it's hard past the hour here in moscow where we kept our top stories about tripoli refuses to accept an arrest warrant for current of daffy's saying the international criminal court is just a western political tool and has no authority the hague based tribe you know has accused libyan leader of crimes against humanity. greek trade unions are staging a forty eight hour strike with tens of thousands expected to take the capital streets on tuesday that follows the greek prime minister urging the parliament to

pass a fresh austerity plan to avoid bankruptcy. and russian lawmakers discuss controversial restrictions on abortion designed to boost the birth rate in the country for many fear the move will spurn on the back streets injuries and legacy of abandoned children. are next to our financial guru a max keiser explores the dangers of an even debt crisis and its influence on the global economy. i'm max kaiser this is the kaiser report there's a common theme emerging all roads are pointing to one culpable source of the catastrophe b. b. i'm not talking about brigitte bardot but ben bernanke stacey herbert please elaborate yes max we're going to talk about the root cause of our financial

catastrophe being the chairman of the command and control federal reserve committee greece impact small for u.s. banks bernanke so this is ben bernanke speaking to the press he says we have asked the banks to a standstill a do stress tests and ask looking at all their positions all their hedges what would the effect on their capital be if if greece the faulted the answer is that the effects are very small right now this is going to be a recurring theme throughout this entire portion of our program the fact that ben bernanke the law is i mean this is the beginning of all law because it doesn't mention the shadow banking system as it was described by former prime minister gordon brown when he says that the effects are minimal he's talking about the effects of what these banks reports to regulators as being a fair balance sheet but we know now going back to two thousand and eight that they

simply don't report trillions of dollars of liability on their balance sheet and then when these global they claimed the market did it we had no idea and bernanke knows this that's why i've grown lanky at the end of the day because he's sheltering financial terrorists he should be waterboarding i mean he actually says there they even looking at the hedges that this will be a so. negligible impact of greece defaulting but we know from the bank of international settlements recent release that there's one hundred fifty nine billion in credit default swaps written by u.s. banks against the european sovereign debt holdings of greece ireland and spain and portugal so again he he's he's lying when he makes that statement in front of congress he is telling a lie that's causing incredible global financial damage again i suggest

waterboarding ok well let's look at this video here and this is jim grant's being interviewed on bloomberg news and he was asked about ben bernanke lying to the audience there about monetary policy in the causes of it getting and which though he mentions in money markets so the fed has pushed interest rates to zero right it has flooded the system with dollar bills pity the poor saver who wants to get something some little taste of interest income on his or her balance so that they invest in money market mutual funds the money market mutual funds having nothing to do in this country is richard zero go to europe so many more neutral fund investors are taking him quite ponderable risks for about zero percent return or you get these funds building a few basis points only but to get those few basis points these funds are crossing the atlantic right smack dab in the middle of the european banking crisis to try to take some measure of yield this is

a prime example of the unintended consequences of this massive intervention by our central bank that's right and let's not forget that in two thousand and eight there was a five trillion dollar iran on the money markets because they're totally exposed to this crisis and as jim grant points out the returns people are getting on the money markets are less than one tenth of one percent it's like trying to pick up nickels in front of a steamroller. is that a good risk reward ratio no jim grant also points out that it's the fed who's forcing the zero percent rate he's and he's penalizing savers he says so the fed is the one forcing people to lend more than is necessary to other countries who care they're there forcing them to be predatory lenders for a little tiny nickel in front of a steamroller as you say right the command and control concept is that there is command and control and interest rates and taking

a position outside of the supply and demand of what people think is going on in america free market capitalism that's not what's going on it's a command and control type economy of centrally planned bureaucrats like bernanke the they're causing the global economy to collapse ben bernanke is in fact the cause for greece's problems because that's the model used by the e.c.b. in the bank of england and the bank of japan again i suggest one board ok max so he's also saying that the greeks are not the problem it's not the people of greece that caused this problem it's the monetary system that is the principal agent and the fact that this is true you could see in the price of gold the points you see that takes me to the next headline greeks turn savings to gold and perth mint silver coin sales surged to record on haven demand so the financial times this article points out is reporting that greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of

a sovereign default and a run on the banks so sales of gold coins have soared in recent weeks as people are converting all their savings into gold that's not gold and silver and you know we were in athens recently raking in a documentary down there and had a chance to speak before thousands of people have been on the national television since and translated into greek and the message to the greek people is clear to buy gold and silver to protect yourself against the flu. whole cost provokers like a burner remember back to the occupation days in one nine hundred thirty nine greece was occupied now greece is being reoccupied by bernanke he and his central banker whole cause provokers well one person interviewed in the financial times does say that he converted his entire savings to gold coins he said quote i keep them at home just like my grandmother did in the second world war so it is like in back to the global world war but speaking of the whole of cost i guess the

entire destruction of financial wealth we have in this next headline here to which also proves that ben bernanke is lying about the impact of a greek default greek crisis could cost u.k. three hundred thirty six billion pounds british exposure significantly under estimated so the bank of england alleges that like ben bernanke. the u.k. banking system is justifying the exposure to greet that is only eight billion pounds but it has emerged that britain could actually be hit with losses of three hundred sixty six billion pounds which is equal to twenty four percent of annual g.d.p. and this is based on complicated derivatives and insurance deals again mervyn king is ben bernanke u.s. counterpart in the u.k. he should be water boarded as well he is lying he is talking about the risks to the economy in the visible economy not talking about the whole of graham economy of

credit default swaps that go bust due to the fact that they're manufactured in a faulty way but that part of the problem is you know if you had tainted meat and it was making people sick you go and you do something about it and hopefully there would be some redress if you're buying toys that are painted with lead paint and they're making children sick and you would have some redress you would go to the manufacture. here the world is being flooded with all the credit default swaps these products don't work they're completely in congress with any notion of a capitalist system they're used only to destroy as they weaponized financial instruments as a credit default swap c.d.'s and blitz on these economy causing financial hole of cost as the result of this financial hole the graham. well let's talk more about that let's go back to the u.s. because there's a hysterical video here this is an ad for

a guy named mark day he's running for congress for nevada after death to our fortunes and that he's home and runs again well. he already is too late to the party you know that already the chinese came in through wal-mart ten fifteen years ago but do you argue ben he's talking about the u.s. debt being the cause of the wealth of china but listen isn't the us doing the same thing to europe aren't they occupying greece at the moment in order that greece doesn't default on their debt so that american bankers like jamie dimon lloyd blankfein don't have to pay out on these insurance products that they haven't any reserves worked but it's a cause and effect problem and this is propaganda as we see in this t.v. commercial just like the problems of greece ultimately come from bernanke these loose monetary policies and corrupt monster recalls there's the problems with china and america perceives them that they are quote unquote currency manipulators is

also the result of america's loose monetary policies america has the world's reserve currency and there's huge benefits on having the world reserve currency if your economy starts to collapse because you could use your privileges as for having a world reserve currency don't blame people like john greece for your sins but let's look at what the state of the united states is that looks like a land war already scrapyards of the new pawnshops so remember everybody was saying oh gold and silver are going to sink because everybody's going to the pawn shop and cashing in all their family so where and stuff like that well apparently they've run out of that now people are going around snatching copper wires from electrical transformer it's actually taking the entire transformer risking death as folks the republican operative the zinc and the lead is the basis for the infrastructure. it is the platform upon which the economy is operating of course to satisfy that

problem the fed will do what they'll increase the money supply which of course will drive the prices of lead copper and zinc ever higher which will incentivize people to read more of it out of the ground the other point here is max that we're talking about here's a congressman saying oh it's the chinese who will invade us and what should people do when they invade what to nations do when they invade a country they wipe out the infrastructure we've seen the us do that in iraq we see them doing it libya now they wipe out the infrastructure and what you're seeing here a train derailed in taunton massachusetts yesterday after thieves apparently used the blowtorch to steal two eight foot nine hundred pound chunks of solid steel track so the american population themselves are at war because of burning these crazy policies yes they're good ideas and something vising american citizens to recall their own infrastructure. it is that reason yes it is where should it be. what you to be experiencing. and then one might think well my headline here because

this i know we're talking to somebody in the oil speculation market an expert on oil speculation french president compares secular leaders to mafia once again it goes back to the top of the show ben bernanke he is the cause he's the root cause the central banks are the root cause of the financial chaos around the world and here nicholas sarkozy is saying that it's speculators who are the mafia not the guy who is causing people to speculate on oil and other products and yes exactly and the capital to capital all tamil is the bank of international settlements in switzerland there are the head of the mafia family and then the fed and the new york fed and the e.c.b. and bank of japan and bank of england are regional mafia captains and their techniques are the same they lend money you can't possibly pay back and then we don't pay back they steal everything you've got and then they crush you with rampant inflation and food and energy well he blames financialization for bringing the world to the edge of a precipice and it is true i mean that's part and parcel of the u.s.

federal reserve system it's the private bankers it's jamie dimon the white blankfein who are the fed and they've created this financialization as a way to occupy our economies and the people in our revolving it's a global insurrection against ben bernanke yok the creation all right since you were thank so much for being on the couch report thank you max thank you i much more coming away so stay right there. twenty years ago are just countries. to some to. judge or. where to take. well. really you believe in science and technology from the realms.

we. covered. welcome back to the guys who report i'm max keiser time now to go to new york and talk with liam a graph goodman she's the author of this gripping new blog this siloam if you haven't got your copy yet i insist that you get it. this all got to run against the hijacked the world's oil market and welcome to casa report crying how are you doing today mac. all right so who are the renegades how they hijack the world's oil world's biggest oil market these are the boulders in the original oil market i can one hundred eighty three reagan lifted oil price controls and when that happens some traders who had destroyed their own exchange which had traded potatoes this was called the new york mercantile exchange decided they're going to try to trade oil and when reagan left to those controls in one thousand nine hundred three that had been imposed by nixon they went ahead and said it was effectively the deregulation of

the market it became a true free market not big oil setting prices or opac behind closed doors this is when you had bitten off or is that were freely exchanging hands and that was the beginning of it all this is the oral history really of these traders instead of not knowing who they are we know their names and we find out exactly what they were thinking how it happened all the way up to the present day right now at some point the what you call the transformation of the market into a more of a free market system away from to control the oil companies and opec at some point another nation occurred this is when these markets start to become dominated by those folks who are gaming the system when do the transition become apparent and talk to us a little bit about that what's interesting is if you look at the history of this market because we need fuel that's left out of this world oil and gas this is some has always been gay and there have been different evolutionary and or ations of how

it came. but often it's the same thing and that is cornering supply or creating panic about supply running out to make the price go up or dropping lots of hope supply to me prices go down but really it's about being able to predict what's going to happen by. moving a few things around really just ponds on them on the chessboard and a lot of that is in terms of oil supply and perception is there now and that is very much james and it is to this day and it was done as well but when you say predict which way things are going on it's easier to predict which way prices may go if in fact you are manipulating prices correct yes the biggest players in this market own huge amounts of oil and huge amounts of fuel and we are not really allowed to know how much everyone has but we do know that increasing oklahoma where most of the oil stored in this country or rather it's the largest onshore oil storage facility in the world this is a black box we're not to know who owns oil there who's doing why there are

a couple big companies but they lease out tank farms to go in and sachs morgan stanley the large banks large oil companies and then these groups also trade oil and it's very good to have the supply ship as well trading in the paper market if you can put them together there you have a lot of the story covered and that's what a lot of these groups you know you talk about the eighty three period of deregulation there was of course another major wave of deregulation i believe it was in two thousand when the commodity futures modernization act was passed and how did this transform the market but this codified congress literally voted to take away any anti-fraud powers that might have been implied by the regulator of the oil market so that they could not do very much about the kind of trading that was going on off exchanges while the exchanges do set a global transparent global price most of the training actually takes place off exchange and they just use the price set on the exchange. as

a way of your pegging right there but at the end of the day the big trades take place off exchange and this piece sickly made that arena which is now worth about six hundred billion dollars a day a free for all and to this day it's still a free for all what we're seeing now with the frank dodd frank i'm taking so long to be put into into a fact has a lot to do with the war between last year in washington over how are we going to rein in this thing when we threw away to can shut the door all right so this idea of price discovery the idea of supply and demand meeting in the exchange and the result of price setting the market has given way to price discovery happening off the market and then what we see quoted in the the exchange is actually just kind of a shadow of what's really going on in the forces that are really shaping the prices are completely invisible and unregulated and as you just said it took away the anti-fraud powers which imply that there is nothing that fraud if you want to look

at from global price on the new york mercantile exchange for oil it's like the tail that wags the dog you want to look at a valet it represents a small piece but it's only piece people can see so let's say you and i often exchange or making a deal if you try it out if you try to mislead me about price i can say ok and i'm x. straining at x. today you just offered me why you have that kind of thing so it is used as a benchmark but at the end of the day the big trades take place off exchange and this is where a lot of the gaming takes place i don't know if you noticed that b.p. trader recently who are now being pursued by the c f t c this is been a three year in the making chara group of charges and yet why would it take three years to go after these guys well because they were doing this over the counter and it's very hard to piece together what happened because there's really no paper right so over the counter another one another way to say off the market and the b.p. scandal of course comes after the enron scandal and so the. energy market has quite

a history of this type of shadowy dealing to what degree does the manipulation in the futures markets and through the transmission of moral hazard creating executives that oil companies to also are completely insensitive to committing fraud the biggest problem here is that it's still more rewarding to game the system buying into the culture of corruption and is still more financially rewarding for you whether you're a regulator whether a politician or they're an executive in an oil company or whether you're a lost or a cheerleader if you engage in this culture on the level it's now playing out you're going to do a guy or then if you john those who stood up and resisted and i talk a lot in a book about different people from different walks of life who tried to stop this out of control train and they were broken just as badly as the system is broken and it's very sad and to this day what's happening now is we see traitors who enjoy anything wrong who are you who are being prosecuted because the regulators are sort

of fun about not having done anything before they pick a fall guy and vice versa you see traders who you know feel that they're actually trying to make a better system but they're not getting any help i get letters from more traders than anyone else saying disaster awaits the scandal on price discovery is broken ok well in order for all the smart manipulation to go on all this huge volume of trading to happen off the market over the counter it requires a lot of money to be borrowed from wall street banks to what degree are c.e.o.'s like lloyd blankfein jamie diamond culpable in committing massive fraud on the futures exchanges i would be very surprised if they don't understand how this works but at the other end of the. street has been investing very diligently and to creating loopholes in this market creating the legal openings to allow themselves to do these things if their best investment amber is to be able to manipulate the financial system and be able to do it legally and that is what we're seeing over

china fixed. now but when you when you've done this for decades and this is been going on and getting if you look at the history since the great depression of the loosening of the rules in the chipping away of the regulations it's a very long sordid path that we're going to have to cross over again to fix it in the meantime many people will try to present it as hurting business and in a way it is hurting business but if business is corrupt and shouldn't be allowed to thrive well a lot of the question this way if you take a major wall street bank and you were to eliminate all the trading profits gleaned through corruption what percentage of their profits would remain poor i guess it depends on how you define corruption and unfortunately a lot of things that we might have been considered corrupt before the one nine hundred ninety s. are no longer considered in our regulatory and legal system crofts well let's define corruption as a false price signal generated through market manipulation we just agreed that most

of the price signals coming out of the system are in fact false or corrupt if the prices were to represent true supply and demand and not fake supply and demand how much profits would be impacted on these major wall street banks their profits would be in tyson enormously if these rules were to change and to make it much more on ass and that is why you see this battle going on and on and that's why you see one with our financial crisis right we start to see things happen in zero six it came to a head in a way and here we are it's going to be summer of two thousand and eleven and we haven't done anything that's made any material difference and we're not going to if we haven't now we're not going to ok there is one industry however that has done something just last year cantor fitzgerald was going to launch boxoffice futures contracts and they were shut down the motion picture association of america once a washington think about washington outlaw box office futures contracts correctly

asserting that it would destroy their in. history so called people who are being destroyed with the gas price manipulation oil price manipulation commodity price manipulation can't get a lobbyist for them to go to washington to save them from the financial terrorists well it's a sad fact that the lobbyists are strongest for those who have money and consumers aren't united enough and moneyed enough to fight this battle so while corn soybeans all that continue to be traded anything that we might need to eat sir just to survive continue to trade in the futures market and the bar is very low i mean if you're a day trader in this market you don't have to put any money down the tree is not a science and when you're talking about hollywood these are people who are very aware very aware of the effects of futures on the price and the value of something and you're going to see a lot more battles going on for those who are trying to commodity names like movies like box office receipts we're going to see a lot more pushback because the cat's out of it by this is not fundamentally

a good thing how do you decide how speculator should be governed that has to be a discussion we have but certainly they need to be governed by one last question the flash crash of natural gas eight percent drop in seconds is being blamed on high frequency trading and energy markets are now being co-opted by this new kid in high frequency trading what's happening here. we're seeing a lot of cases where the equipment is superior to the operator but being sad these systems have a great deal of power i don't know if you remember in zero nine but there was a russian american computer programmer who was apprehended you probably covered macs and goldman sachs literally engaged in a manhunt and the u.s. assistant attorney here in new york said goldman systems can easily manipulate stock and commodities prices and this trader rather he was the client here's a programmer he had taken from the code and he had quit and he was. as

a moblie starting a job somewhere else goldman was so of sad that they went after him very publicly and also rest exposing their own their own computer programming and it was not good for common it wasn't great obviously for the program are bad and the day it exposed that these systems are very very dangerous and they're also very expensive but they give a huge ads to banks like goldman and thousand revealed and we moved on right what's amazing is our own law enforcement and find it alarming that goldman had to send to community labor markets study not a programmer walked away with the code ok well the book is called the asylum but limit graft good it is a must read thanks so much for being on the cars report thank you max all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i want to thank my guest and liam a graph good men if you want to send me an e-mail please do so at kaiser reported r t t v are you until next time this is nice guys are saying bye.