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tv   Boom Bust  RT  August 16, 2014 4:29am-5:01am EDT

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hello there i'm marinated this is boom bust and these are some of the stories that we're tracking for you today. first up in europe's in an economic depression and things don't seem to be getting much better we look into the factors contributing to this and if there's any hope for the continent coming out on the other side and while europe's great recession looks worse than it did in the 1930's not everyone believes that the continent is down for the count boom bust favorite mr jim rickards is on the show today and he's sharing with us his off the mystic thoughts on euro and kind of a low but they're optimistic ben our chief correspondent manilla chen is sitting down with me later in the show to talk about atlanta city so can the ones that glimmers gambling destination regain it's possible henri we're looking in through it and it all starts right now. with.
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our lead story today europe and its non existant growth the eurozone has been in the pression since the financial crisis economic growth within your land has been much worse than in the us as well as economic growth in the second quarter of two thousand and fourteen came in at zero europe doesn't seem to be breaking out of this depression anytime soon back in two thousand and ten two thousand and twelve europe had a very serious crisis known as the sovereign debt crisis which it addressed by having the european central bank offer a debt backstop to every country that caused borrowing costs to plunge removing fears that a country would default and be forced to leave the common currency now for liquidity that looks good thanks to the e.c.b. but the economy it still hasn't grown which it needs to do that some are. important
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and sadly aside from this nothing else has really worked the e.c.b. has let alone growth and inflation plummet and countries are still very much employing austerity in one form or another the employment situation in europe is much worse than the us as well and with mass unemployment inflation on a downward trend and stagnant stagnant industrial production economists like paul krugman worry that europe is turning into japan japan has spent more than twenty years in a deflationary depression and with its aging population europe also has similar demographics to japan these c b has deployed tools to increase liquidity but the federal reserve can do much more to avoid an economic depression than the e.c.b. can example of this would be very simply quantitative easing we all know about q.e. and of course the e.c.b. unlike the fed has a primary mandate to maintain price stability which it defines as two percent inflation per year so it's not required to achieve low unemployment however producer edward harrison has pointed out these he also has
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a responsibility to quote support the general economic policies in the union with a view to contributing to the achievement of the objectives of the union these include full employment and balanced economic growth now that quote that comes directly from the e.c.b. is website but even with only one primary and i mean primary mandate to handle the e.c.b. hasn't been meeting its two percent per year obligation so basically things look bleak in europe so is mario draghi in denial perhaps just maybe he is but i think matt o'brien at the washington post put it best when he wrote europe hasn't recovered because it hasn't let itself too much fiscal austerity and too little monetary stimulus have instead put it more than halfway to a last decade that's already worse than the one nine hundred thirty s. .
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so you just heard me say that europe is in trouble and economically speaking european countries are far worse off than the us today but our next guest our next guest doesn't necessarily agree with that boom bust dave jim rickards is bullish on europe's political cohesion and nowhere near as downbeat on its economy as many people are jim is a new did economist and author and i first asked him to explain why germany's economy contract it in the second quarter here's what he had to say. well what's happening in germany erin is happening all over the world germany's economy contracted as you said italy is already contracted france has two quarters in a row of zero g.d.p. the united states in the first half we did not even grow one percent it was down a lot in the first quarter of a lot of the second quarter but a lot of that was inventories and if you just inventories make it look more like final sales growth was less than one percent and china is slowing down and of
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course japan fell off a cliff so if you look around the world. going into a global recession except i would say this is a continuation of the global depression which began in two thousand and seven you know we've done interviews in the past or so the way to understand is this is not a normal recovery a normal business cycle this is a depression that you can have growth in a depression it's just this below trend growth you never get back to that sort of three four percent growth that you're looking for it's kind of one two which is what we're saying but you can have multiple recessions technical recession is inside a depression that's what we had during the great depression we had two recessions one thousand thirty two and then again one hundred thirty seven so it looks like that's happening again this is a global slowdown. on that no you know if this was this was before the sanctions on russia were even applied what's happening in germany in europe so do you think an economic sanctions will dampen the economy in euro and and the u.k. even further. there's no question about it it's a very very very good point if the sanctions are supposed to be political this is
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primarily a financial war between the united states and russia i think that's right way to understand it europe is being dragged along kind of against their will the u.s. the other all nato not all but one of them are nato members they feel they've got to support the united states they may not be happy with what putin's doing in ukraine and crimea but you know that it's not a core interest for them what they want is an issue of the natural gas queues flowing for ukraine so there are geo political reasons for this but there's no question that the impact is another drag on growth so we have all the drags that we just discussed all over the world and now we have a new impediment to growth and then of course just a matter of time before the china credit bubble collapses and then the u.s. is not too far behind in terms of our stock and housing bubble so this is a set up for. best a continuation of the depression and a tech to go recession but at worst may be you know markets breaking something more like two thousand and eight jim do you see europe as school leading it sanction regime or letting a temporary sanctions just expire every time. i see you have to as little as
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possible of the relationship between germany and russia is very strong remember engine of merkel grew up in east germany at a time when it was part of the soviet empire in their putin was a k.g.b. k.g.b. officer stationed in germany he speaks german she speaks russian they they've got a lot going on in terms of the north stream pipeline in maine there's no more kind of natural law and in the world than germany and russia germany is a technological powerhouse russia is a natural resource powerhouse germany's the natural resources russian is the technology so that's kind of a match made in heaven so that merkel is going to do what she has to do publicly she's got to go along with the president barrack very mind obama is the one who tapped her phone not putin so so that i think the german russian connection is very strong but there's a little bit of posturing up but i think europe will do as little as possible. and harrison has been telling me to watch italy with its terrible demographics high
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debt load and zero growth as a key battleground in europe so why does it even matter jim. well it only matters that it is one of the largest economies in the world by the way they're the fourth or fifth in terms of the largest gold holders in the world i tend to think of the european gold as all the members of the eurozone combining their gold into a total stash of over ten thousand tons which is more than the united states but if you take the members individually germany's the largest budget france and italy are right behind italy's a major gold power very large economy by the way i love its analysis i read it all the time i think it's one of the best but my advice for it is actually go to italy and look around because what you find is the tour is for the underground economy so yes maybe the demographics are not on their favor but there's a lot of unemployed youth labor that can be brought back into the workforce this is a lot of italy can do to help promote exports you know of course tourism is a very important part of it so i think it is never as bad as people think mainly
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because or largely because of the underground economy i like that and maybe maybe i share with them at their home now he's smiling right now here and you say that's the thank you jeff you've been bullish on our european institutional cohesion but what about the economy where is it headed. well the it clearly is slowing down whether the whole euro zone goes into recession there's little bit academic there is the major members are there in recession or verging on that in the case of france and germany so they're slowing down but the whole world is slowing down so i don't think what we're seeing is unique to europe where i give you our credit they have the e.c.b. has better monetary policy i like to say marriage argue is the only central banker in the world who actually understand central banking he knows you're supposed to you know talk a little and do less you know the people the fed can't shut up you know there's always a governor or a president giving a speech every other day confusing people contradicting themselves. cetera so to say us is a mess but i think i think europe has a right so they've got
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a lot of gall they've got a much more sound central banking policy and they've got a lot of assets they including chinese capital chinese capital is poorly into europe because the chinese want to get away from u.s. dollars they've got you know multiple trillions of dollars of u.s. dollars in ominous securities they're trying to diversify so the euro has problems there's no question about it but my point is the whole world has problems japan fell off a cliff the u.s. had a terrible growth in the first half so you know you look around the russia slowing down marshes a very large economy also china so these problems are worldwide europe is not going to escape the world but i think fundamentally they're doing a lot of things better than the rest of the world. jim i'm interested in the political aspects of all this so arguably france about it that's now in the periphery and austerity committed family and has seen its economy stalled so do you think this tips the scales against germany politically. no i think germany is still the politically there is still the powerhouse of europe is still the leader of the
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europe the germany once the euro and actually the rest of europe on the euro you know with the politicians complain about the euro places like greece and spain and italy and now and then the you know the the academic economists people i could win and stiglitz and there would be any and others they say you know you got to break out of the euro go back to your old currency devalue a currency that's all nonsense first of all it's not good economics you can lower unit labor costs internally you don't have to do it through cheapening your currency effectively your currency only gets you inflation so it's bad economics but apart from that if you look at opinion polls forget about politicians but look at what the people of greece italy spain portugal say they love the euro because they know that if they went back to their old currencies the governments would devalue and instill their savings so that people like the euro germany like the euro germany's providing the leadership i like to say that merkel's the only head of state who understands economics because she's not an economist. that was author
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a columnist and boom bust all star jim record. time now for a very quick break but stick around because when we return our t. correspondent manilla chan is sitting down with me to discuss the downward spiral of atlantic city so here's the question can the ones that go amorous i mean who doesn't love boardwalk empire glamorous weekend when does a nation regain its glory days we're going to look into it coming right up and it's the end of the week which means we're bringing you the best of the very best from this past week plus remember you can see all segments featured in today's show on you tube or you tube dot com classroom but start the end on hulu dot com slash boom dash bus now we got to go before you hear our look at summer closing numbers at the bell.
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crosstalk rules and if it doesn't you can jump in anytime you want. sweden or finland to bring deep to join nato would provoke some sort of free action on the part of russia and this is why as far as the military calculus is concerned what faces humanity the west north and south lawn of it can't be solved by military
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means or craft or satellites or nuclear weapons military is outdated it should go like cannibalism and slavery and child labor it doesn't belong to civilization to kill each other. in december of two thousand and ten. more likely to be raped in college and in the real world. i don't think people did that to each other when they knew each other i thought rape was a stranger in the bushes. girl complaining about the sun of in the. millions of dollars in the school why listen to somebody who's going to lose money at the school of schools that make money based decisions are much more common than they
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would ever admit publicly. to your home and a lot of these communities face. a pleasure to have you with you today. welcome back to the show now twenty twelve atlantic city welcomed a new two point six billion dollar hotel called revel revel was supposed to usher
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in a more opulent era for the east coast gambling destination but sadly that didn't happen and after failing to find a buyer in bankruptcy revel announced this week that it will be closing its doors on september tenth revelers just the latest casino to fold in a seat both caesars and the trump plaza hotel and casino will be shutting their doors as well the closings are expected to leave the already struggling city in shambles with up to eight thousand people left unemployed and here to discuss this are to correspondent manilla chandra no thank you so much for being here and this is good stuff to learn and you see not very far from here and i see you so let's get to is now i want to ask you you know it looks like the rubble was great everything was going well if there was no reason for it not to work but it just didn't turn a profit and in fact morgan stanley they were willing to take a billion dollar loss on this just right up just to get out of get out of their position so why was rebel not as successful as anticipated did it have to do you know with time in the recession what was it you know i think it's
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a little combination of all of those things the timing was in part and we'll get further into that as we talk about as we know sandy but let's start first and foremost with really bad function way ok and not not to be not to be talking about you know design and but really when it comes to building a casino. you need to put the casino where it's accessible and right this casino is on the third floor it's six stories above the ocean so it's really bad funks way for the gambling area is really just inaccessible for for people to go in and out of people because you hear you know like hotels they spend so much money on functionally experts for their log. interval to yes obsessive hotel or yes. casino it's even more important is that's where you're not going to know me now i don't know if this is what they intended to do but they they have kind of a vertical build revel is built vertically i mean the hotel towers actually the
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tallest structure in atlanta city it's the second tallest in the entire state of new jersey it sits at fifty seven stories and it's actually the second second tallest casino tower in all of the u.s. so i mean even taller than some in las vegas so maybe they intended to build vertically but that did not work and it didn't work out the floors are wrong can you tell me about sandy you mentioned sandy beach and i mean superstition it's big gamble and sandy had five days after the opening of all that is about as bad timing right when you're doing when you're building a casino i mean superstition is part and parcel to the business i would say i mean there's just some things that come that come with a certain line of business and superstition i think has a little something to do with this so after sandy the entire boardwalk suffered i think we all we can all attest to that right but not only did sandy give an ominous sign to begin with before the resort even opened they had a crazy string of horrible incidents that happened i mean check this out ok
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early in the construction phase six key executives were traveling to minnesota for business stuff for rebel. they chartered a plane the plane crashed with all six executives on board so that you're into superstition this is pretty dangerous you know what july two thousand and eight that's crazy i want to ask you about this you know bill us numbers came out and were better than expected but this is the fourth casino to close in new jersey particularly atlantic city and i believe that they only have twelve in total so they're losing a lot of jobs that are mentioned in the open and a lot of the so you know how will this affect new jersey's fiscal situation you know it seems pretty dire it is very dire i mean between like you mentioned the plaza that's closing between trump and ravel alone that's more than six thousand jobs are going to go away so that you've got to think about the economic impact there of the people that live in that town that people property values are going to
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drop that one thing we can look at probably going to mediately drop because the people that own homes or rent properties there they've got to look for jobs somewhere they're going to leave the state meanwhile pennsylvania is actually picking up the gambling slack so i think a lot of people are probably going to leave new jersey the people that are losing their jobs here and probably run over to pennsylvania but then you look at mom and pop shops. the dry cleaners what i'm hearing is that they're going to. bring the coke cans i mean all these other. side suppliers that people don't tend to look at when you think of a casino you just think you know people going to gamble and there's but it's good that you bring up the gambling aspect because movies they recently downgraded the. scuse me it was two hundred forty five million dollars in general obligation debt for atlantic city and to jump so you know is they said their primary reason for doing this was that the number one driving force in atlantic city was gaming and
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now gaming is going away so is there anything that is you can do moving forward to basically have diversified not become so reliant on gaming you know they're trying really hard atlantic city they're trying hard really. to try to compete with las vegas but i think las vegas is kind of got that that gambling aspect right now and so for atlanta city i mean they really i think personally i think they need to move into turning it into a more family friendly area as well as maybe even convert some of the properties that are there that are currently existing like the towers and maybe turn them into like long like like vacation rentals or maybe even luxury housing they need to make it a place for people that they need to go through the rezoning process right as chris christie really needs to knuckle down and look at other avenues of bringing long term revenue to the city because gambling i mean you're not you're just not going to compete with las vegas you just can't let go and linux city is beginning to crumble right meanwhile las vegas is continuing to build right you have it's
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interesting you know it used to be you are right in one thousand nine hundred the number one destination summer destination that year and now it's going away so people are still gambling even though absolutely you know we're feeling the the after effects of the recession but they're back out there and vegas is growing so not only vegas i mean he has to compete with all the indian casinos that are opening up in new york in pennsylvania in florida even you know i'm so sorry we got to have you back on to talk about this i know you know real estate so we'll talk just that was our correspondent manila time now for the best of the very best from this past week. it's the end of the week and that means it's time for a best of the very best segment now first up we have william white chairman of the
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economic development and review committee at the c.d.c. and he's giving us his take on quantitative easing and whether there is truly a trickle down element to it and you child are. first week of blackout interviews we'll see what cryptologists bruce schneier has to say about n.s.a. surveillance nextstep computer security analyst dan gear tells us what he sees for the future of internet confidentiality and to top off the segment security consultant keep pierces giving us her take on the efficiency of data mining in light of all the controversy surrounding mass surveillance enjoy. i think the real problem aaron has being that policymakers bankers regulators politicians versus anybody you want virtually anybody you want to think about who has been a party to what has happened up until now i think if you accuse them of short termism it would be an accusation that i think the judge would say is a is an appropriate one. i think there is far too little thinking about the longer
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term implications of what's happening and that's one of the reasons why i'm sort of sympathetic to the b.o.'s as arguments about is it time to pull the pull the plug on quantitative easing and all the rest of this stuff because my sense and i think the b.o.'s a sense is that the positive benefits being derived for aggregate demand are going down over time whereas the unexpected in undesired consequences medium term consequences are going up over time and these two functions cross of a certain point in time it which point you have to conclude that the policies are doing more harm than good and we should we should think seriously about stopping that is actually not a good tool to find terrorists and the problem is we're looking for extraordinarily rare events in a massive sea of communications and whenever you have those sorts of systems false
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positives completely overwhelm anything you're finding we see that the united states the data we know we know about different n.s.a. programs. that sent tens of thousands of tips to the f.b.i. all of those are false alarms there are programs that try to find suspicious of events all of those are false alarms the boston bombers we know that the n.s.a. had data about them in their database they didn't know they were more important than the millions of other people in the n.s.a. database a data mining just surveilling everybody is not a cost of affective way of finding terrorists because it's too easy to hide in the noise what finds terrorists is following the leads the things that have been successful for the n.s.a. are when adolescents go with a known thread and follow it who are their associates what are they're doing that's how we stop terrorism it's not broad surveillance it's pinpoint targeted
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surveillance the kind of stuff you see in the movies and following the leads frequently right now most focused on issues of roughly speaking confidentiality data breach privacy etc etc you know that that might all be. collected on the word confidence you know that going forward it could well be that we inadvertently or maybe just decided oh well give up on confidentiality put integrity. in the big issue and with. medical records i'd really rather that the average person not modify mine and and and electronic health records already so for more on the black market than credit card records do so it's not as if this isn't something for which the first glimmers can be seen or for that matter the integrity of of configuration for all the things you rely on being automatic. you know i spoke a little bit about liability but part of that has to do would be do you or do you
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not assume things go badly and if so do you have a way to cope with that. it might well be that integrity is the new thing is a big risk with data mining where if you look back at the data you head you can see how you could have found something the monday morning quarterbacking but that doesn't mean your choice was wrong at the time so is it the best way i don't know that it is a good way i don't know of any better ways. but i don't like it more people to work on what data is a key part but. the promise that everyone has their own agenda and whether it's one mess of organizational vulcanized agendas you still have a gene you still have to prove your worth and prove why it was there and. in the classified space with there you can be accountable to your populace just by the nature of your work that's different because what you are generous that can be
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transparent to your people and often it can be transparent you're politicians and that i haven't had to reconcile that with the idea of democracy and i'm a kiwi we had a similar thing when kim dotcom went down a few years back when it turned out the government was surveilling him and they should not have been people got really really upset and so now they've changed also they can do it. retroactive. that was boom busts best of the best from this past week. and that's all from us for now but remember that we love hearing from you so please check out our facebook page at facebook dot com slash combust our team and you can also tweet us at our innate edward n.h. from all of us here boom bust thank you for watching us the next time but i.
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so now we're in a deep play sherry spiral where resources are scarce and people are going to war to get control of the remaining resources the workspace everyone against everyone everyone's at each other's throat because all that money printing did not work it was a failure it calls the very question they said it was going to eliminate. miserably and as a result everyone's got up to their neck in blood. there
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was very interested because with dropped out of the sky the roar of. the word shift across a few degrees. of the circle of the above the speed but you know just astronomical spoof. these aren't just soldiers this spits no soldiers. russia's internal special forces but being tough and good with a gun may not be enough for these extreme tests. only the most capable will be to the end. but. those whose dreams can melt away exhaustion ranks put themselves through fine smoke and water but not for money promotion. is the coveted crimson bear.
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yet skin in eastern ukraine is suffers more attacks from the me that bring despair and devastation for its people while tons of russian humanitarian aid is still being held at the border. moscow ripoffs claims by the ukrainian president that russian armored vehicles were destroyed after crossing the border citing a lack of evidence. and in america the police officer who shot dead an unarmed black teenager sparking riots is named outrage continues to brew over the heavy handed approach of police to the mostly peaceful protests. and if the e.u. greenlights the supply of kurdish forces in iraq.

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