news today violence is once again flared up. these are the images the world has been seeing from the streets of canada. giant corporations rule the day. the back you're with r.c. here's a reminder of the top stories the finish very speaking out against one of the world's most wanted terrorists and these countries tolerance of extremists is questioned by police volley in our two reports you have a laurie has been a long time critic of yahoo mars is behind and also naturally an airport bombings and these mouthpiece and a website called the cut cost center. the anger of libyan rebels was nails tactics in the country grows together with

a number of civilian casualties opposition leaders have laughed out of the alliance for not arming down and failing to properly respond to put off these offensives. and that stricken portugal has finally asked the e.u. for a bailout a move many predicted was only a matter of time this comes as a fresh blow to europe's economy still struggling after already bailing out ireland and greece. so they have lines now that's kaiser and his co-host ace herbert look at the scales behind a financial news headlines and explore the murky links between banking and the drugs trade because the report is next in our city.

styes or this is the kaiser report you know a lot of people say love makes the world go round but that's false and facts what makes the world go round is cocaine so if there ever is a yes we're going to talk some torpedoes of truth today because it turns out that much of what we think is a rated or eight listed is actually collateralized by a whole bunch of class a. first we're going to talk about charlie sheen's detroit disaster walk out for the torpedo of truth or as one gentleman on you to put it charlie sheen and destroy torpedo. but that's quite a review well charlie sheen is the embodiment of the american dream he thinks he's winning he's really losing that's the key isn't it there's a delusion out there there's

a thought process that goes in the mind of the collective unconscious that everybody in the u.s. is winning but in fact if you look at some of the numbers and you look at how they're doing competitively around the world they're actually losing and like charlie sheen many americans have lost their job like charlie sheen many america has gone reality t.v. and make fools of themselves and they're no winning no no no they are losing well charlie sheen was the highest paid actor in all of hollywood just as on wall street warren buffett was the highest paid fund manager forget david sokol is the f.c.c. about to tell charlie monger to suck it in and i remember we covered the story charlie munger is warren buffett's right hand man and now david sokol who is supposed to be the heir apparent to warren buffett had to resign after it turned out that he could have been front runner insider. trading on lubrizol which he bought shares in his company prior to convincing warren buffett to buy huge chunk

of it well david sokol appeared on c.n.n. b.b.c. and said i don't believe i did anything wrong charlie monger by my own three percent of b. y. b. before he asked me to look at it for now this is that chinese are manufacturing of electric cars that charlie munger apparently owned before he convinced warren buffett to buy and it's sad because warren buffett was really the last man in a finance in america that had any moral authority whatsoever the oracle of omaha and he was constantly referenced as the quiet a studious graham following a good guy who would come in and see goldman sachs or before that it was solomon brothers and it turns out he's just a conniving backstabbing insider trading market manipulating schmock like dick sold or jamie diamond or lloyd blankfein or any of the other crux of wall street the

fact that he's an omaha doesn't make him any less of a wall street crook and charlie monger that guy needs to to excuse himself from the public forum and just disappear for a while because he is a total embarrassment i don't care how old the guy is they put on your depends and get out of dodge because your back your stinking up the joint charlie munger get out of here david sokol thinks that he will be able to get away with the same crimes that a guy like charlie monger can but i think remember there longly apply selectively to certain people some guys are just totally exempt from them and you see this in this following headline max how a big u.s. bank laundered billions for mexico's murderous drug gangs so this is the guardian news and they've done a deep investigation into the story that we've covered before which is what bank and they were. were found to have laundered three hundred seventy eight billion

dollars or thirty percent of mexico's g.d.p. in this time of drug money the cocaine of cocaine yes three hundred seventy eight billion dollars three hundred seventy billion dollars loan it's what cobia which of course now is owned by warren buffett's company berkshire hathaway. and of course you start talking about that either and it's a huge part of the mexican g.d.p. thing and the bank paid a fine well it's three hundred seventy billion in money laundering through the cost us it can be zero and they paid one hundred ten million dollars fine or less than two percent of one year's profits from markovian rocco via is now owned by wells fargo warren buffett and six point five percent of it but from this article there's a very interesting point that i want to note that relates to this whole financial catastrophe first of all our walk over us started really getting involved in these costs can be zero in two thousand and four just went to the violence really started

getting extreme and the mexican drug wars in april and may of two thousand and seven three years later were cobia as a result of increasing interest in pressure from the u.s. attorney general's office began to close its relationship with some of the costs as they come you know and then in july of two thousand and seven all of our code years remaining ten mexican cosseted cardio clients operating through london suddenly stopped july two thousand and seven what happened to all guess that two thousand and seven the world credit crunch the world credit crunch began so what we see here is that the good lord all banking liquidity is funded from the mexican drug cartels when somebody decided to go after them they withdrew their liquid cash because remember the global economy it's all credit and paper money going to actually no cash except for the drug money they were they took

the drug money off the market and they crashed the global economy there is a bear stearns went bankrupt the reason lehman brothers went bankrupt is because a mexican drug cartel withdrew their cash from the market as a protest against the investigation in other words so. well cove year if i'm following this correctly they had to pay a fine no further investigation was pursued presumably because if they want to after this story deeper the mexican drug cartel would threaten to withdraw the money again and throw the global economy back into total standstill well i think they learned their lesson because let's go on to the next headline the bank run we knew so little about this is from the new york times gretchen morgenson and she looked at the federal reserve freedom of information documents that were released only last week this is based on the bloomberg news efforts to force the fed

to release information that who they were loaning money to at the fed's discount window and it turns out according to gretchen morgenson and august two thousand and seven as world financial markets were seizing up to mastic and foreign banks began lining up for cash from the federal reserve bank of new york that august twentieth commerce bank of germany borrow three hundred fifty million at the fed discount window two days later citi group j.p. morgan chase bank of america and walk each received five hundred million dollars now banks only go to the discount window when they're in serious crisis and they're facing a liquidity crunch that's began gretchen morgenson says the bank run that set off the financial crisis of two thousand and eight so in retrospect it was set off by mexican drug gangs the ending of the money laundering via the banks without that access to liquid cash they froze up because it turns out it appears that drug

money was the only cash in the system americans don't have jobs nobody we only have debt brits only have debt there is no cash there's no liquidity there's only crime all right so we covered the story at the time and we've certainly talked about this and we suspect it and we said that the crash of two thousand. thousand and eight the only way that the wheels of global banking system started turning again was that the money was released by the direct mexican drug lords but what we're saying today is that the reason why the crisis happened to begin with exactly yeah was that with that with the withholding of the cash and i remember let me tell you something stacey i remember just very vividly when i was working on was the 1980's every friday we should have cocktails on park avenue and watch this parade of limousines travel down park avenue into the basement of citibank everyone knew this was money that was being loaded by citibank from drug money this was an open secret nobody got out of this so i'm glad to see now twenty at least twenty twenty five

years later people begin to understand that the global finance community the global banking system runs entirely on cocaine money so when they say well why is the war on drugs failing because they need the cash to run the banks why is the drug problem so rampant around the world because bankers need that money to pay their bonuses the bankers when we say bankers are terrorists they kill people and they have the moral equivalency of a mexican drug lord lop in the head of a baby to support their crimes and they get that's what we mean they're there they're the same those same two faces of the same kool-aid they're terrorists blancpain dine in owes a member of drug lord they're all terrorists they all revolve around cocaine and money laundering and we now we know unequivocal we based on the gretchen morgenson report and others what do you bank of course warren buffet's around volatile that who knows what charlie munger is had it is a guy must be a horse after time up until july two thousand and seven when money was.

circulating through the banking system from a class a drug dealing those c.d.o. backed by would be a bank j.p. morgan bank of america all these other banks that went following month to the fed prior to that their c.e.o.'s may have been a rated following that all the downgrades happened now we first reported on this in two thousand and eight when antonia maria kosta then head of the united nations office on drugs and crime said he had evidence to suggest that proceeds from drugs and crime were the only liquid investment capital available to banks on the brink of collapse he said quote interbank loans were funded by money that originated from the drugs trade there were signs that some banks were rescued that way but and again there's another aspect to why do analysts give these studios a rating of aaa what is moody's s. and p. fitch give what is obviously garbage

a aaa rating isn't it clear that they're high on cocaine well it clear the people of moody's executives of moody's pichon and. t. are need to be in rehab immediately because they're taking massive quantities of cocaine to support their delusion of a max what it suggests thing now that while cobia has not been put in trouble nobody's there's no criminal sentence there's nothing but a tiny tiny tiny tiny minute little fine like pocket change they're saying it's aaa rated now because class a drugs are once again backing up the collateral that were often assets were selling i guess this is again why the federal reserve doesn't want an audit because if you open up at all it's their preferred whether it's the fed in new york of the one in washington you're going to find pablo escobar sniffing twenty tons of blow yet he was sniffing around the federal reserve is like don't close the reserve because you got. charlie sheen type nostril.

all right. thanks so much for the journalists. on the cocaine trade mark colvin. thank you max well we'll be coming back with a lot more right after this so don't go away. hungry for the food we've got to eat first the biggest issues get a human voice ceased to face with the news makers on the hot seat. welcome back to the concert for time now to go to upstate new york and talk with author and blogger james howard kunstler james welcome back to the kaiser report i

meant it's nice to be with you now i believe you have a phrase entropy made visible all that's not all about you know a trape is that force in nature that drives us towards disorder and destruction it's the second law of thermodynamics and you know what it basically means is that things run. you know your coffee cup never warms oh more it always just cools off you know people don't go in the direction of being younger they go in the direction of being older and passing away you know things don't get better when you use them they break better and i guess just also kind of play and say what we're saying the lonely what the focus shima powerplant destruction there's been a collapse and this just in time supply chain inventory methodology which when you take what you take away one piece and entropy ensues and things suddenly get ugly

which it is that does not fit in yes i think you know entropy is really the reason why things break there in the world but i i.v. special pet theory about a pair of these days i think they're going to be golden before i think they're going to at some point in the year or two ahead they're going to decide you know we've had the industrial adventure and we just can't do it anymore because we have to import over ninety five percent of our hydrocarbon. fuels of energy and we really are going to be able to do that so let's go back to the eighteenth century i think that's going to happen over there i know it's kind of an out of the box idea but there you have it both an interesting thought i may have talked about the nischelle a lot about what we call neal feudalism where you've got modern societies breaking down in the past the emergence of a cup soccer see who are pulling up the drawbridge you know all the assets are

inside the club top or seen anyone else is left outside of the in the wilderness so applied to japan as a hall is there enough of a vestige of society there to pick up on and i no i don't not an expert in japanese culture but it seems like they have clung to many of their medieval traditions is they're just again thinking out the boxes are enough of a vestige they're going to build out could they conceivably go this in this direction james howard kunstler well i don't think we really know they do have a very deep and fine culture. and it was kind of blasted away by this two hundred year venture less than two hundred euro which are industrialism on the really sure that the vitreous anymore you know one of the things speaking of feudalism that i do believe we're going to see is they're going to be a lot of desperate people in the industrial nations who are you know really can't feed their families or to make as much money as they did before or are in some way

or other finding themselves in desperate trouble and i think what we will see is that they will sell their allegiance to some authority or person or group you know in order to have. security for food shelter and the basic necessities for a wife and and that's the essence of feudalism when you're selling your allegiance to somebody for security or share i remember i used to live in a in the south of france a town called hill from the scenario and this town got started something like eight hundred years ago by a lie. i'll call a pirate of arriving and selling people security saying let me pay a stipend to me every heir and i'll protect you from any forces that come about so you see a return to this type of model where broken down locally so instead of let's say the us being the world's global protectorate and extracting stipends from the world you know the world has to pay its annual tribute to america in one form or another

to keep them safe as the us collapses the model is broken down and we see more of a medieval model merged but let me ask you this about japan for a second the atomic energy industry the plants and japan there used to essentially boil water and that's what that's what that all atomic energy configuration is all about. right now in japan like iceland is sitting on huge geothermal resources i read somewhere recently that the geothermal resources could do everything supplies much power as the atomic energy industry can have you heard about this is that true is it practical what are your thoughts on that there's a question here is located on the real fire there part of the pacific or there's a lot of volcanic activity and go a lot of earthquake activity would think that a lot of people don't understand about that kind of energy is that you could

actually run it down in a local sweet spot we also don't know what happens when you sink a lotta kuyt into these fractures in. places where the the crest of the earth is disturbed and you know if you need me that you can actually disturb it more by doing it ok imagine sticking pipes into the ground and not having a great idea how that how it all works now to stop radiation from leaking from the fukushima plant into the sea tepco has deployed a few kilos of diaper absorbent now. reminds me of the cough balls thrown into the deepwater horizon well during i can pass a thing that b.p. catastrophe what are your thoughts on these again returning to medieval ism and these primitive methods i'm responding to these high tech catastrophes people will be able to seem to do with the candidate you know the when people are desperate they'll do strange and desperate things so a sense of privacy you know they just can't you know sop up that radioactive liquid

or keep it from going into the sea or getting into that room so you know they're doing with the care or the three good pins in there yeah they're throwing diapers and garbage and whatever they can get their hands on like they did you know that the famous junk shot of the deep water thrill so here are it's very asymmetric and that's why they come up with these high tech brilliant multi controlling dollar skiing's to do deep water drilling or have a ton of energy plan of the ring of fire but nobody they are invading iraq for that matter but there's no contingency plan and anything goes wrong everyone's got their thumb up their strength training and they're saying look we never thought you could possibly go wrong let's toss in garbage out it i mean it was a mentality that where were these politicians and engineers i want to so seen with this kid seem to ever imagine that anything they ever do fails in race is kind of a comical species you know sometimes things go work out for us so we're we like to think magically that everything is going to work us forward did you happen to see

mr obama's energy speech this week give me the highlights another example of our absolute inability to tell the truth to ourselves you know we just are just stuck in credible magical thinking that you know that there are huge undiscovered unexplored areas of north america that we're going to get huge amounts of oil out of it's complete nonsense and by the way larry kudlow got on t.v. last week and said we have one hundred years worth of shell shale gas and excuse me three hundred years of. shell gas and president obama said we have a hundred years of shell gas and both of those statements are completely untrue we have probably about four to six years worth of shale gas energy at the rate that we use it and maybe twelve years if you include all of the natural gas of any kind that we drill in north america you know we have these crazy ideas that we're going to run an electric car fleet well here's an interesting thing let's say by some

miracle we ripped out and all electric car fleet one hundred ten million electric cars in the usa and that's really optimistic we run over two hundred million cars ok so what do you think is going to be the political shot if only ten million people get to drive and all the rest of them are paying through the nose for gasoline or katie even afford to own a car do you think they'll be any political repercussions of that because i do. these are the kinds of things we're not even thinking about well barack obama is probably and sound to me to charlie sheen of presidents and he's crap he's great on twitter he's got a great twitter following but when it comes to the levering easy task if a guy so and you were recently quoted as saying that you believe that industrial farming will soon and ok talk about the soul bit by industrial farming i mean what we take to be the normal way of farming in america which is you know

a huge acreage is with giant machines a lot of diesel fuel a lot of hydrocarbon based soil amendments herbicides because it's fertilizers. you know we're going to get to a point where we're going to have trouble carrying that on and you know there's another part of the industrial farming picture that we don't think about at all there's another main thing that we use and that's capital you know it takes a lot of borrowed money to run a big corn operation in the midwest. and we're running out of capital and the reason we're running out of capital is because there's a huge amount of borrowed money out there or credit or debt that isn't being paid back and as that money is not. the money vanishes from the system and there's less and less money out there for people to. borrow to rather forums or even to do other things like buy cars who are buying houses or thirty year mortgages so we're facing

a tremendous capital sure that's every bit as severe as there is a problem and you know i don't really don't think we understand how it fits into the picture all right we're got about a minute left i want to talk about this a little bit more because it's very confusing for a lot of people because what you're describing is deflation and what you're describing is what happens when credit evaporates when when the ability to roll credit over evaporates and the credit simply disappears and you have deflation which is what's happening in the real estate market which is what's driving barack obama i'm sorry ben bernanke to continue his quantitative easing and it's quantitative easing one two three and four but no matter how much of this credit he expands it doesn't seem to be enough to cover the black hole of debt that's emerging and the net result is deflation but at the same time you have rising

energy and precious metals prices which people point to and say aha that's inflation and the disconnect comes between having a system that's thrown on a gold standard where you could have inflation against something like gold at a system that's purely thea money based where you have no collateral whatsoever at underlying this in this economy so we end up with what i think you would describe i know it is you know you've described peak oil and they are talking about peak credit and these two things are coterminous correct that's kind of the point is it not james howard kunstler yeah and everything. there are two things that are going on right now with with the debt situation one is that we've used so many accounting tricks to hide the losses and hide the fact that the certificates in the vaults of the federal reserve and the big banks are worthless that we can't even determine what debt is not being paid back you know it's just not being recorded and the

other thing is that you know as a general principle when you introduce. distortions into a system you either perverse producing perverse behavior in that system so right now you know the curse behavior is that the deflation just isn't being allowed to show up and you know we're seeing these distortions like distortions in commodity prices and things like that but you know as this works out i think that we're going to see a whole lot more inflation and what that really boils down to is that nobody has any money when you have deflation if you get into a hyperinflation event which tends to be a very sudden kind of event that happens very quickly because people start spending money as best as they get it. but that's having a lot of money that just isn't worth anything so you can have a lot of money that's worthless or you could have no money but either way you're broke ok james howard kunstler thanks so much again for being on the kaiser report

it's nice to be here by remote control fantastic and that's going to do it for this edition of the kaiser report with me max kaiser and stacey however i want to thank my guests james howard kunstler if you want to send me an e-mail please this out at kaiser report at r t t v are you until next time this is max kaiser saying off. early. i'm.