momus is well you have two options either the three of us grew in each some areas and we draw the tree top bring the record to some kind of european cuisine he's going to venice i think the burger will taste best for me then for the two of you. russian germany set the table book way to alteration with the west as a summit in the euros on the menu transport and technology advances for russia followed by the billion dollar deals and the meeting for of the benefit of also iran to be more transparent in its nuclear but. in other headlines the u.s.

hands over the last iraqi prison on dates control to local authorities america will continue to hold two hundred detainees including eight members of the former regime says the allied invasion the us road system one hundred more than one hundred thousand prisoners president obama's deadline for withdrawal from iraq is set for december next year. i'm thirty five years ago russia and the u.s. launched their phones a joint space mission apollo sinews they've been to launch the not only the beginning of an air of space corporation but also in the nation's. after next of freshened over me to look at all this candle behind the week's financial and economic headlines that's in the kinds report and he's here in just a few seconds.

hi this is the kaiser report i'm max kaiser this is warren anderson you may recall he's wanted all over the world for eco terrorism twenty thousand dead in the end this is tony hayward he just a minute act of eco terrorism the gulf of mexico is the u.s. pursuing him no the obama administration is now trying to pave the way to allow exxon mobil to possibly take over b p. yes we're going to let this eco holocaust just go by the body but then again in america back in the thirty's was an i.b.m. coca-cola and j.p. morgan they were complicit in the last major all cost of the last century so the u.s. has a bit of a track record here i wouldn't sell short the possibility of exxon mobil going

after b.p. let's get the rest of the news going to stacy pervert max well actually the war is on between china and the u.s. according to this next headline china ratings agency downgrade the u.s. debt from moody's s. and p's and fitch is aaa rating so if you would call it the june twentieth the g. twenty summit in toronto president hu jintao of china called for the creation of more accurate credit rating systems well it turns out de gong international credit rating agency which has been around in china since one thousand nine hundred four rating corporate debt but now for the first time they have actually issued sovereign debt credit ratings and they've downgraded the u.s. to below china below us strelley a below switzerland so america won't do anything to break up the cartel to break up the racket and there is a racket between the rating agencies the investment banks the fund managers and wall street and they won't do anything to break up this rock at the financial

reform bill does nothing to break up the racket so china's going to break up the racket they're going to bring in their own rating agency what they have brought it and it's now announced this first thing and they gong chairman jong said that the western lead rating agency is to blame for the global crisis and europe's debt woes and this emerged in all the testimony all the evidence emerging through the entire disaster is that the rating agencies were very central to it and one of the problems that the chinese officials have with the western rating agencies is that china's debt is rated lower than many other countries and thus causing their borrowing costs to increase and yet the u.s. has the lowest. borrowing costs in the world mostly because of china's large cash surplus which they used to buy treasuries so china is having to pay a huge amount of money for their own debt relative to the u.s. but the u.s. debt would be unsustainable if it were not for china recycling their own savings

and america wants to label china as a currency manipulator when in fact the real problem is that america is a ratings manipulator well you could view china as a currency manipulator in that they keep they sustain the u.s. dollar beyond its natural law if that's true. so along the same lines next headline reads gold keeps rising as panicky investors look for security according to the article investors have piled into gold on fears that capitalism is about to crumble into a capitalism is about to crumble because the whole idea of supply and demand has been destroyed you no longer get price signals on the exchange which is indicative of supply and demand the prices are manufactured by high frequency trading and algorithmic trading which distorts the entire system and it's the death neal for capitalism and gold is going back to feudalism where the global economy is headed this is the fantastic sentence from the article as well having narrowly averted

a financial armageddon in two thousand and eight and investors are worried the authorities have transferred western debt in this from banks and consumers to national governments they have and now those national governments are going bankrupt and they are now just getting to the point where they are going to reveal hey there are two on disclosed multi trillion dollars worth of losses that they still haven't told the people in the respective countries like the u.k. europe and the u.s. there's still another fifteen to twenty trillion in bad debt yet to be disclosed well let's see if china and other investors have reason to worry about this. i have some headlines that might suggest they have a right to be worried first headline bank profits depend on debt write down abomination yes this abomination in obama nation is that bank of america and wall street firms that notched up perfect trading records in the first quarter are now

depending on an accounting benefit last used in the depths of the credit crisis to prop up their results all you need to know is it's called statement one five nine which you know sounds very orwellian and it allows them to if their credit spreads wide and they're allowed to book profits so the worse it gets for them the better it gets for them and they're now using this to record a record profit but it's an accounting gimmick that allows them to book a loss as again. i wish i could do that chris cutout ski and analyst at oppenheimer says in practice it's an accounting abomination because fluctuations in the value of the debt don't change the amount the banks oh what's it called an accounting obama nation. nation. obama nation accounting fraud that's his legacy well here's obama nation on the next headline presenting the wall of worry the fifty ugliest facts about the u.s. khon me. describes fifty amazing facts about how the entire u.s.

economy is basically bogus but i want to highlight two of these fifty items number twenty nine for the first time in u.s. history banks own a greater share of residential housing net worth in the united states than all individual americans put together let me get this right the banks when i'm in it that means it's centrally planned economy it's command control economy the government essentially who owns the banks who owns all the debt so it's no longer free markets the ownership society that bush talked about was actually a return to command control centrally planned economies and we saw well in. soviet era russian well it works with fascism how orwell described how fascism happens as soon as they start saying we're going to spread the ownership society that means the slave society you know it's always the opposite well yeah that's generally what happened americans back to slavery now again you know china's worried about their investments in the u.s. and we keep hearing you know warnings of this where we're concerned about america

well number thirty nine should give them concern because what is backing up u.s. debt but u.s. jobs more than forty percent of those employed in the united states are now working in low wage service jobs yes most people are actually just working at wal-mart you know selling chinese made goods to american fellow workers at k.-mart as low wage working and there's a big trend on the horizon and we're going to talk about it more in the show going forward this is virtual slavery in the virtual economics so there's a company called zynga and they have virtual currency systems and they use on sites like facebook and game social networking games like farmville were effectively people are working for thirty cents an hour so basically subsistence clicking on the virtual plantation this is a new way to actually lower wages beyond the minimum wage this is voluntarily having millions of people work below the minimum wage for the virtual currency wage

it's a big trend it's on the rise it's going to be much bigger going forward in two thousand and ten two thousand alone but max speaking of virtual currencies in the virtual world this also is another worrying trend in the united states with these workers who are forty percent of them are working in low wage jobs well how free i phone game suckered me out of one hundred ninety dollars oh yeah that's right this is you know a tech guy a blogger who basically was suckered out one hundred ninety dollars from his seven year old child playing i fish he's game on his phone and it started deducting from his i tunes account which is automatically. net to to his i phone deducted one hundred sixty dollars in virtual pearls that history son accidentally bought as a seven year old on the. right and going forward when they take over the internet a huge way they defeat net neutrality they'll be able to forced debt on to people who are not viewing content that they want this is virtual dead that you go to get

out of by clicking in virtual ways and of course with perfect citizen the n.s.a. in america will now know if you are not being perfectly buying downloading virtual pearls for your that's right and what is it i think is really on is a major contractor for new perfect citizen program coming out of washington which is as the executive at raytheon said in an internal e-mail this is big brother this is big brother tell terry in his home now this is the final headline worryingly these big brothers are ponzi themself oh yeah headline reads hundreds of federal agents fall victim to ponzi scheme three hundred retired and current federal agents representing the f.b.i. the drug enforcement agency an immigration and customs enforcement collectively invested tens of millions of dollars of retirement money and what turned out to be a ponzi scheme allegedly run by a florida man who committed suicide last month with

a bullet to the head. well i can tell you how this works and we saw it with bernie made if you offer somebody five six or seven percent in an environment where the federal reserve bank in central banks around the world artificially lowered interest rates down to zero people are sucked into these schemes why because they're not getting any money on their savings whatsoever there's another whole a cost going on in america there's another genocide going on in america all the retirees that live on pension accounts who thought they would get four or five percent which would be a normalized rate of return on a passive bond investment given a normal rate of g.d. . growth but since the g.d.p. growth was outsourced to other countries and sense the banks wanted free money to speculate with and says to bernanke eason the greenspan's are in the pockets of the investment banks the interest rate was artificially suppressed to near zero percent

which means you've got millions of retirees and pensioners we're going to starve to death this is another whole a cause affecting millions of people in america well it creates a perfect ponzi economy because people are desperate for returns because there is zero percent on the savings rate and here you have the f.b.i. which is essential agency in terms of monitoring and looking for in detecting ponzi schemes and securities fraud and financial fraud behind this ponzi scheme in which the f.b.i. invested authority said was a self described retirement investment adviser named kenneth wayne mcleod who was forty eight forty years macleod served as a trusted advisor to federal agents around the country making free financial projections for retirement classic sign of a ponzi you know we'll give you free advice just for you it's free and in some cases offering high yield returns of eight to ten percent uncertain investments and now the federal agents are claiming that you know the guy said he was investing in

u.s. treasury bonds for us and yet they accepted that the returns were eight to ten percent because they don't know how to read a basic financial publication like the wall street journal or the financial times they have no idea even try this experiment at home kids ask ten people to give you the relationship between bonds and interest rates what is the relationship between bonds and interest rate this is a fundamental piece of economic knowledge that every third grader should know as ten people ask a hundred people i doubt not a single person you probably don't even know what the relationship between bonds and interest rates are it's can be summed up in one tidy word inverse there's an inverse relationship now if you've got interest. rates down to near zero that means that nobody but nobody is going to be able to eke out any kind of strategic gains like those talked about in los of course they invest in an ecological hole cost provoker like british petroleum of course deal that british petroleum is high it's going to suck in

a lot of money but that's because the federal reserve these banks are not doing their job they're keeping interest rates artificially low for too long they say never thanks much for being on the kaiser report thank you max don't go away we've got plenty more coming your way right after this on the kaiser report.

welcome back to the kaiser report so i'm not to go to canada and talk with stefan moline new of free domain radio stefan welcome to the kaiser report thank you so much matt said so great to be here let's talk about the global financial system up

there in canada and it's an interesting pocket of economic strength because of the speculation and some of the areas of canadian real estate but tell us your account of what's going on in the financial system globally and in canada there's this myth floating around the g twenty and the economic system that canada has somehow avoided the subprime meltdown and other forms of financial catastrophes this is all complete nonsense committee in debt stands at three point five trillion dollars or about one hundred sixty thousand dollars for every man woman and child living in this frozen wasteland of socialist paradise so it's complete nonsense to assume that canada has somehow avoided it the canadian government has also become the largest. subprime lender in the world and we all know what happened to every single u.s. financial institution that focused on subprime lending they all went bankrupt since not since two thousand and seven canada has introduced legislation and supported the government backing of more mortgage backed securities over ninety percent of

canadian mortgages and now backed by the government and the amount of mortgages backed by the government has gone from back about one hundred thirty billion dollars in two thousand and seven to tracking to five hundred billion dollars by the end of this year and the amount of assets that are in an actual home has declined from over forty percent a few years ago to about six percent now so canada is enormously exposed in the subprime lending market it just hasn't hit yet the last the to stick i'll throw at you that will make you chill your britches is that at the peak of the u.s. housing crisis housing prices were about five times the average national income in canada right now they are over seven point four times the average income or almost fifty percent as the u.s. so the legislation that has changed which has allowed a zero down payment and between thirty five and forty year amitai zation has invited an enormous number of people into the housing market who simply will not be

able to afford it in the u.s. style the moment that interest rates go up as they're going to have to so the u.s. has already gone through what canada is going to go through the main difference is that the u.s. backed the mortgages up to the fact it was canada is backing the mortgages as head of the fact that's reducing the model has at exposing the risk of the canadian government and the canadian taxpayer even more people say that the canadian banking system is really quite strong and it's a uniquely strong in the wild but based on what you're saying here that sounds like that's a bit of an overstatement well the banks getting their mortgages backed by the canadian government in these mortgage backed securities and so the banks are taking on all of this mortgage at very low rate so their balance sheet looks quite healthy or. across the balance sheet of the kadian government and the canadian taxpayer goes down proportional to the amount of risky real estate loans that the canadian banks take on so it's all it's all a paper sham it's all a paper shuffle like in the nineties canada went through the supposedly reduction of its government twenty percent budgets whop of the science spending was caught

but it all turned out to be complete smoke and mirrors all the government did as is so often the case is that borrowed from the quote scepticism various social programs that's increasing the downstream risk for the social programs they took a dollar out of old age pensions that's increasing the future liabilities so all they're doing as governments always do is borrowing from the future in order to buy the present which is vile despicable and ultimately completely self-defeating ok now in the us down in the gulf of mexico people are freaking out about this huge oil geyser from b.p. that's causing ecological holocaust but you've got something similar going on every single day it's called the canadian tar sands is that correct. yes i would say that it's a little easier to get at leaks that occur in the tar sands and i think the really important thing for the american public and really the people around the world who are all concerned but the environment which i think includes most of us particularly the parents is to ask why this is going on so long why on countries

that have offered to help the u.s. why aren't they allowed to come in and help the u.s. deal with these oil spills there are lots of countries have dealt with this sort of stuff before one of the reasons this is actually illegal to do so it's illegal for foreign ships to operate in america waters this is something that has only been partly rescinded by the obama administration and so found ships simply aren't allowed to come in and help and that been many office from around the world there's a taiwanese skimmer that can take out of the ocean as much all in one day as has been done in a week or a month by u.s. methods but it's not allowed to operate because of these outkicked laws would prevent foreign ships are operating in u.s. waters the simple answer is it's always the same why isn't the problem being solved because people will be a. rest against by the government if they try to solve the problem and that's the great tragedy of b.p. and why they can operating it a mile or two of water because it's illegal for them to operate anywhere else and also because they get specific tax breaks and subsidies for drilling in the gulf it is ridiculous and absolute catastrophe and of course isn't it completely

heartbreaking that the coercive violent monopoly called the state which is almost completely responsible for the war for thirsting the oil companies to drill in the gulf or preventing them from drilling anywhere else from failing to regulate and protect the environment from these. entities from b.p. and i'm out of companies but everyone is running to the government for the solution it is like running to the market to protect your property it is insane but of course it's what people they have no other solution than their heads then run to to daddy president to solve the problem but it is the government that is causing it and exacerbating all of these problems and as soon as we can start to think outside this corrosive box called status and we will actually start to have some real solutions in the world right you right on your internet ration apast. stuff on that statism is dead so this is what you're talking about that people don't

realize that the state that they're making appeals to is actually nonexistent well you know those medical shows if you've ever watched these medical dramas on t.v. you see the same scene every week in some dr who is pounding the chest of a patient and he's saying i can save him i can save him and he keeps doing that and the nurses are all like he's dead right and eventually someone puts his hand on the doctor and says he's dead or something like that and this is exactly what goes on with the government the government is like the titanic it hit the iceberg twenty or thirty years ago with these massive social programs which were funded by deferred spending in other words you bribe existing population to pay for their bills in terms of health care old age pensions and. i meant insurance you pay for the bills by stealing from the future from voters who aren't even born yet and so as soon as you stop that process the system as a whole dies it's a massive blow it's hit the iceberg it's going down and now we're seeing a whole bunch of economic and political leaders slowly edging towards

a lifeboat saying to everybody there's no need to worry everything's just fine the recovery is just around the corner we can see all of these green shoots poking up they're going to get on the lifeboats and i think i think all too many people are going to go down with the ship which is a real tragedy so you have a whole system is dead and buried at these about we're seeing now it's just the last kind of twitches of muscular activity as life meets the body but there's no options for governments left anymore what are they going to do they can't increase taxes they consequent public sector pensions they conned raise the retirement age very reasonably at least in any time to do anything useful they can't borrow any more money because everybody's out of monopoly money and everybody's lending to everybody else and so the system is quite good and is going to go down it's just my hope that with communication like this we can replace it with something humane and peaceful and voluntary rather than hierarchical institutional and coercive right now let's talk a little bit about solutions there and the three minutes or so we have left you're saying that to paraphrase that there are some possible humane solutions

that can take on this entrenched kleptocracy that has basically destroyed capitalism and all the institutions associated with it please expand on this so you say i've got two minutes to soft world's problems i'm on a minute ok well what i would say max is that we need a revolution and thinking and the revolution in thinking a codes something that i call the gun in the room the state is an agency of coercion the state prints money which is called counterfeiting in the free market and will throw you in jail if you try to create a competitive county if you try to use gold as a regular currency or search for anything that has intrinsic value the government will throw you in jail the government takes money. for through taxation the government steals from the future through national debts the government uses for us to impose its will on everyone as long as we view the government as some semi paternal benevolent agency that is there to help and protect us we're going to keep running to its for solutions until and unless we can see that the government is an

agency of violence that the government points guns at people to get things done and so we can see what i call the gun in the room we will not be able to put down the gun in the room and begin to explore voluntary and peaceful ways of having currency's voluntary and peaceful ways of having banking systems voluntary and peaceful ways of helping those who are in need the poor the sick the old until and unless we can see the violence inherent in the system that we live under we will not be able to put down that down and begin to go shooting like civilized human beings about how we're going to solve social problems and stop attempting to possible laws and regulations which throw people in jail which steal money from people violence will never solve problems violence will only and forever profit the few at the expense of the many and soon to solve things in the present by creating more problems down the road so until we can see the gun in the room and put it down we are simply things are going to get worse and worse and worse until we let go of our addiction to violence in solving problems which will never ever solve problems at all all right let's let's talk about one word and this massive social contract

equation the word is incentive the reason you've got massive violence and the reason you've got financial turmoil and price dislocation because incentives have been skewed there was a time when actions of merit were enough of an incentive to get people to do productive things in the society today if you go down to wall street the incentive is to simply make as much money as possible even if it causes incredible social harm as we say down with the goldman sachs and j.p. morgan they have an incentive to make a. and they don't care if they destroy america doing so but if in fact we're going to reform the entire system what incentive can be. dangled as the carrot in front of the entrepreneurs and the folks are going to actually get up at five in

the morning and do something productive what is going to be the incentive because obviously the current system of incentives of just pure cash fail so what can we incentivize folks with we need to chase money out of the stock market in other words we need to have governments we need to stop governments from fueling and funneling all of this money in the stock market because the more money that there is charging around in the stock market the more incentive there is for people to do short term gains to to lie about things to manipulate things to avoid long term investments to to pump things up and so we need to have the government stop forcing people to invest in the stock market through after one k. plans through through tax incentives through capital gains incentives we need to get money out of the stock market because the more money there is in the stock market the more you fuel speculation rather than rational investment and the more the stock market goes insane and the more c.e.o.'s a focus on short term gains rather than long term gains that is the only solution ok stefan molyneux thanks so much for being on the kaiser report thank you max and

that's going to do it for this edition of the kaiser report i want to thank my guests stefan molyneux and the stacy head bear if you'd like to send me an email please do so at kaiser report r t t v are you until next time this is nice guys are saying bye.