the low level street derivatives dealers why not put the crime lords like the management of society generale in jale those are the guys that are counterfeiting bonds those are the guys who are engaged in a massive global money laundering derivatives dealing counterfeiting schemes the big fish got away again. shucking well speaking of influence centers of influence new york city wall street the devil's den home of the devil's currency the new york federal reserve bank of the u.s. dollar is seeing today a visitor stacey herbert welcome to the cars a report. ranks kaiser i'm here in new york you can hear the noise behind me i'm actually out here in the skyline of new york so those noises you hear you'll hear the train every once in a while this is the real thing you mentioned wall street and that's my first

headline here max wall street sees world economy decoupling from us and that's why i'm here because i see here that the u.s. has actually decoupled from the first world everywhere you go from my flight here are american you know big american airline it ran out of fuel on the flight here so we had to stop in the arctic for refueling you come into j.f.k. you take a taxi which is like literally held together by a wire you come into new york city and it's possible worlds and ramshackle and then you arrive in new york city and it's even more ramshackle yeah well that's the information we're getting is that the u.s. is slipping and sliding down the slippery slope of decay and the rest of the world is moving on the decoupling investment strategy seems to be working for those who are dumping the u.s. dollar my god the u.s.

dollar is puking up its guts right now and it looks trading lower than they poop i never heard of that but speaking of the complicating there is this headline super rich investors buy gold by ton so this is according to u.b.s. executive joseph the world's wealthiest people are responding to economic worries by buying. thousands of ounces of gold and sometimes by the ton including stayed there from u.b.s. said we had a clear example of a couple buying over a ton of gold and carrying it to another place at today's prices that shipment would be worth over forty two million dollars well there i don't want to say anything but. when you come back i have a ton of gold waiting for you it's only about this big actually a ton of gold that's about seventeen square cubic inches remarkably you know it's pretty bright actually next to the refrigerator nicely and you know you talked

about jerome kerviel and i was here in new york in my hotel room last night the news was talking about this long shore men were involved in this cocaine deal but they also were involved in a pump and dump scheme and where they defrauded investors of about three million dollars and using facebook and twitter and things like this pumping penny shares so three million dollars and the news program where the hosts were saying that the attorney general is shocked at this and they think if these longshoreman could be so immoral it's a danger to our national security that they're so corruptible for three million dollars max. well it's about time the longshoreman figured out how to make really serious money instead of shaking down candy stores and rigging you know government contracts here's a way to make some real money join citigroup j.p. morgan goldman sachs manipulate the markets do your pumping and dumping on the on the new york stock exchange and the over the counter exchange i'm sure the

longshoreman's union will get involved in high frequency trading soon which is just siphoning cash from the exchange and pocketing that wealth and calling it make it go market the exact same defensive bernie made up is is the exact same defense that lloyd blankfein uses over there goldman sachs to defend his pilfering his wholesale larceny well even the news so you know condemning these long shots. and for the three million dollar theft fraud i look at the front page of the wall street journal today central banks open spigot that's fraud that's fraud that's defrauding the population at large well what does that mean it means that the central banks are taking from the balance sheet all of the bad debts tied to all of the fraudulent mortgages paper you know the huge scandal j.p. morgan underwriting tens of thousands of fraudulent mortgage claims and all these other banks underwriting thousands tens of thousands of bogus mortgages contracts instead of fessing up and having to deal with that on the bank's balance sheet

they're giving that to the fed in exchange for fresh treasury bells then the fed goes to congress they put a gun to the american people said and say here's some nice austerity measures to go pay for j.p. morgan's christmas bonus it's a it's it makes the longshoremen is perfect that you know the longshoremen union is finally getting involved in the scams of wall street because there have they have a unique skill set in racketeering led breaking up you saw the story about one of j.p. morgan's debt collector showed up at a woman's house stuck in through the window and basically she had a call now. oh my god well you know what speaking of these guys i mean hopefully they will be coming for me because i when i bought my plane ticket i had to give a us address and i gave my mother's address and by the time i arrived at my mother's house there was a pre-approved credit card waiting for me of course you know they want everyone to

get into deeper debt that's the business model of america casino good leg obama is the warden of a casino go speaking of this fraud as well i also you know just some of my observations here i met i saw my uncle yesterday for dinner and he was talking about his investment of my. one of these big banks called him and he said he has no idea what the heck is up with the markets because he said he's never seen anything like it something's dodgy it's not right and i said to him yes it's the central bank it's open spigot there it's all there fraud well it's as we've been reporting on the show stacy for a number of months now. people don't understand the role of the gold vigilantes and i saw something on business insider yesterday about the gold vigilantes these are hedge funds that are giving the global financial system cardiac arrest by forcing

comix and other places to give them physical delivery of gold this of course is causing gold to have fresh new highs and silver as well and anybody who's in paper money right now is starting to feel really sick inside their intestines and they're spewing paper out of every orifice as fast as they can and they're trying to convert that speer you into gold as fast as they can and the result is paper bad precious metals good you know the other observation here so we were approaching these midterm elections and it's their nonstop political ads going on and basically every ad runs as such my opponent is a fraud a scumbag and a liar but nobody none of the ads are talking about the war the deficit for real they they they use the phrase big government but nobody's talking about any of the real things they're not talking about the dollar they're not talking about gold being up into the thirteen hundreds heading towards fourteen hundred well i mean i

can run for office in america and get elected just guaranteeing everyone free diapers because they're all babies you know this a country of infant teil idiots who all they want is free milk entitlements free subsidies from the government free bailouts from the government free diapers and they want the rest of the world to respect their you know the spew coming out of their orifice as something other than spew and everyone saying america i drop dead obama i'm told well you know we were talking about the decoupling going on and it's wall street saying there now it's goldman sachs and j.p. morgan now saying oh the u.s. . the rest of the world is decoupling from the u.s. so. let's look at below the j.p. morgans of goldman sachs the guys who were bailed out by the us taxpayer and you see government propped up personal incomes in august so the news was all like excited last week because it's personal income rose by point five percent in august

well it turns out it was that one off of the unemployment benefits twenty six point four billion member they withheld it for a few months and now they've paid off the back benefits and now the government share of personal income has crept further into record territory at just over thirty percent right so the government is becoming a kin to what we saw in the soviet era russia where the government is basically the biggest employer the economics are to manage control by a central committee the federal reserve bank the export is military weaponry there is no more innovation there's no more entrepreneurial ism it's just a state a state run government and a bunch of fat slobs in america looking for a free handout either their welfare bums on wall street like lloyd blankfein and jamie diamond or their warfare or bombs in the pentagon looking for obama to drop

a bomb somewhere max i mean speaking of sort of soviet style baghdad bob saying this notion that there's a war on terror i have to tell you walking around new york city the day of the guy being found guilty of the times square attempted bomber getting life well. there are garbage cans everywhere when i went to penn station hundreds of people standing in front of the departure board and there's a giant garbage can right in the middle of them metal metallic you can't see through it and who knows that it's doesn't seem to me like they're taking it seriously that it's a genuine. attempt to mitigate the possible situation of you know a terrorist bombing. people. or no work for the government and there's seventeen intelligence agents are hiring all these government employees every time they want over time they hit the panic button and the taxpayers got a forked out more overtime they're the terror threat exists eighty five broad

street that's where goldman sachs's is only was shutting them down no so don't come crying to me about your imagined terrorist threats who nobody noticed is stays arab or there's no reason for the terrorist to hate america after nine eleven because after the after nine eleven it's finished there's nothing left to destroy they destroyed themselves who cares anymore their dog who is you who waste their time with sacking a dead person they're dead who cares and one final story here max and speaking of all these bankers there's the button what gathering in new york twenty sixth of october maybe i'll come back without all these honchos head honchos central bankers everybody's going to be there and on five pm on the second day at the town hall they have a gathering about reinventing global finance and just so you see what they're thinking there to discuss the impact the negative media attention has had on the

financial industry yeah i remember back in the eighteenth century the british were concerned about the negative press from the colonials in the thirteen colonies of america what what should we do about all this negative press that the colonies are giving us the british empire you know the people in america have got to revolt now or forget the whole experiment that was america you gave back your declaration of independence you gave back their constitution they did back your freedoms for what free donuts actually had some this morning. what else you do where you are for fun if you did you go to a broadway show now i went out with the guys from joe wiesenthal from a business insider with a no list his friend has his analyst is. tala just on ly sure you're going to have to ask is there reason you want to know about joan wiesenthal's product ologist boy that sounds like a fun time working i booked my flight to new york ok stay serwer thanks again for being on the cards the report thank you x.

i'll see you soon all right that does it for this half of the show when we come back more about joe wiesenthal's project ologist and a special guest so don't go away. for the feast we've got to. the biggest issues get a human voice ceased to face with the news makers. welcome back to the kaiser report well we're going to stay in new york city we're going to talk with barry ritholtz sees the author blogger analyst marries the author of bailout nation and his big picture blog can be found it really holds dot com barry welcome to the kaiser report thanks for having me max all right you wrote something on your blog very interesting he said it's no longer about right versus left it's about really sounds to me like class war talk a little bit about that and some of the recent things you've been writing about you

know there in the united states we have a two party system and the basic political spectrum and the argument about everything from health care to financial regulatory reform to foreclosures is this left right debate but when you look at how the two parties have both sucked up to big corporate interests you realize it's sort of tweedle dum and tweedle dee there's not a huge difference especially when we look at how much money is sloshing around the senate and the house of representatives from big corporate donors the left right to economy might have been more relevant fifty or one hundred years ago now it's pretty much you on one side and big banks. big oil big corporations on another and remember i say that with my day job managing assets and trying to decide which of these companies to own for our clients right so talk

a little bit about you've noticed actually if you look at congress the way people sit in congress as indicative of the way that this is being played out and as you point out barry you're a money manager you're picking stocks and assets to manage for your clients and of course the objective is to maximize return on investment and but recently what i'm hearing from you and from other folks out there is that the politics is starting to get a little bit too ugly and it's hard to ignore i mean you've got a fiduciary responsibility to maximize profits but you've also at some point got a responsibility as a citizen how do you juggle the two the twin mandate if you will the fiduciary obligation is to identify risk and reward it's not just about maximizing profit it's how much return can you get for a certain amount of risk you could really hit a home run by taking the deed to your house to vegas and putting it on red and spinning the wheel and if it comes up red hey you've doubled their asset but the risk the downside is if it doesn't so we're not just looking to maximize profit

we're looking to get a very good risk adjusted return a couple of years ago when it was readily clear to us that housing had become wildly extended that the financialization of the american economy had reached levels that were totally unsustainable we moved away from anything involving investment houses banks home builders mortgage underwriters we thought the sector was really setting up to be a disaster which is when we started writing about what a backwards economy the u.s. was having instead of having job creation lead to consumer spending and home purchases it was the opposite low rates cause home prices. amongst other factors that go through the roof and people were living off of that so that's a case where we looked at these stocks and that included names like a.i.g. and lehman and fannie brothers which we very publicly shorted and said stay away

from these the flip side of that is you know when a certain stock becomes cheap enough and it shows up in our screens and it shows up in our. system we turn around and we end up owning companies we may not necessarily like and a good example of that is citi group one it's in the low three three dollars and change it's cheap enough it's attractive enough and we know that the federal government is not going to let them go out of business the fiduciary obligation forces us to have a what's called a rental position in it all right so the case is citibank you're running my citibank it's almost as a quiet kind of was still blowing i mean you're you're making the observation that here's a bank that's getting tons and tons of bailout money even though there but underlying business model is really doing more destruction to the underlying banking system in the economy than helping but at some point as a trader you have to you know make your move but you are in effect putting that information out there have there if there was

a functioning congress they would take your information as somebody who has got a fantastic track record and i must also on your website i will mention one of the great things about your website is that it's very panoramic or interactive for example he did a piece a photo montage of all the banks as you can see out your window that we're getting ballot money but when we moved up we were in a building and we added some people we need more space so we moved up to the twenty fifth floor and as i'm walking around and looking out the windows out every window north south east west is a is a major bail out company there's the bear stearns building this citi group there's g.e. there's u.b.s. there's j.p. morgan and i know behind j.p. morgan is lehman brothers in the distance i. the mcgraw hill building which holds s. and p. the new bank of america building is do east from us and on one of the windows if we looked all the way downtown to the world trade center and you needed a binocular to do it you could see the merrill lynch building and we also have can

see christ will building which has nothing to do with chrysler other than the name but it was pretty pretty fascinating that we were right there in part in the word ground zero of bailouts the new york city economy has surprised people with how well it's done but throw a couple of hundred billion dollars at the headquarters of broken companies and that trickles down to the rest of the economy right now so they've got these enormous ballots that have gone these banks and lot of a lot of banks around in the in new york as you point out you can see them right out of you when now and as you point out it's it's horrible for the economy these bailouts because of this thing called moral hazard if these banks aren't yes aren't this you know huling to some kind of free market capitalist principle of america america tragic. the good do well and the and the bad get go out of business and they just keep getting ballad over and over again you end up with a really noncompetitive economy now the u.s.

is becoming that noncompetitive economy the rest of the world is pulling away the rest of it's also about this there used to be a lot of competition in the banking sector even amongst the giant banks now you have four big banks that are controlling you know two thirds of the deposits in the nation you know you go down the list of all the banks that have disappeared we had a robust competitive system and now thanks to the bailouts instead of quoting most of these giant debacle zat of business and you know i talk about citigroup i think citigroup and bank of america if they had an honest accounting of their books they're technically insolvent and what we've done instead of forcing banks to do what in the united states we have. two systems of resolving financial crisis one is kind of japanese like and the other is swedish like the swedish system is what the f.b.i. see does the federal depository insurance company that is

a clause government agency that's run by sheila bair and when a bank is insolvent the f.b.i. see steps in they guarantee all the deposits under i think it's a quarter million or half a million dollars now they fire the senior management they tell the shareholders we're sorry but your bank is insolvent you wiped out they take what's left there they find a buyer washington mutual's a great example i want to j.p. morgan for a couple of billion dollars and once the net of that leftover money is goes to the bondholders typically twenty thirty cents on the dollar so they lose a hefty chunk of their money again that's the penalty for lending money to an insolvent institution sweden did the same thing they essentially nationalized on a temporary basis all of their banks when they had their crisis nationalization is the wrong word it really should be called a prepackaged bankruptcy resolution they cleaned up the banks they threw out the lousy management they they sold off the debt for pennies on the dollar they

recapitalize the bank and they spun amounts of the world where they do it banks are supposed to do they make loans to businesses and people we didn't really go that way with our biggest banks instead we gave them enough cash so that they could get by we're allowing them to borrow from the fed and zero lend to the treasury by buying bonds at three percent and in a very japanese like fashion we will rehabilitate the banking systems balance sheet by allowing them to arbitrage between two different divisions of the government over five or ten years we couldn't just turn around it would be politically infeasible in the united states can totally unfeasible to say ok here's two hundred billion dollars recap are lies. balance sheets instead we need to do it slowly but surely we're going to penalize savers and we're going to do it for a decade we're about a third of the way through that process with a very wonted quite anshul sector that's how we're going to rehabilitate this

instead of going through that the way general motors did put them through prepackaged bankruptcy for some reason it's good enough for the auto companies but not good enough for banks we're going to do it very slowly painfully with all sorts of disruptions throughout the system right america very slyly of voided socialism by capitulating to fascism because now the corporations and the banks and the government are fused together in a way that's impenetrable by any democratic initiatives let's move on to something that's truly out remarkable you move on max i just have to tell you we do have socialism the united states but it's only for the very wealthy exactly because the very wealthy have chorused is come rather as welfare through bailouts or were fair they're constantly getting a bailout while it's all about the most shocking the tyndall of the week this whole four clue closure nightmare j.p. morgan other banks saying tens of thousands of four of these days are these these

documents were robo signed it's completely fallacious it's a huge scandal but yet congress suddenly within a day decided that they're lowering the standards for notarization this took one day to bail out the banks once again it's absolutely astonishing if you look at some of the really offensive agree just things that have took place the most outrageous is a guy who bought a house for cash no mortgage paid cash he was foreclosed on evicted from his house that is something that is a legal in possibility you cannot have that happen unless there is rampant fraud throughout the entire legal court and financial mortgage system so disloyal system from big. getting to end is just so over ridden with fraud illegality corruption that the whole system needs to be thoroughly looked at and rehabilitated as it exists today it's a third world nation it's

a banana republic i as an american i'm wholly embarrassed that this is going on in my country and i want to get into the fact that the rest of the world sees all this criminality masquerading as a business in america and it's decided to dump u.s. dollars and this will probably permanently screw the u.s. economy for fifty years time but we're going to have to discuss that on another time so thanks again for being on the cons the report thanks for having me neither is going to do for this edition of the kaiser report with me max kaiser and stacy herbert and i want to thank my guest barry ritholtz if you want to send me email please do so at kaiser reported r t t v dot ru until next time this is max kaiser saying.

mine. would be soon which brightened if you knew me about that song from phones to pressure these. stunts on t.v.

don't. cause you stop stories this hour russian explorer is in the arctic find a floating chunk of ice suitable as a base for a new manned drive to drifting i. intended. as part of a year long polar expedition tended to support country in it it's always reach regional. russian security forces killed two suspected masterminds of september's market lost in the deck of cards in the republican office a chair with three others arrested after a shootout to sources say the hunt for those involved in the north caucuses atrocity which killed nineteen is. and if you asked secretary of state hillary clinton business will grade pressing president boris tadic to open up

talks with the south declared independence breaker or public of course. because the headlines up next is the iowa show from our washington studios which today luke said to cleaning out the wall street mess and also whether president obama is on the side of the binds all the people. welcome the lower show will get the real headlines with none of the mersey work i mean live out of washington d.c. now today we're putting our attention on wall street as a new report shows the banks and investment firms are set to get bigger bonuses than ever meanwhile of course the rest of the country's living and the effects created by the recession and all the bank failure the wall street cost so we have to ask how is it the wall street is continuing to thrive while everyone else is suffering next whose side.