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tv   Boom Bust  RT  September 5, 2019 3:30am-4:00am EDT

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in the 2nd half of the show we begin to see a global bond from south america to the e.u. and what's the latest move in the sector for the global market at the top the very moment the global economy but we're here to help you keep calm and carry on with the latest let's go. on chief executive kerry lamb on wednesday formally read with through the extradition bill that has been at the center of the protests and riots this summer. first the government will formally withdrawal the bill in order to truly a lay public concerns foremost priority now is to end follett's to safeguard the rule of law and so restore order and safety in society as such the government has to strictly enforced the law against all violent and illegal acts. stocks in hong kong soared more than 3.9 percent with shares of retailers and wreaths bouncing the h.k. to strengthen slightly but traders are now hedging as it feels to also mistake to
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assume that this will end the protests the withdrawal met one of 5 demands made by the protesters and while this was viewed by some as an olive branch critics now say that lance moves are not enough and insists that they will not settle for anything less than bowing to all 5 demands shortly after the withdraw announcement the financial action task force an international body that accesses money laundering and fraud issued a report that cited the lack of a mechanism in hong kong to extradite suspects to other parts of china is an obstacle to tackling money laundering and terrorist financing it suggests that hong kong should look at other ways to improve its ability to cooperate with china as this was part of the loophole lamb was concerned about earlier when the bill was temporarily suspended on the bill with raul lamb emphasize that the move was a technical procedure to streamline the legislative agenda with a legislative council set to reopen in october after the summer break sources say that the for withdrawal was the easiest way to ease the ongoing tensions in the
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city which have turned increasingly violent in past weeks lamb maybe hoping that the move will put a lid on the protests ahead of the october 1st golden week when china will celebrate the 70th anniversary of the founding of the people's republic. and checking in on the brics a drama in the united kingdom british prime minister boris johnson suffered a bruising defeat in the 1st vote on the house of commons under his government as m.p.'s voted 328-2301 last night to advance a just solution that would rule out a no deal exit for the u.k. from the european union mr johnson then said he would introduce a bill for a snap election to take the issues out question to the people but opposition leader germy corben of labor insisted that labor will not supply the loots needed to call a snap election unless and until the entire no deal bill is passed or securely on its way to becoming law. today prime minister johnson spoke on behalf of his election bill before the 122 committee where he was reportedly rebuked by speeches supporting the conservative rebels who voted to advance the bill from ben of labor
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barring a no deal bragg's it and as we prepared to go to air the ben bill had just passed a vote for a 3rd reading and reading in the commons setting it to the house of lords. and joining us today for a special power panel across both blocks of the show are peter schiff the c.e.o. of euro pacific capital and richard wolffe professor emeritus at u. mass amhurst and the author of democracy at work a cure for capitalism gentlemen bragg's it i feel as if every headline we've done as long as i can remember leads to one more now what moments and we're at that point again in the cycle but while we may not know how this will end it seems we can be fairly certain that confidence in the u.k. is political system to handle handle paul challenging policy questions and process democratic input seems have been severely undermined so my question is what is the economic effect of the one sure consequence it seems of this adventure which is
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loss of confidence and u.k. institutions peter do you want to take that on. how much or how much confidence there was a u.k. institutions to begin with and you know it seems like both sides have a political interest to kick the can down the road to avoid dealing with the consequences of bragg's it but you know i still think from a long term perspective getting out of the e.u. would be a net positive for the british i mean i think they've been their own worst enemies when it comes to dealing with this potential way out but actually i think if they actually do something the pound my rally i mean there's been a lot the pound has gone down there's been a lot of selling it dissipates and of a potential hard bragg's it so we might get a buy the rumor sell the fact and if that happens that be a good opportunity for the british to buy some gold. and now richard as the loss of confidence the one share out. that we can plan on and what exactly is the economic impact of that very intangible a very real factor we've already previously thought saudi aramco pulling out of
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their planned i.p.o. and choosing to actually i.p.o. in japan on the nikkei rather than put me in the there in london. well it seems to me a number of effects and i think there are serious the one is obviously uncertainty which has its own consequences like the a ram co decision but there are literally thousands of other companies around the world in britain and europe and beyond who do not know how to make t. investment decisions because they can't figure in what the consequences or even what the final decision is going to be number one number 2 britain is a small part of the world relative to the rest of europe i believe that doing what they are doing a distraction from their basic problems is going to make life for that country and the people in it worse because they'd break away that if they tried to find a more acceptable way to participate in what is one of the majored trading and investment blocs in the world and finally it seems to me that particularly since
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the crash of 20081 and austerity was imposed on the british working class far more serious than almost any other country say except greece that you are seeing the building of a rage and the anger of the working class once they figure out as they will that in or out of break that they've got the same problem of the structure of britain you're going to see in the acceleration inside britain of a very powerful class struggle of the sort we haven't seen for quite a while in history has not ended sounds like moving to the other side a brags that the incoming president of the european central bank christine legarde said in a confirmation hearing for that post on wednesday she seems to offer some very mild concessions on the issue of negative. interest rates and quantitative easing suggesting a review of the policy and said that while the quote continues to be positive we need to be mindful about potential side effects and take people's concerns
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seriously so i already hear you laughing peter is this just the usual kind of statement that political nominees in these kinds of scenarios make so the critics can claim some influence on the nominee can make minimal changes if any in their actual position. that well 1st of all the fact that rates are now negative is positive proof that the policy is an abject failure i mean clearly it didn't work i mean europe said oh the reason that we have problems is that we don't have low enough interest rates and so they keep lowering interest rates yet the problems don't go away in fact the problems get bigger and then when they get to 0 they don't question the fact that maybe lower interest rates is the wrong prescription for what alz the economy no no no they decide they need to take them down into negative territory this is insanity we're at the end of this experiment it is going to blow up hopefully maybe some veer from this course you know they keep saying that they want more inflation they want more inflation which is ridiculous they're
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going to get a lot more inflation and they bargained for and it's going to be very hard to put that genie back in the bottle but i do think that potentially they may have more success at doing that then will the united states. now richard the same question should we expect more of the same from the e.c.b. and with my guard if correct and the policy is basically a fact that. no i think peter's right about this this policy has not worked it hasn't worked for quite a while that's true of a quite a few of the policies that have been turned to in the wake of the crash in 2008 i think the real question is whether the i.m.f. gets beyond or the world bank or any of these institutions get beyond the policies that haven't worked to begin to grapple with the seriousness of the dislocations in global capitalism and come up with new ways of scuse me to intervene i don't see that so i become quite pessimistic that they're just going to be treading water
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especially with the uncertainty of bragg's it and the uncertainty of the united states china trade wars and the trumpet ministration all of that they're gonna stick keep doing what they're doing crossing their fingers at the problem doesn't get worse my guess is it probably will and back to the issue of interest rates you are too gurus on this issue the era of falling global interest rates seems to be settling in and shifting behaviors some from some major players one datapoint there is apple has now started borrowing in bond markets for the 1st time since the trump tax cut they've been on a buyback spree and they say they want this these funds to raise cheap money for more of the same buybacks are there any lessons here above and beyond one very large company responding to low interest rates peter. you have to remember that low interest rates are not the solution to the problem low interest rates are the
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problem interest rates need to be much higher than they are today and the longer central banks succeed at artificially suppressing them the more screwed up the economies are going to get the bigger the imbalances. the more speculation the less legitimate savings we're going to have the less real capital investment we're going to have and so we're just going to continue to blow air into a bubble until eventually it blows up and richard what can we infer from apple's return to the bond market here. well i think i disagree a little bit with peter but i think on many things we do agree here's my take on it the whole point of lowering interest rates has always been the hope that if you make it cheaper for business particularly but also for the consumer to borrow money that the consumer and the businesses will borrow the money and invest in the real economy hire workers buy more rigid bullets increase production and thereby lift if you like all the boats that hasn't happened now for
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a long time instead the cheap money is being used not to put the real economy into gear but rather to hype up the stock market to use the borrowed money just like apple is proposing to do to buy shares of stock and to have the inflation that isn't happening in the real economy happened in the stock market getting its prices are all out of whack with the rest of the economy therein lies the continuing danger of this kind of policy peter schiff in europe you know hubble and points you know you had peter you know there is inflation and there is inflation in the real economy the government is not being honest about it but we don't want the government to try to artificially manipulate interest rates to encourage a we want their free market to do that and remember it takes 2 to tango if you want to have people borrowing money somebody has to save that money to lend it to them and we're not going to get savers and left we have higher interest rates right now
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the government creates the money out of thin air but this is not legitimate savings this is inflation this is not how economies grow this is how bubbles are inflated and all bubbles you know burst and they have very profound consequences when they do interesting was always we'll get back to this in the power panel and peter schiff and richard wolfe will be back in our 2nd block thanks so much for your insight viewers stick around we'll get them on the other side of the break. google has agreed to 100. a $70000000.00 settlement with the f.t.c. and the ag of new york due to violations of the 1980 child online privacy protection act the company will pay 136000000 dollars to the f.t.c. and 34000000 to the office of the new york a.g. the capo requires companies to obtain parental consent if they will be collecting data on children under 13 years old the f.t.c. claim due to collected personal data from users who watched videos that were directed at children in turn use that data for targeted advertising following the
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statement you tube will now require can content creators to designate if their videos are intended for children if that wasn't enough of a headache for google the internet titan is now facing an investigation from the irish data regulators over how they use information such as race health and political users to target ads a process which circumvent european union privacy laws. and now for a quick break but stay tuned because on the other side of the break bonds are going to the microscope as well the fragility comes under scrutiny we welcome back our panel to break down what we said the headlines of the sector mean for the future of global finance and as we go to break here are the market numbers that the us.
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i'm. ready ready ready sure to stop at the continuing to grow. i just never know very good about the idea of bringing children into the world because i didn't feel like things were in very good shape that a life was just going to be a lot of software programs. there's no reason the more. you take things that are to me the. movie is a myth something else that we need to get love to everybody's scared to talk that is certifiable is really dependent on us addressing this issue and if we can even talk about it if we can't even have a conversation of that it then. we're in trouble
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ready. here's thinks. d. and. this is a stick from the water bottle found in the stomach of the fish the brand is sponsor of the coca-cola company which sounds millions of bottles of soda every day the idea was that let's tell consumers they're the bad ones they're the litterbugs are trying this way industry should be blamed for all this waste the company has.
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promise to reuse the plastic. in may like. there's less if. you stay in your own social group just fine to me just a difference and also on the line your best bet is you're in the event for. the mountains of least only grow. while argentina is already struggling with a sovereign the credit crunch and asked the i.m.f. to restructure its debt payments there is also a $15000000000.00 pile of provincial bonds that is threatening to saddle foreign
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investors with even more losses the nation's provinces were political issue as when the international capital markets reopened to argentina in 2015 offering interest rates of 9 percent yield hungry investors investors believe that these provinces had the support and assistance from the federal government and argentina wouldn't default under pro market mccree well that bases blew up last week when the government announced that it would postpone payments on the caps short term local notes that a move the s.n.p. considers to be a selective default now money managers are racing to dump the debt amid concern that the local governments will use a sovereign restructuring to lessen their own debt loads many of these provinces are almost wholly reliant on disbursements from the federal government for dollars needed to make interest payments which only further increases the risk to creditors the country's bond plunge with many now trading below how their face value and to make the situation worse the debt is also mostly in foreign currencies and when they collapse in the past so many. provinces don't have
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a large dollar revenue stream the province of. half of all the outstanding prevention of debt and is seen as most likely to default given its significant foreign currency obligations and the weaker credit metrics. italian government bonds surged on wednesday pushing yields to record lows a point 83 percent on the 10 year investors are now placing bets that the new coalition government will avoid confrontation with the european union over the blocs budget rules and expect a more conciliatory tone towards europe members of italy's 5 star movement voted overwhelmingly in favor of forming a government with the center left democratic party with nearly 80 percent of 5 star members voting to back prime minister just up the conti 5 stars forming a new administration with former foes from the democratic party with an expansionary 2020 budget at the top of its agenda to help the stalled economy grow with large chunks of the eurozone now trading at subzero yields italy looks to be relatively attractive to fixed income traders italy currently accounts for 62
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percent of all eurozone government bonds with a positive yield as the market has been supported by expectations of renewed bond buying from the e.c.b. as early as next week having agreed on the outlines of a coalition pact the 2 sides still have to decide on ministers with uncertainty surrounding the role of 5 star leader demaio. and now to give us their take on the turmoil in argentina and italy we welcome back richard wolf and peter schiff. now peter the results of the election we just heard the political maneuvering we just discussed in italy the 5 star ballot was actually quite strong but this isn't enough to give investors confidence in this new coalition it's a lot of shuffling chairs but only still has a 2nd largest debt burden in the e.u. will they be able to be able to deliver an acceptable budget. well you know i wouldn't have any confidence at all in. earning money to italy or
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any other of these european nations at the low rates of interest that are currently being offered i mean they don't reflect the type of inflation that the eurozone or the rest of the world is likely to experience based on the amount of money that is now being created by central banks and how much money they're going to create in order to artificially suppress interest rates so they can continue to pretend that they can service an enormous amount of debt that has been piled up so nobody should be buying any of these bonds they're a lousy deal for everybody people we should look like should be looking for alternatives that's why the price of gold keeps going up that's why the price of silver keeps going up it's better just to stack gold and silver and put it in a safe then lend money to any of these government said negative or barely positive rates of interest. now wolf while italy is on a temporary upswing now argentina is in crisis again and usually at least as we've seen in history when a sovereign borrow gets into trouble and experiences a rollover risk and they can't refinance material debt due to
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a sudden stop in the market financing a policy choice must be made and we can either monetize the material debt and send the country into hyperinflation as bulgaria did in 1906 or you can default and restructure as russia did in 1908 so here in this instance why did the government choose not to monetize the caps last week and let the puzzle just float. well the problem is for both italy and argentina and indeed for many other countries they have gone through these cycles repeatedly they haven't as peter said in the 1st segment they haven't learned the lesson that the problems the dysfunction the the the deep crisis of the economies of italy argentina and many other countries requires structural changes they're not willing to do that so they pump in money they drop interest rates i disagree with peter if you raise the interest rates given the absurd levels of government industrial and. consumer debt the in
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possibility of continuing would only become even more extreme the kind of cold water bath that he suggests is exactly what they're of fraid of i why they do the things they do and the irony is only for me as watching the investors if you lend money to italy under these circumstances or you were money to argentina you'll know that they have defaulted in the past you know that they have enormous unsustainable debts you're taking an enormous risk to which the rest of us orders say if you're willing to take that risk don't come to the community of the world and the air for help what it turns out the risk you talk was as big as it looks to us. be even from this moment and given those risks that you cited you know century that stary. a steady medicine to improve the economy prevents the economy from growing enough
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for them to. manage their debt italy obviously you know we're looking at italy in the in the view past crises greece is probably the best example italy's managed to avoid a momentary crisis for now but they still have to pass a budget within weeks to automatic rise in the value added tax set to kick in on january 1st if the government doesn't reach its debt reduction target so are we seeing you know are we just on the road to crisis slowly or do you see professor what do you see a chance for real significant revolution resolution here. i don't see a resolution i don't see it. but i don't see a resolution and i don't i don't see i don't see a resolution i don't even see the coordination of discussions about a real resolution i see them turning to very problematical monetary increases negative interest rates. partial for
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a given this is this is exactly what they've done in the past that did not solve their problems and brought them to this brink my fear is that they will produce another crisis on a scale of 2008 and 9 and the mass of the working people who went through that who watched the collapse who watched the bailout of the big businesses and watch the austerity will not permit that to happen again ok peter. the word. shuttle program says art international live from moscow as you can see over my shoulder we're going to one of asia's biggest or one of the big get togethers over event of all star so of asia's biggest economies get together there in the far east as the 2nd there for him over 3 plan days of discussions and meetings and hopefully deals greenside russian president vladimir putin's already met leaders of india japan malaysia and some others the renter modi
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of india speaking just now listening to think pro president putin's about to speak any time now it's still narrowed remotely by the looks that listen to that and i think president putin speaking later because through this live event is the 1st country to have opened its consulate and like people are still at that time and even much before that there was so much. tools out between india and russia even at the time of the soviet russia when there were distinctions are and why foreigner is. why we were glad he was stuck in the why is it open to indians. our grounds for our defense and development a lot of goods that are used and required used to be sent to be sent to india through vladivostok and today. really of this partnership is
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further deepening its roots. it is becoming. hard for the welfare and prosperity of the people of both our 93 india has made very useful investments here in the energy sector and in other natural resources such as diamonds. in our oil fields are a great example of the success of indian innovation and mention friends of president putin's attachment to the far east and his vision and creates an unprecedented opportunities not just for this region but also for friends and partners of russia like india where he has an ounce that is the development of the far east is a national priority for the 21st century. of his holistic
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approach. is an inspiring heard to improve all aspects of life be it economy or education. or s'pore the culture or communication trade or tradition. a lot of efforts have been done to improve all these aspects of our lives on the one hand he has opened up avenues for investment on the other he's paying as much attention to social sectors as well i myself have been impressed by his vision and i do share. aerate heart of. regional india wishes to walk them free hand in hand with russia on this visionary journey. on the basis of my experience i can say. that the rapid
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and balanced development of flood of our stock and the far east which is president clinton's vision will definitely be successful this is because it is a realistic question and behind it the value of the resources of the region and the unlimited talent of its people his vision reflects. the respect and love that he feels for this region and for its people in india we are working on building a new india following our moncho which is collective efforts and inclusive growth. we are working to ensure we can achieve our goal of becoming 5 killion dollar economy by 2024. for horrid rapidly
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developing india and for its talent a partnership with this region. it is a historic opportunity to make one plus one equals $211.00. trends. the reasons it is so with this motivation is that not really did i know princess dented. a group before our participation in the eastern economic forum several ministers ministers of 4 states of india and about a 150 business leaders came here. running the day and met the president's special envoy for this region and all the 11 and governors of the far east and they met several business leaders from here as. ministers from russia and business leaders from the far east also game to india i am pleased to let you know
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that our efforts have been very good result. approximately 50 business agreements have been signed in various sectors from energy to have education just skill development mining timber. we expect. that this will lead to a several $1000000000.00 range after it and investment are in friend. the contribute to the development of. will provide $1.00 line of credit. this is the 1st occasion where we are providing region specific line of credit to a country.


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