john howard had on australian t.v. and somebody did the right thing by trying to hit him with a couple issues. so the other major stories going on right now around the world political analyst stacey her max well here is the headline bankers cause credit crisis for kicks bankers blew up the financial system for the thrill of it according to one british academic in a new book in blood on the trading floor waste sacrifice and death and financial crises dr paul crossthwaite claims that his apropos logical studies of investors and traders found evidence of an element of masochistic satisfaction in running up losses now you've told me that this is what you experience as a broker on wall street that's right there is a sadomasochistic there's a masochistic element to dealing with the client some of them enjoy getting screwed you know roughed up by the broker and you don't see your best clients and in the

case of wall street bankers they try to find pension fund managers these are the best they've got huge pools of capital and some of them like to get beaten up they go to permissive on the weekend they like to get you know hedge funds calling up during the week to get them to lose billions of dollars because they're sick and this is what is coming out now this is a crisis just not about fraud so much it's about six psycho financial terrorism go to financial terrorists right here stacey that looks like lloyd blankfein to remax you know sly blankfein c.e.o. of goldman sachs is a financial terrorist so now since these guys have been proven to be very ill and psychologically addicted to losing people's money what's happening in the foreclosure fraud stacey is knowledge is coming out now that for example a three hundred thousand dollar mortgage that they foreclosed on they get paid like nine million dollars on a credit default swap because they're pathologically trying to kill people it's it's an extension it's a whole cost so. as

a whole cost perpetrator lloyd blankfein i sometimes think what we should do to him should we waterboard him how about waterboarding lloyd blankfein well let's look to the native american indian because this is dr paul crossthwaite in this book says that the modern credit crisis is the equivalent to the traditional native american practice of potlatch a ritual ceremony which the chiefs of rival tribes competed to destroy ever greater quantities of their own possessions as an expression of power and importance remember during the height of this crisis was when lloyd blankfein said he was doing god's work just suicide bankers or it's a weird cultural macho thing i can the can can destroy more than you can you know the psychology of these c.e.o.'s is the same as a child ripping the wings off flies but i'm not sure what you really do with lloyd blankfein here should we waterboard oh well why don't you put it out to the audience and ask them i'm thinking decapitation i'm thinking do competition well

let's look at what lloyd blankfein himself wants to do to the u.s. economy speaking of destroying your own wealth goldman the fed needs to print four trillion in new money reflect what four trillion that is print one point seven trillion last year just in march i think your mayo this year yes so they're arguing one of their analysts is arguing essentially that we need to create four trillion more in order to basically lower the cost of funds for them well this is all the central banks of the world lining up in a circular firing squad they're trying to assure mutual destruction by a race to the bottom to see who can destroy their own currency the fastest as an attempt to export and of course in america there is no export except for maybe poor now and doenitz well there's another suicide banker in america that's a citibank if you look at the. next headline oh this is an outrageous story you in

there listen to this story in the osama bin citibank suicide banker reveals trillions more in financial c4 ready to take out major american cities so this is of course ahead by written by yourself max but you're talking about richard cohen who is a former senior vice president and business chief underwriter with citi mortgage and he told the financial crisis inquiry committee that in mid two thousand and six i discovered that over sixty percent of these mortgages purchased and sold were defective because citi have given reps a warrants to the investors that the mortgages were not defective the investors could force city to repurchase many billions of dollars of these defective assets this situation represented a large potential risk to the shareholders of citi group but of course the shareholders of citi group are always say jump to the suicide bankers right and remember now i think majority of citigroup is owned by the american people seventy

five percent of it is and after richard bowen wrote this in a letter to robert rubin who was the head of citi group this guy richard bowen was fired and what's at citi do well apparently they increase the volume of defective mortgages they were selling to fannie mae and freddie mac. to eighty percent of all of their mortgages the martyrs they blow themselves up because they believe in this fundamentalist ideology of free market capitalism where the quicker and more whole aish asli you murder your fellow american and global citizen the bigger the payout the credit default swap and you would you still owe a lot of you know you didn't go out didn't go the way of bear stearns and lehman brothers and you know gee the spawn of the devil's. putrid she d.s. . leg is still active with the devils and lloyd blankfein to the room i'm sure. what do you think so i mean e-mail right now kaiser reported on t.v.

are you sure we want to bore or decapitate lloyd blankfein next wick next show based on the e-mails coming from you i want to go buy a box cutter ready for the decapitation i mean if it took down the twin towers it can certainly take down lloyd blankfein so some e-mail cards are reported r t t v dot ru next year we should bring in many macs thank you not even texan to do the waterboarding or the decapitation oh this is going to be so what is going on you know the g. twenty met this weekend they did nothing to sort out the banking crisis and now let's look in the u.k. where they're introducing massive austerity measures to finance the bailout four of the bankers cable looks to avoid confrontation as he sets out banking vision so this is the business secretary of the coalition government vince cable who made headlines around the world when he was able to identify all the fraud going on in what was happening during the credit crisis the the collapse of the markets and now

at once he's in power of course as happens all around the world and all of our western democracies i guess now he doesn't want to have any confrontation with the poor fragile bankers because they're very emotionally upset about you know people pointing out that their crime wave and it's very upsetting to them and well they might take down the whole system again if if you don't stop making fun of them the bankers might be absent is that right yeah but you know vince cable and the politicians and the government and the economists around the world tell the people that you french people are ridiculous for for resisting austerity for resisting paying for the bailout of the suicide bankers that you're the one that has the problem vince cable doesn't want to come from no he doesn't inskeep. big groups might not like my thought pick them from falling. the bankers money not pick this cable to come to their cotillion. oh vance you're not socially acceptable anymore

poor vince but the biggest confrontation of all is of course with the united states because the united states is where harboring all of the suicide bankers they're also printing up all the money for the suicide bankers and we saw all. right before the g twenty finance ministers met this past weekend germany says fed is headed wrong way with monetary easing so here you have in the u.s. timothy geithner in the congress you know alleging that we're going to say that china is the currency manipulator but here comes germany and says the u.s. is the currency manipulator this is german economy minister reiner brood earl he says excess of permanent money creation in my opinion is an indirect manipulation of an exchange rate so the us gets accused of the currency manipulation but that's right the us has a world reserve currency they're manipulating their currency by manipulating the current the interest rate so there was interest rates not

a free market function it's manipulated by the pull of bureau as it were the nazis that run the federal reserve bank with hank paulson as the himler of this current fascist takeover of america and germany is saying you know we've seen this before you can't let these criminal nazi types take over your economy just as it's a bad idea and of course americans are like words are free food stamps that you stole the money from the rest of the world just don't tell us how you get the money just give us the money well that happened to germany do the people don't want to know where the money came from they just one of the free food stamps they don't care where the government got the money they don't have the government killed people in afghanistan killed people in iraq they're going to bomb iran to steal the money from them they don't care this look the free money of the american people we don't care how we look at least tells us they're just killing they're committing war crimes or committing genocide for what so that these fact trog apply to the suburbs to take a little triangle down a wal-mart by chinese made toothpaste. the german economy minister was actually

talking not about interest rates but about money printing and the fed is expected to announce as you know goldman sachs is laying the groundwork for this was saying the fed should buy four trillion dollars and new quantitative easing new money printing you know goldman of course would say they would want for chilling because they get the commission goldman gets a commission on repackaging all the bad debt goldman's got this this longer about going this slush fund this this business of dealing in crooked coupons crooked currency crooked securities insider trading insider market manipulation high frequency trading which is a goldman sachs scheme to defraud the american public to defraud the world and steal billions of dollars and they themselves admitted this member that caught the program was trying to cross border and they said they can use it to manipulate markets goldens a self admitted larcenous to a leech parasite islam came black regulator during yes no crisis refer to goldman sachs and other banks collectively as parasites and like any parasite the parasite

wants it infects the host a whole starts believing that the parasite is doing good it's like that stockholm syndrome thing so you've got like geithner or obama obama's become who is a woman who got turned around by the seventies liberation army patty hearst obama's like the patty hearst of our day the senate he's gone down there but you know attacking folks with the machine gun given to them by the crooks on the federal reserve and he's saying these things he's doing good this guy is kind of shut down well that's all the time for we have on this part of the show stacy ever thanks again for being on the kaiser report thank you max don't go away much more state.

welcome back to the cause report time now to go to new york talk with reggie middleton of boom bust blog dot com reggie middleton welcome of the kaiser report thank you all right now you write in a blog that deserves your zero interest rate policy is literally starving j.p. morgan now this is the exact opposite of what most people would think explain that does it lowers the cost of capital to effectively zero if you lower the cost of capital to zero people don't respect the capital so you're not really making you

not really giving up the capital you simply loring the respect for the capital in the system. through j.p. morgan is not making any money on his interest bearing assets so everything that is invested in it has a much lower return the common belief is that j.p. morgan can borrow money at zero percent and then invest it at x.y.z. percent and they captured a spread that's free money but again this thing with the free j.p. morgan is not doing business because a capital is not respected and b. the economy's in adult terms so there's we know where for them do business if you look at their metrics all of their conventional traditional banking businesses have been on a down trend especially anything interesting lately anything related to the czar has been on downtrend for the entire year young people understand that for the saver and the pension fund holder out there if they're getting zero percent on their investments of course they. or starving to death and the assumption as you

point out is that the banks like j.p. morgan are in fact benefiting by this because they are borrowing and zero and investing at two or three or four percent making that spread but we are saying is that basically the j.p. morgans in the same boat as everybody else that they are literally starving themselves or burning the furniture to heat the house at some point that game is up and what happens j.p. morgan simply declares bankruptcy i mean what do they have to fall back on if they're bit basically committing suicide banking as i like to think of it j.p. morgan is a significant push in the fredric of this economic environment the u.s. so it. i think politically be very difficult for j.p. morgan to. declare bankruptcy never rule it out though because that's not what i do i look at things as they are not as i think they should be what's going that what's going to happen no matter what guarantee the bad assets a copy purge from the economy one way or the other that's going to happen now what's going to happen sometime in the future now j.p. morgan has a huge derivatives book we know this and you've done some work and looked at this

pretty closely how does their book look these days it's big j.p. morgan is the largest by far i have a cute graphic on my site that has the sovereign state of j.p. morgan where it has j.p. morgan with ninety six trillion dollars or so notion of the river of value and that outstrips everybody else when i say everybody else that's the entire world ninety six trillion notional value derivatives and people bandy about big numbers out there that the total derivatives books of all these banks are six hundred seventy trillion dollars and it's expanding is it contracting so what is that as a percentage of the total derivatives out there in the system there are a lot of technical director of guys who always comment you know notional value was a nominal number you can't really use it but notional value does give you an indication of counterparty risk in a so if you have ninety six trillion dollars of anything and you have it with another party you have ninety six dollars of risk with another party now if you

take the market value of the fair value of the market value of j.p. morgan's to rid of is much lower but that is still a multiple of a good twenty something times j.p. morgan's tangible equity so you know there's a significant amount leverage there and they still want to risk that two hundred twenty something trillion dollars worth of notional divider of exposure is spread around five banks five banks so there's absolutely no way in the world you know you can assume that these banks tonight hedge almost all the different exposure in the world with each other so if one banker. as down it's going to drag everybody else along with it because they simply borrowing the money from each other or borrowing value and risk from each other so j.p. morgan is going to say that the stock has a book value does anyone know what the book value is or is a we don't talk about book value anymore we just talk about a kind of a. conceptual algorithmic value if certain conditions exist i'm a stickler on these terms such as book value. just to give you

a quick overview of. how i look at things accountants in general they tend to make relatively poor investors because they. are business activity ok they don't count economic value so a lot of the measure of the value of something on the books you have to look at both the risk and the reward so if you look at book value but you don't adjust it to the risk that was taken to create that book value you. have a very incomplete picture of what's going on. with that being said where those just for risk or not just the risk would be economic value not a just a comic book value either way most people have no idea what j.p. morgan's book value is because they like not to pick on j.p. morgan almost all the other banks have never come clean with the true market value with their assets you know the assets have to be mark to market in order to get a true value the argument for the other side is well we don't want to market long

term assets to market because we intend on keeping on long term which is nonsense you know they're worth what they're worth right now and if you don't intend on selling them then you don't and that's understood but the value is what the value is so it's a misnomer to use that phrase book value as it applies to banks currently because none of them have any book value they have enterprises which are based on gaming the system and to that extent they're able to pay themselves bonuses but as an underlying viable business that does something constructive no there's nothing there let's move on to the foreclosure crisis and the mare america j.p. more. of course essential to this new crisis again fraud being their principal business tell us about what the foreclosure pipeline looks like for j.p. morgan so we get an idea of what their earnings might be or not be in a company with no book value three months down the road be aware when you use the term earnings again the using an accounting term. not to pick on you because all of well i don't. understand that in

a business model based primarily on fraud you need to have a separate nomenclature continue because most media and everybody else in the cells i was to use the kind of term earnings that's the view war from doing business that can be manipulated j.p. morgan and again not to pick on j.p. morgan and many of the other banks increase their earnings during the week quarter by releasing provisions and reserves for future and present risks. in my opinion that's a mistake the justification of doing it was that the credit metrics were improving margins but steadily but if you graph j.p. morgan's foreclosures versus j.p. morgan's delinquencies you see the lines start to whiten with the foreclosures lessening and the event which is increasing despite the fact that the link with these may be decreasing they're increasing significantly in relation to foreclosures what that means is that j.p. morgan is creating an extensive and increasing pipeline of bad assets that have to be gotten rid of foreclosure and any time foreclosures or slow or stop that

pipeline simply increases right so the the countdown to let's call tarp two the second ground extortion of congress by whoever is the treasury secretary at that time probably jamie diamond. is on that as on the table so how many more weeks or days or months before jamie diamond or the new treasury secretary geithner is gone by then will be in front of congress threatening congress once again. give us another few trillion dollars are we're going to you know essentially declare martial law in the united states how many more days and weeks before that is the case i don't know that's going to be a hard sell you would be a political genius to go pull that off in my opinion but i don't predict the future person in my opinion is you know to be a lot less expensive. to simply let the insolvent fail than it would be to tempt

tarp you keep talking about let alone let the bad credit collapse let the banks suffer the consequences look things fail i mean it sounds almost like you're living in america during of some kind of free market capitalism or something but we know that that's not the case anymore why is capitalism why is free market enterprise why is the market clearing mechanism in the price discovery mechanism the thing that built a country for one hundred fifty two hundred years why is that such an alien concept why are they fearing this is it just pure psych psychosis or are they just greedy well you have all of our cadets in command or in charge and they don't want to lose their position which is perfectly understandable i mean if you and all of the good chance that you probably wouldn't want market pricing market price clearly through the market as well because you may be displaced with that being the case it's going to happen over time because this. is too large so it's just a matter of how long it takes either you do a twenty year japanese and counting because japan is still sitting in the round of

q.e. or actually engaging in it or you do a much sharper cliff which will be much more painful but which will bring organic economic development and growth much quicker so it's just a matter of time and the. rate of descent and then sent the faster you descend the faster you ascend but you have all got the issue. i can almost guarantee that there's going to be some type of disruptive creation bodies' seemed to happen would bear stearns lehman brothers washington to have cetera the issue is the problems of two thousand and eight or the exact same problems. we have right now in the fourth quarter of two thousand and ten except for the fact that the government has almost perfected a lot of its liquidity injection methods measures and as i explained in illustrate a little earlier with j.p. morgan the liquidity injection measures stopped much of the fall but did absolutely nothing to cure the problem and the only way to cure the problem is the pricing the proper pricing of the assets of sitting on bank and real estate and other companies

down sheets so finally as we look ahead to this this announcement this quantitative easing announcement that's forthcoming so basically based on what you're saying here is that if the idea is to get rid of the oligarchs and to return to some economic. system that is at least nominally democratic that number should be as close to zero as possible is not a fair statement i don't believe in a totally free market system because it's very difficult to maintain these sets of control so i believe that there should be some safety net and that safety net and should support conventional traditional banking in other words everybody who has every joe six pack in grandmother who has the money and c.b.s. should have that amount protected same thing the pension funds etc that all the dogs some of them can even stand in positions if they're putin enough to stay in those positions from a financial perspective but no bailouts no safety nets for you know financial

corporate america you know you sink or swim on your own abilities with that being the case much though about the showing that they cannot remain in the deposition which is why the government came in and build everybody out to begin with but no the big man the little man the like on their own you know you have a big wave there in this remote droughns be just that simple it sounds you know i don't but i mean sounds like at the us having somebody else try to do that you're saying give the oligarchs a little bit of room you know the u.s. gave us all a bit long a little bit of room also in afghanistan. when that didn't work out too well either so i'm not sure if you give the oligarchs any any room but this is when this announcement comes out in terms of the quantitative easing we'll see how that plays out hope to have you back on but thanks for being on the kaiser report reggie middleton let me just one quick correction i'm not saying go across anymore room to give everybody else what do i get everybody gets that you said i'm in favor of it arcs having some power ok so you know it's not what everyone every every every

everybody gets the same five feet you know what if you could do five if you do with it all cogs don't pay less than five feet or more neither does but you middleton neither does max kaiser and who have survived the five he survives really does it does it well i mean that you're counting there in terms of accounting for all these people getting five feet and ending up with some being oligarchs and others not sounds like you've got some quantitative analysis from mit working there in the back room to come up with some algorithms to demonstrate how this is possible to create you know three hundred sixty degrees out of a twenty degree you know obtuse all right anyway we got to go with thanks for being on the kaiser report ok you're welcome and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert and i want to thank my guest reggie middleton if you want to send me an e-mail please do so at kaiser reported r t t v dot ru until next time this is nice guys are saying bye you know.

a fresh wave of strikes. but the majority of becoming targets the disruption to. parliament's approval anyway. as the country struggled with huge budget cuts the governments of the largest states becoming paying for the problems of smaller nations and call for the lisbon treaty. and the new rest of the f.b.i. sting fuels fears of homegrown terrorism in the u.s. and criticism the agency's entrapment to the catching of people. live from our studios here in central moscow this is thanks for joining us frances

seen another day of disruption and another crippling two hundred million euros loss for its finances the pension reform that people have been protesting against has already been rubber stamped and it seems the tide is now turning against the unions who've been paralyzing the country's economy katrina czar of. saving face the french trade unions are still taking people to the streets despite the fact that reform they're protesting against is a given still angry french citizens say the show must go on as ordinary persons look on drinking their coffee and mineral water members of trade unions and students continue taking to the streets just outside the french senate protesting a reform that is pretty much already guaranteed to take place they haven't even had a chance to learn the new slogans but it's not enough to stop them yourself either this is overheard we can strike. against the reform we have decided to mount resistant.