in the. summer check out the main international headlines for president obama to outline his policies for the troubled middle eastern major speech follows the introduction of new sanctions against syria but for the first time target the country's president. scotland is set to consider a break from the united kingdom in full independence polls show voters are still on shore whether they can go it alone. or the european union's main lender germany

loses patience with member states that received bailouts demanding strict austerity measures before they are offered any further any. other financial situation in europe as unstable as ever it's the whole monitor system itself that could be at stake relax a kaiser explains what's behind the top class report something. hi i'm max kaiser welcome to the guys are reports special in the same. club strauss is in the us a great people i go to inquire into the for.

the love of sports. yeah that's for a spring it stays here is their server well max this whole suicide banking crazy insane banking model is spreading to the entire world everybody is actually like a crazy banker headline reads south korean staged bomb blast to cash in on stocks and this guy obviously learned from hank paulson he was the best that this the whole story this south korean man staged two minor bomb attacks with homemade explosives in seoul last week in an attempt to cash in on stock investments by affecting market sentiment police said they said quote he invested fifty million won or forty six thousand dollars this month and said he believed bomb explosions will send stock markets following giving the concerns of terrorism

after osama bin laden's death well this is a huge issue this man has stumbled upon something very important markets are over leveraged markets are reflective of hundreds of trillions of dollars in leverage so yes a small thirty or forty thousand dollar bomb can. caused markets to crash because they're so highly leveraged by the professional hedge fund managers five hundred thousand dollars on nine eleven because of multi-trillion dollar collapse forty five thousand dollar investment there could cause a multi-billion dollar collapse this is not really this guy problem so much as the problem of the markets themselves they're all over leverage because of the fraud in the. the world but words robert zoellick this robert zoellick in the comics last count having a meeting at the world bank. i know. there's

another quote from the policeman in the situation which is important to. to address because he doesn't take it as seriously people don't take these flash crashes and hank paulson holden the american population hostage we see no intention of political terror here the policeman says the suspect was just trying to affect market sentiment but again let me emphasize that due to propaganda they have successfully delineated between financial terror and political terror this is been commingled into one global financial terrorist dominated global economy there is no political terror anymore there is no ideology there are no political parties there are no religions there are no country boundaries there's only the market leverage and events to make the prices go where you want them to go this guy is the hank

paulson of the retail side he is you know basically you know the equivalent of hank paulson going into a liquor store not going over but he's the same mindset that from the same mother there sprung from the same so many times semen. well so here it's not political terror it's just affecting my. that sentiment so let's look at the head politician of the world see if this is political terror or just affecting market segment let's look at those head politicians headline reads obama says u.s. default may unravel global finances so is this obama doing the same thing so he's trying to get the republicans or will scare the population into convincing republican politicians to vote for an increase in the debt ceiling not that it matters apparently that you even increase it technically right well if i had a blue and red balloons together would get the right color for obama to listen to

you could create the obama version of this yeah if you don't raise it to clear the postal over you have made poor made slaves there ok. go far enough obama is a fly actual terrorist just like dumb extra just like no no no the south korean police might say he's just trying to affect market sentiment it's not fair or right sentiment not prices they don't even understand that sentiment drives prices well so now that you have you know the president of the united states going in front of the people via face the nation program on c.b.s. and telling him you better the entire financial system is going to unravel unless you give us more debt well look at this headline our b.z. urges gold back zim dollar so this is the reserve bank of zimbabwe and their chief dr getting go know he is advocating for a gold backed zimbabwe dollar gideon gono yes well he made quite the stir when

he introduced the one hundred trillion dollars and bob way note they was right for inflation now they're the first into gold back r.c. and here's the thing according to game theory which of course drives the global economy in this highly leveraged cock the world if one country goes to the gold standard there's going to be a lot of money actually going into that currency it will force other countries to go into gold standard both rupees. hugo i remember once dr gono started printing madly before the hyperinflation that led to the hundred trillions of dollars on the central bank of zimbabwe's website they actually cited the u.s. fed policy and bank of england policy of quantitative easing that they said they were doing the same thing well their currency has now collapse and now they're saying ok well everybody is going to abandon the us dollar because we know because we copy them and look what happened to us so now we're going to he says quote zimbabwe is sitting on trillions worth of gold reserves and it is time we start thinking outside the box for our survival and prosperity is going to work i totally

recommend going to vegas i've been hoping that some country in fact does exactly this i thought china or india or brazil would be the first country to have the first mover advantage in this case first mover advantage is going to be huge because once you get to the gold standard people look around us we have currencies or like we're going to get a natural resource based currency older zimbabwe dollar on them and this is going to bring huge amounts of capital into zimbabwe in the make them an international global player well ok and then some can look at zimbabwe and think ok they've had a hyperinflationary collapse they're run by maniacs but then look at who else holds the u.s. dollar who's the biggest bond fund trader in the world max kaiser cucolo well they're in this next headline bullish on cognac yogurt and gold so fortune magazine interviewed pinkos equities portfolio manager and good fein and she said quote the largest position in the fund is gold which we think is

a very good form of protection against what could go wrong we were encouraged by the fact that a lot of central banks especially in asia are big buyers we think that's an underlying trend that's very favorable for gold that's right well bill gross was named fun over there. due to the way that. the charter that created that fund he's not allowed actually to own precious metals but he's a believer in inflation if not hyper inflation so you would naturally think he'd be a buyer of gold so here's one of his satellite phones actually buying gold so now the circle has been complete pimco is pimping gold as he should be in this environment where the bond market will get creamed well there are also as gold and silver have corrected over the last two or three weeks that they've had a big decline silver up thirty percent there's been all sorts of shouting and screaming especially in the b.b.c. saying it was a bubble it's burst that's popped so what do these sort of people who do you trust for example the largest bond fund trader in the world or the b.b.c.

trust the actual people who are dealing with money day to day not the lackeys of the b.b.c. who are an extension of the corrupt government and after the hutton affair of course the b.b.c. lost all objectivity and in the pocket of those nasty number ten downing street operetta check well and this goes on to the other thing so gold as i said fell back here's the headline gold calling sales reaching one year high signal no end to rally in history so this is from bloomberg another big financial news service the u.s. mint sold eighty five thousand ounces of american eagle coins since may first is the standard and poor's g.s.c. i index of twenty four wrong materials fell nine point nine percent the last time sales reached that level fully on rose twenty one percent in the next year freedom is on sale as i explained on the show many times days that herbert in particular would surprise us over when it got up to the prize of j.p.

morgan stock price but there would be a huge turbulence because j.p. morgan is going to defend that price because they've used their own stock to collateralized against naked silver short sales just like enron use its own stock to try to keep the walls of the door and then eventually collapses or. well j.p. morgan stock will collapse to zero at some point so when it got to that price of j.p. morgan stock in the mid forty's then you had j.p. morgan pull in a lot of favors with the those in the treasury in the global banking system and the various sisters of deceit led by diamond jim and they you know stage an attack on sober as they've done before but they can only talk of so much because what they've done is they've radicalized more silver buyers the silver liberation army has been radicalized by more of these attacks and so you've got a much wider base developing which will translate into a much higher amplitude and eventual target of five hundred dollars i'm sticking to

it's not just the u.s. mint that's all the record amount rand refinery which sells the krugerrands which means krugerrands they also had record month also u.b.s. had a record month in selling gold so this is a big theme that we've said to focus on for two thousand and seven that's the class of the us empire which is the collapse of the dollar and you'll see that that there's no getting around it and the final headline max this shows you without any doubt just like this pimco story that the dollar is ready to collapse and gold therefore will be the new currency j.p. morgan's hunt for afghan cold oh so to be more good work tell me more team of bankers starts to tap the country's vast mineral riches with help from the pentagon . so j.p. morgan capital markets are in afghanistan backed by the pentagon and they believe that afghanistan represents a gigantic untapped opportunity one of the last great natural resource front two years and they reckon it has hundreds of billions of dollars worth of gold and

they're in there to acquire that they don't want to pay thirty five dollars an ounce or so over fifteen hundred dollars an ounce for gold they want to pay nothing they want to free they want to have a u.s. taxpayer financed the pentagon to go to afghanistan murder about. people destroy the civilization kill the culture and steal all the resources that was a strategy in iraq with oil that's the strategy of the pentagon slash j.p. morgan slash goldman sachs around the world these two fused together now how somebody can argue that this isn't some you know bastardization of fascism you know explain to me how this isn't fascism when you've got the banks of the pentagon fused together and the pentagon has bombs the country and the bank steals all the precious metals how is that how is that a sustainable foreign policy and how does i'm not going to lead to a social unrest and all kind. of to me listen this is goes in with the collapse of the dollar is all and the collapse of the empire the fact of the us is the empire

the article states this wealth all these natural resources in afghanistan has lain there mainly undisturbed for thousands of years as armies of persians greek mongols britons russians and now americans trapped above invaders have dreamed of exploiting it since the time of alexander the great but no one has yet succeeded in a large scale and i reckon the us won't succeed either us or the empires go to die before we go let me do my impression of scott when he arrives first first night in a prison cell surrounded by a bunch of hardened criminals who. well buddy got to learn some new tricks all right that's going to do it safely harbor thanks so much pinky max when we come back once more coming your way don't go away.

twenty years ago the largest country in the world disintegrates into the. what how did you come. to get it you're. where did it take to. plug a magnet hazard porritt i'm not going to boston to speak with energy analyst gregor mcdonald of gregor dot com gregor welcome back to the kaiser report good to see you max it's great to be our writing on your blog you write paper versus real exit from

normal ecological economics and probably ballistic regimes in one chart well you've got all that in one chart the chart is the thirty year treasury bond versus the c.r.p. the commodity research bureau index tell us about it tells us a couple of things first let's just note that since two thousand and two the u.s. dollar has expressed uther in dollar terms we're just in terms of u.s. treasury bonds has lost about sixty five percent of its purchasing power against a broad basket of commodities and i just find that with this latest ramp up over the last two years in worldwide commodity prices in the global financial community there's a real reluctance to own up to the fact to face up to the fact that paper currency is losing its purchasing power against natural resources so i do think as it's starting off point it's worth just pointing out empirically that the u.s.

long bond is lost sixty five percent of its purchasing power against our natural resources which are all the things that we used to live every day sentential air since two thousand and two a case out the sixty five percent loss of purchasing power against resources the stuff. that you buy what that paper money for and be the d.x. why the actual dollar index that people look at that has not depreciated sixty five percent since two thousand and two so it's so i think what also is saying here is that there's a bit of a complete disconnect in terms of comprehension on the part of those who follow markets and follow economics that they look at these technical indicators like a dollar trade weighted index but they missed the big picture here that sixty five percent of purchasing power of the dollar's been smashed says two thousand and two and i take it the trend is not good either you know it's it's not and i don't

understand why so many in the financial community regard these types of comparisons as as arcane i mean as anyone who's retired or you know knows we all use our financial assets a bench really to command services labor resources energy food and so what the financial community has clever clearly been able to do is to talk about g.d.p. in nominal terms talk about corporate earnings and nominal terms talk about the rebound since the financial crisis lows of two thousand and eight in nominal terms but to avoid talking about these figures in real terms what does the s. and p. five hundred buy you know what does u.s. g.d.p. by you know what do those corporate earnings buy you know they buy you a lot less of just about everything you need to run a business or to live in retirement so you know this is a

a reality that sort of you know behind the front page and of course we're starting to see professional professional money management which certain is you the first few professional money managers like the university of texas mine gold we've got jeremy grantham it g m o in boston talking about the problem of scarce resources we're starting to see the first. few escapees from the world of nominal and they're starting to face up so the world real sorry one other factor in this of is the percentage of income that people spend on food and energy now in the developing world that number is quite high they make very little money and a huge amount of it is spent on food and energy like fifty sixty percent in some cases in the united states and in other developed countries up until recently that number was almost negligible so do the growth of the fianna currency period

after the one nine hundred seventy one and the ill and the income that was derived from the bond market and the stock market and the artificially inflated housing market this component of the household income was ignored but now it's coming back with a vengeance at what point does it do we start to see parity between the developed world and the developing world we're the entire world is going to be paying a lot more for food and energy on a parapet sue basis to use a fancy banking term well i love that question just a couple of things here if we look at the united states in aggregate. the drag on rising food and energy costs doesn't look catastrophic yet but if you look at the for the first three quintiles of americans in other words those sixty percent of of income of income wagers earners in the united states you're actually seeing enormous stress among those first three quintiles of wage earners in the

united states and when you get down to the first quintile new lower quintile you know certain americans are almost struggling against food and energy costs the whit way many other people or developing and all over the world not just in the developed world but in the in the in the developing world now the lord. your issue is the fact that as we move through this world we're we've got we're hosting you know nominal prices but everyone's living are in real crisis you know we see certain asset classes are absolutely collapsing for example wait us housen us housing got its first blow from the fact that it had been put into a bubble but now it's really suffering from the far with food and energy costs housing can't really recover in those conditions and so housing looks like it's probably one of the crime victims of peak oil and the fact that higher energy costs are basically raising the real living costs of everything in the system all right

let's roll back for a second and talk about the three fifth's quintile south just to put that into a layman's term you're talking about sixty percent of the population is coming in to the point of contact with stress in the terms the rising price of food and energy and the bottom twenty percent the lowest quintile is actually now you could say on par with a lot of the developing world who is struggling on a day to day basis almost of handsome out existence and this is creating in the united states the social strata which seems like it's completely ignored by the political class nobody running for president for example addresses the fact that the economy is producing a permanent underclass of people who because as you point out due to the constraints in the energy industry constraining future growth these people will be in the lowest twenty percent in perpetuity because there's no way to climb out of

that permanent underclass given the restraints on growth that's tied to the restraints and oil correct it is absolutely correct in fact we've seen the price of oil globally basically leave whole tranche of people both in the especially in the developed world behind the price of oil is now. of course at one hundred dollars at euro it's basically left behind the poor of the of the o.e.c.d. of europe of the united states these are people that may never really be able to afford oil again and you're right there is i almost call this emerging america it's almost like emerging market america where a certain portion of our society is unable to feed themselves their own able to afford gasoline we've got to an extraordinary number of people we're we're going to probably hit fifty million people on food stamps next that's in a country of six hundred of three hundred million people and you know supposedly the wealthiest nation on earth if you million people who know you built

a few cells i want to talk about volatility for a second because this is something that i think is completely under the radar as the energy constraints start say oh kick in and as countries start to actually hoard their own energy from saudi arabia and other countries that are the oil rich they're saying we want to hold onto our energy we don't want to export as much as we used to because there's not that much around this is increasing the volatility in paper assets and we see huge volatility in the currency market talk about that relationship place what we have come to understand is that the steadiness and the consistency and the liability of industrial growth is really the driver of what allows paper assets to hold and maintain their value when you're floating paper assets which is either promissory notes of zero maturity like cash or or some

other promise which is maybe a ten year bond those paper assets are basically promising to the holder of those assets but there will be future industrial growth that will encourage a profit and the profit will be used to pay the coupons and to pay that paper a setback and what we've seen is once we ran into the energy limits ok and i. mention a young nineteenth century scientists named liebig who talked about limits within natural systems once we ran into the energy limit then paper us it's not only begin to falter but now they become unstable they become wild but the forex markets are wild the foreign sovereign bond markets are wild and unstable and i see very dim prospects that any alderman change your u.s. treasury bond or a fifteen or a thirty euros first report will be repaid in any sort of dollars or any sort of paper capital that will allow them to go out and purchase the food and energy that

they need you know which is this is supposedly their savings and so at one time max paper assets were a secure place to store your capital they are no longer they do still have a group of rent seeking predatory in the banking industry who know that this volatility is real and they know the causes of the volatility but their answer is to put on a volatility spread on the volatility index fell by the put and the call simultaneously and they'll pay for the spread and they'll let this whole market and ecology collapse knowing that the volatility itself will generate returns for them and this predator class is really. in charge of not only milking the system necessary capital but to what extent are they actually adding to the volatility gregor mcdonald well you've heard the expression i b g y b g which is be gone be

gone and be gone and that's sort of the credo of the short term. you know a little buccaneering. trading capitalist who's not interested in extra analogies in the system is not interested in future risks basically just wants to play current volatility in banks. short term profits and of course you know this is sort of the tragedy of our system we really do need to have the political complex and the continental complex working more in concert to address longer term issues if we were dressed longer term energy issues climate issues environment issues it would bring down volatility but since we're not interesting those were enhancing the volatility we're almost in hansing the volatility just by the fact that we refuse to deal with these large long term pressures that we need to face all right great a mcdonnell thanks so much for being once again on the cars the report creature be

with you max and have a good afternoon all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert our thank my guests gregory macdonald of gregor you ass if you want to send me an email please this so it kaiser reported r t t v that are you until next time this is nice guys are saying by al. great for the full story we've got it for. the biggest issues get a human voice face to face with the news makers.

it. can. be.