have five six eight dollar copper you know within the next couple of two three years to one hundred fifty two hundred eighty and that issue of oil brings me to the next conversation i want to get to about what needs to be done in terms of
a transition to other energy sources if truly we are going to see those kind of oil prices and couple that with scarcity but that is going to have to wait for another day we covered so much we're going to have to leave it there with you thanks so much dr levy he's author and chairman and say i believe capital management. thanks laurin. and still ahead grey's may remain the poster child for the eurozone crisis but we'll look at some different kind of poster and how individuals are stepping up to help the country but first are closing market numbers.
all right we've been getting some viewer feedback from from a lot of viewers who say ok we hear a lot about the problems a lot of analysis of everything that's going wrong what about some solutions well this next story is for you because anyone who watches this show knows that we devote a great deal of attention to the goings on in europe the debt crisis the austerity the economic deflation that is forcefully contracted g.d.p. across the continent but particularly among the deficit countries and of course the poster child of the eurozone crisis remains greece never out of the headlines especially not now with greek elections coming up on sunday where really the future of greece and the eurozone could remain in the balance greece's economy for its part has contracted six point five percent in the first quarter of two thousand and twelve compared with last year that's according to the athens based hellenic
statistical authority now this was the country's third contraction in the past fourteen quarters of trade this is truly dismal state of economic affairs if you stop to think about it for even a minute in the broader picture now we're talking about a depression that has been going on for more than three years with no end in sight and for a few years now we've been seeing the fallout through protests on the streets and various see that now wall malata have cocktails have been aimed at the parliament it's been truism that's been the prime target of economic deflation greece's tourism industry comprises about fifteen percent of the country's g.d.p. and employs roughly a fifth of the nation's workforce international rivals a greek airports meanwhile fell five percent in the first five months of the year old loan and that's not to mention the fifteen percent drop in tourism receipts or
revenue that greece's central bank recently reported for the first quarter of the year compared to last year. ok the statistics go on there are many more by far solutions in general have centered around governments and central banks and what they can do to stem the crisis but these measures have proven largely ineffective they've resulted in those protests on the streets and they've inspired some specifically the guys that we were supposed to talk to you but we'll tell you their story and his colleagues to take matters into their own hands take a listen pristine thousand dollars to label us to run a company in your city and the fires have to come pain by earning far wider media coverage this is to prove that resilience teamwork and innovation are still part of the great d.n.a. . so using the crowdfunding platform known as loud sauce your bros cleaver and his colleagues up greek tourism dodgy are managed to raise over twenty thousand
dollars to fund an advertising campaign for tourism in greece this included electronic billboard in times square in new york you can see it there so right in times square crowd funded reminding potential travelers that hey were garlits of the economic situation greece is still a great place to visit and maybe perhaps more importantly bigger picture sending a message that individuals play a role in this solution and this is a message that seems to be spreading there are other examples of this now we're still trying to get your goes. on skype so we can talk about this he is co-founder of tourism having a few problems there so we'll let you know if we get him but lucky for you dimitri kofi anan is our resident greek he is our producer he found this story he was inspired by this story this is his country and also this really plays into to your
feelings about the economy and politics and i think you know one of the big messages to me that i want to get your input on is what does this say about the individual's role to do something to take charge of or their economic situation in lieu of government solutions you know well this is a very inspirational story from a very inspirational they were able to exceed their targets they had to think fifteen thousand they went to twenty thousand dollars as you saw the audience saw there was a billboard there in times square they had they have another billboard here in washington d.c. and they've been able to crowd and to me says a lot because the news cycle the centered around what can governments do what solutions can governments and central banks provide it seems that that's it's presented in a framework so that the only solutions that are available are solutions that are brought from on high from these institutions but what we see here is that through technology specifically and that's all sort of point the. scale solutions from private from the private sector in ways that weren't possible before and i think that's what's so inspirational about this you don't have to wait for governments to
do something you can actually get the community because there are a lot of greeks outside of greece the aspers very large so you can get help to advance to help recapitalize the greek economy get tourism going without having to rely on a largely. inefficient and ineffective government angry specifically in larger the euro zone yeah one thing because i know you talk to a lot of family in greece a lot of people that are dealing with this situation very immediately give us a little update on how bleak it is or or or just what the reality is well it's obviously it's very bad so the pressure that's been good i think i can remember now we're in the teens in terms of consecutive contractions in this this quarter growth at six point five percent over the last quarter relative to this time last year so it's a depression and that economic depression feeds into a social depression because when you are uncertain about your future when you think that the future every day that comes are going to be worse than before and that
causes a social depression and that affects the people so it's very difficult and there's also a sense of anger directed abroad media outlets and others who greeks feel like are. yeah just doing the name of greeting them right when it's not the case and the greeks are lazy right and they're not they're doing things on their own to try and fuel this economic depression and revive tourism in greece and lucky for us we had our growth clear vokey is co-founder of a tour is that we've just been talking about your project and what you accomplished raising twenty thousand dollars and such a short time to put up your own ads to try and get people to travel to greece so maybe you could just tell us you know aside from the fact that this is inspirational in terms of individuals doing something what inspired this initiative . well. first of all thank you for having me on the show.
well everything started a couple years back when in two thousand and nine we. you know the news broke out about the debt situation in greece was in in the middle of this global financial situation financial situation and we thought there must be something we can do to help the greek economy and therefore the greek people and the two largest competitive sectors in the greek economy is shipping and tourism shipping doesn't really need much how. on the other hand tourism is very much affected by the. image of the country and what's happening inside the country and at the same time in her helps bring in money from abroad and inside the country so we thought we needed to help and focus on tourism. in the meantime from two thousand and nine until today there's been a lot of crowd funding platforms and different types of complaints so we learn about one of these platforms out of
a law. that allows people to. find an advertising campaign and that's how the idea came about what i wanted now bigger picture and we were just talking about this on set why you think this says about not only the ability of end of it jewels but the responsibility of individuals to do something either for their own. to control their economic situation or to influence they've got a situation in their country in lieu of always looking to the government for fix theirs which clearly the government is not proven very good at in this crisis. so i think people who are civilians in any society any country have a responsibility which goes further than just casting their vote every time there's a lections we should all be doing what we can to help improve our society and i think improving our economy in our society is a very serious and
a very difficult problem and we cannot. do to fix it by themselves because obviously they're not able to obviously quickly i want to know just what kind of response you got from the greek community around the world and also could you have done this without where we've come a technology where you can crowd fund this way. well the greek a minute embraced our campaign there were you know in the very early beginning it was people were a bit skeptical about it but it was very easy to collect the money initially so we raised twenty thousand dollars for our first billboard in times square new york and then we raised a little more than twenty ten thousand dollars for a second billboard that was put in on the seventh street and washington d.c. last month. and especially back home in greece people have been extremely
enthusiastic partly because there is very little good news coming out of the country these days so people were immediately writ ready to embrace an initiative that was done by the greek people without involvement from the politicians in the government who they consider to be corrupt and incompetent and they were the no involvement from from brussels or from germany so it's been very popular i really quickly i just have about twenty seconds but you know we think a lot of things that protests ally news have economic depression in greece still a good place to travel to. well i think greece this year is lower cost than it was before people are more welcoming in the appreciate more when winter is come and spend their money and it is beautiful and you know as amazing as there's always been. all right well i really appreciate you being on the show and tell us about telling us about how you did that we'll have to see if it happens more broadly as
the eurozone crisis is not going away anytime soon thanks so much that was your rose cleaver co-founder of up greek tourism and that is our show thank you so much for watching make sure to come back tomorrow and in the meantime you can follow me on twitter lauren lyster you can give us feedback on the show or catch any you missed you tube dot com slash capital account watches on hulu in h.d. it gulu dot com slash capital dash account jamie diamond on the hill tomorrow you are not going to want to miss our show have a great night.