well thanks for watching our team has kept us in love and in the russian capital let's take a look at some of the top stories this hour. after launch emergency crews are searching for the unmanned russian space freighter which crashed on wednesday in syberia the soyuz rocket was supposed to ferry food and fuel to the international space station but it fell back to earth and rebels in the libya possibility of true million dollars for colonel gadhafi dead or alive that's as western nations wasting no time in jostling for a slice of the country's world by under the new government and the u.s. and e.u.

are pushing for more sanctions against syria after the crackdown there against protesters meanwhile journalists are on the ground are warning that there's a lot of objective coverage coming out of the country. and up next max keiser and stacy herbert discuss the painting bankers of the wall street and that's in the kaiser report up next stay with our city. kaiser stacy herbert this is the kaiser report let's talk about. jenna. you know that is going to find stacy ever exactly max i

officially have a diagnosis for the fainting traders of wall street the same thing traders of wall street do continue you know the markets have been up and down up and down up and down wild over the last two weeks well it made me think of the fainting goats of tennessee domestic agrees of goats in america which average an addict disorder called my attorney a congenital which is when startled younger goats diffidence all over a soup see from this image here they just fall over and freeze for ten seconds pleading that they don't care but they get up and start walking again like normal like nothing happened but this is what we see in the markets how do you apply the fainting goats of north carolina to what we see in the marketplace well i think it's a genetic disorder so i think it we see in breeding in the financial markets this is the first have imax wall street aristocracy about one point two trillion in

fed's secret loans so as you know one of the consequences of aristocracy is often you see inbreeding so i thought this is what you're seeing is that the fed is breeding. a class of bankers who freeze and start on call over because that it generates attention from their own or the central bank and. like on the sell button stocks collapse and then they wake up and they quit everything back now also i might add that this whole idea of inbreeding as relates to wall street aristocracy that was gifted over a trillion dollars by the fed it also reminds me of the word derivatives in the river to our referential they refer to itself after generation upon generation of trading algorithms that have created this kind of inbred ogre like monster on lost tree that only refers to itself and not the general economy or

anything anyone is saying in washington so let's turn to the story here so the wall street aristocracy fed chairman ben bernanke unprecedented effort to keep the economy from plunging into depression included london banks and other companies as much as one point two trillion of public money and max this is the most important part of the sentence that goes on about the same amount u.s. homeowners currently zero and six point five million to wink wink and poor closed mortgages write the numbers work out here banks made over a trillion dollars in loans that they knew could never be repaid because they were lending it to people who had no income no assets no job but they knew that they would be bailed out by the fed to that exact amount of money and let's be honest this isn't a one point two trillion dollar loan this is a one point two trillion dollar gift on wall street they call it a forgivable loan which is code for gift. so the largest bar was morgan stanley and

they got as much as one hundred and seven point three billion which was three times as much as the company's total profits over the previous decade these are the company's profits if there wasn't for this gifting from the fed to these banks their profits would be zero their stock valuations by the way are crashing their liabilities are skyrocketing that's why most people in the know will tell you that banks particularly in france right now and i'm thinking of society in general are about to declare bankruptcy because they are beyond insolvent their insolvent times forty the other thing that is now when it comes to this matter of compensation by a lot of these bailed out banks they're saying it's the free market we have to allow the free market to reign because otherwise we become socialist marxist and blah blah blah but according to the gloom berg article even as the firms asserted in news releases or earnings calls that they had ample cash they drew fed funding

in secret avoiding the stigma of weakness so i ask you max where is the price discovery on their well you make an excellent point price discovery of course being at the heart of free market capitalism the nexus between supply and demand it's all in secret and it's without bloomberg request for information for oil a freedom of information act requests we would even know about this one point two trillion dollars gift and i'm sure that there's a ten to twenty times more of the gifts behind the vet but there is no price discovery there is price fixing that's what we're discovering here that we're discovering price fixing and we're not discovering price discovery and now if my math is correct you know in the u.k. the royalty they're often fell's themselves to the public saying that the queen only cost sixty nine p. per taxpayer to keep the one household so the royal household in america however i figured at one point to try. divided by three hundred million equals four thousand

dollars per american so i think that's like four thousand pints of milk rather than one pint of milk at the queen cost well the point being that the average american is subsidizing wall street aristocracy and it's curious that they use the word aristocracy because it goes right back to the whole point of america to begin with it was presumably to stage a freedom revolution of independence against aristocracy and here we are two hundred forty years later back in the jaws of an entrenched aristocratic class that treats the entire economy as rent seeking travilla did it. that's a new word i've just invented another nearly all jews i'm from mex guys are on the show the other thing that is important or we've just been discussing recently how the population in the u.k. doesn't seem to mind so much the wholesale looting of the economy by the top but the looting by the bottom they go crazy and you see this again in this story as

well about the aristocracy in america the one point two trillion dollar peak and december fifth two thousand and eight the combined outstanding balance under the seven programs tallied by bloomberg was almost three times the size of the us federal budget deficit that year so again federal budget deficit huge story riling up the masses well where is it about the banks where do they why don't they care about it why is the debt ceiling debate going to washington for weeks compared to one point two trillion dollars in looting and again i guess the point you make is a good one you can. castigate looters on the street in london and points then as being morally reprehensible while at the same time being accommodating for the looting going on in the banking system in the city of london and i don't understand why this is such a stretch for david cameron and i see tony blair opened his paw

a hole last week and sort of demoralized now that he's good friends with to prove what really should be done in a society that respects human rights while he is the guy who oversaw the transformation of the city of london into a looting economy not to mention the human rights abuses and genocide that blair committed in iraq well so you know tony blair was good friends with the guy with the farting camels of tripoli what the forty parables of tripoli back on the show well now blair is of course one of the fainting bankers of wall street so this also brings me to continue with this my own tonic markets theme i read the skies of my attorney and this is a statement herbert original sonic markets seeing them. headline reads max bernanke he under pressure to calm markets so you know ben bernanke is speaking at jackson hole tomorrow and he's under pressure to calm these markets remember i

said these fainting goats they faint when they're startled so these these goats these banking goats are threatening to pass out again but i want to bring up one thing about these fainting goats according to the wikipedia older goats learn to spread their legs or lean against something when startled and often they continue to run about in an awkward stiff legged shuffle so you don't need to faint if you spankers can just come up with an awkward stiff legged shuffle they can still stay standing you know the awkward stuff like a shuffle could be the dance craze of the season remember under could go off the recent x. expatriation the. it was a cold as the jane is a thing to dance this is the awkward standing break or dance so if you see the words been bernanke you leaning up against a wall with his goat like beard you know. he's three q three q four q. you know that he's trying to stop himself from fainting due to

market my own tonia congenital ok i can imagine this is what we'll be seeing tomorrow in jackson hole ben bernanke you're leading up against the law a whole bunch of younger bankers passed out on the ground startled like frozen it's a good time to round them all up and come up with a nice restaurant for she just above. but i want to secure some x. yes he's being asked to calm the markets because there's something like eight trillion has been lights off global markets in the last two weeks in these why don't you. know well speaking of a bag of shells the u.k. population barely has that if you look at this headline u.k. household finances are worse than during the height of the recession again all these the fainting bankers of wall street are out there in jackson hole begging for money the actual population who is that out there banging on the drums asking people to lock up the little poor people while their household budgets are

deteriorating at a faster rate than during the height of the recession in early two thousand and nine and according to an analysis of consumer's finances this was my message to the middle classes in britain who are. you know with all of said about the young looters out there on the street you need to join them and need to talk to them you need to join them and understand what they're talking about there because your next financial apartheid only grows if there's nobody willing to shut down financial apartheid so all of you middle class people take all that marmalade off your naked bodies put your clothes on go out in the street stop dogging and start talking and then finally with this whole you know a shift in wealth that's happening around the world as part of the financial collapse that's what it's really about india gold imports may reach zero zero record so as gold prices are soaring we find that the biggest buyers in the world indians they're increasing their consumption of gold purchases by india the world's

biggest user surged sixty percent to two hundred sixty seven tons in the three months ended june thirtieth from one hundred sixty seven tons a year earlier investment demand max jumped seventy eight percent to one hundred eight point five tonnes well because let me tell you something lists confuse us all indian gold buying phenomena of course for years they buy during the wedding season and they buy as a gift and store of value etc so people assume that when the price moves higher that this would be a deterrent to buying gold these high prices but indians are not stupid they realize that all five currencies around the world are being based they've already had the experience of buying gold they've already seen their gold doubled tripled hitting new all time record against the root pay so there's an. installed customer base of gold buyers is

a reason to think gold's going to triple again if people say oh no there are going to pull out as to why this is like saying you know wow that first to the era when they go me so i am never going to do it again this is make any sense you know. say sarah thanks so much rain on the guy's report thank you max that's going to do it stay tuned we'll be right back with much more so stay there. are not. real you deleted some science and technology from the realm of. the future covers.

glugging back to the kaiser report imax kaiser time now to go to massachusetts to talk with chris martin saying chris martenson welcome back to the kaiser report thank you max good to be here all right chris lawrence the markets have been extremely volatile for the last two weeks is this the resumption of what we saw in two thousand and eight or something new well it's both i think it's a lot like two thousand and eight we have critics for it's blowing out all over the place if we keep our eye on the ball remember this is a monetary crisis that it's hard but we you know mostly weaknesses as a fiscal crisis or financial crisis so i'm looking at the financial sector you look at the b.k. x. or some of the indicators that are around even the insurance sector is and you're seeing a lot of distress they work here ex-pro the load of former lows in this run down and so that's where we're seeing the stress i mean obviously when you have credit spreads going out you know europe huge debt crisis so those are the icons of two

thousand and eight what's different this time is gold gold and silver i was signaling that maybe this time i think people are understanding that this is a monetary crisis too it's not just some weakness in the financial sector. chris lawrence and i saw an interesting statistic a couple of days ago that all of the market capitalizations of the something like the twenty eight biggest banks and continental europe the add them together they still wouldn't equal all the market capitalization of one company apple computer i think that's certainly a lot about apple computer but more importantly it says a lot about the european banking system their market capitalization and these banks in the europe and in the u.s. saying awfully thin when you look at the amount of debt they're carrying the bottom line here is that this is fundamentally a crisis of insolvency it always has been a crisis of insolvency the big banks are trying to treat it as a crisis with liquidity you see the big federal reserve liquidity you saw the federal reserve wonderful report coming out you know should the federal reserve

supplier who were a trillion dollars worth of actual cash we query and even that wasn't sufficient to patch the wall in the ship it's really fundamentally an insolvency situation that's what we're going to have to thieves look to i think that's where we're going in this next leg of this downturn i'll get to that one point two trillion dollars gift from the fed in a second but i want to go back to what you just said talking about the interconnectivity of the the daisy chain aspect of these banks i'm thinking back to two thousand and eight it was revealed that lehman brothers had their own little pet bank that they would hide their debts before each reporting quarter was needed this is part of what you could look up and find out the repo one zero five scandal they have this bank they were hiding debts and they were shuttling back and forth to avoid the regulatory scrutiny and to avoid the disclosure of all their that it seemed to me that that particular scam peekaboo accounting or debt shuttling

is done on a huge global scale it did play into what you're saying how much of that is incidental how much of that is more has more of a nefarious twist to it. i think it's much more widespread then is commonly believed anybody thinks that report one hundred five began and ended with lehman and we got that one bad apple out of the bureau really needs to have their head examined this is clearly common practice there's all kinds of accounting tricks and shenanigans that can be done let's face it we're all street can afford the best and the brightest and they are just out going it out manning. the government regulators at every turn and that's hard even including the revolving door where sometimes those very same perpetrators of these scams go through revolving door into the regulatory apparatus would it be wrong to say that when people talk about the shadow banking system as gordon brown the former prime minister of britain called it the percentage of us out of banking system what accounts for this type of fraudulent that shuttling to avoid regulatory scrutiny would you guess on

a percentage basis it's hard to say that because one number i go by you know we look at the number of our mortgages that arrive at the week when or in default and it's you know over one in ten at this point in time so we look at the total size of the mortgage market we find it's over ten trillion dollars so rounding bigger recently year we find there's a trillion dollars in losses somewhere where are those if we go back through all of the losses that have been reported so putative holders of those same mortgages we don't find a trillion dollars missing anywhere we find a fraction of that and so without the ability to have real regulators come in and force this mark to market which we abandoned by the way quite willingly openly when we began mark to market and allow them to do market fantasy and that's the world we live in and this is the important point our markets are really really driven by confidence they require confidence people investors have to have the sense that they know where they're at risk start people don't know where the risks are at this point and for good reason because every time we scratch on the surface we find

another huge example of where things have been hidden ok so they can hide these massive multi-trillion dollar that's forever however the federal reserve bank under a bed but i can't say means that they're so. lucia is to try to keep interest rates at zero percent for ever so that the liability and interest costs. will never have to be paid there is a jackson hole meeting coming up he's being you know asked by the market to do something in the face of all this calamity number one can you deal anything number so i am i right to say that this arrow of percent interest rate policy is an attempt to keep the multi-trillion dollar debt burden permanently head in a closet somewhere it's certainly an attempt at the entire rescue such as it was starting in two thousand and eight to current really has to be called by its proper name which was the rescue the big bank balance sheet act of two thousand and eight and this is always been about repairing the balance sheets of the big financial

institutions i've picked on to banks that were just really vital financial network oh in which the shadow banking system is one part we've got pension funds we've got insurance cons we've got the entire fire starker financed you know insurance real estate the whole sector everything is going to turn around and do if we get credit flowing again because that was his diagnosis we had far too little credit flowing through the system and he's done everything he can to get back credit flowing again and i think every step you take in has been right if that was your diagnosis but from my diagnosis the patient was suffering from too much debt not too little credit and so what we have to do is recognize that those debts can't be paid back under current dollar terms and there is no possible way to dig out from this using crude production and somebody is going to have to eat those losses politicians step into the fray every step of the politicians with the exception of maybe iceland so far come forward and say if we want the taxpayers to eat those losses here's what

people are starting to catch on and have a story look at europe a lot of her unhappy people that are expressing themselves in the street saying despondent feel right and there's a good reason for that and it's just it's not correct and i think the central banks know fundamentally of the all to look at. that's probably the right way ok imagine iceland so let's use iceland as an example of a policy of letting the banks fail come what may picking up the pieces thereafter and moving forward and on the other extreme i guess you have to point to a country like japan that has supported their banking system now for twenty years through this zombie banking period i'm not realizing the losses and eating up their entire country savings and now going into a period of rapid decline so those are the two choices and first of all for those who argue that it would be impossible for america to have experienced icelandic repudiation of the debts and simply allow banks to fall the too big to fail banks

what do you say to them and second of all are you saying basically that we're stuck and edge of pan like a zombie economy well first of all we are absolutely getting ourselves stuck in a japanese argument economy and to those who would say listen these banks were too big to fail it would have been too just from do if you don't think about the deflationary impacts that would have happened this could have led to all kinds of things between uncontrolled you know hank paulson who time back in two thousand and eight walking into congress mentioning things like more from long very scary things that everybody wanted to avoid at the same time we're having was too big to fail discussions we've had too little of the discussion around the idea of too big to see if something is just too large to save in everything we're doing in attempting to avoid too big to fail what we're doing is we can time wasting resources chauvelin trillions we're actually doing no good here just disappearing into iraq or we're not getting any bridges out of the deal or energy infrastructure isn't being or all we have new educational initiatives we don't have any investments back at all we're doing is taking sunk costs and it's wrecked yet but it's just

a shocker we call it creative destruction shouldn't been happening isn't happening we've just got it can't be hidden forever it's going to come out in the meantime what we've done is on very unfortunately we're used to the art of high. with a lot of resources and attempting to sustain the unsustainable that's just the way i look at it and i think the markets are starting to confirm that view and more people are coming around to doubt which means we may still have a very destructive wave of financial instability in front of us that's actually what i am i think is most likely at this point in time and we have been a fiscal situation which is deteriorating at the periphery and starting to deteriorate towards the center very difficult with europe at this point in time but it's going to come to the us could potentially yeah i mean the really the. salta entering a u.s. on top of all this spending trillions fighting tyrants overseas and doing nothing about the tyrants on wall street now you mention this one point two trillion

dollars so we talked about it briefly this gift that was disclosed through the freedom of information act that bloomberg put forward and these secret loans that went to the banks and their individuals at these banks and the c.e.o.'s of these banks and this is really the emergence of what some are now calling an aristocracy in the u.s. is the public now beginning to understand that they're living under the the the the an heiress to craddick monarchical system again that they the whole revolutionary war for independence was basically now we've got a round trip back to feudalism i'd like to say yes but it's hyperion do we really have cracked one percent barrier in terms of awareness of what's really going on here not only do we not regulatory capture we have media capture all of this is very predictable effect of what happens when you go out high concentration monied interests are allowed to own all sorts of things for from politicians to cable news stations to newspapers so i think

a lot of people are starting to in my right to work i find more and more people who are voting with their feet as it were trying to find ways to protect their assets pull the assets out of the system that we see is fundamentally the symmetrical corrupt human one that fee. one party over another that is to the advantage to party over everybody else and so we're starting to see that you look at retail money flows into mutual funds and i think that's telling part of the story look at the price of gold we're seeing a story told again they were all over the place that people are fundamentally walking away from what you see is a rigged game and they were very unhappy about having to do that because we don't have any alternative currencies in the u.s. there isn't a war we can go across we're not like zimbabwe where we can use u.s. dollar if we choose or we could hire stadiums and rams or whatever the border currency happens to be the united states we're really captive over here and so this is the thing i'm experiencing most from people asking the question how do i dodge what seems to be a very giant ball and then i can't control there's nothing i can do about it so you

know here we are facing you know the prospect of q e three or you know some other big bailout or another series of bailouts with it and we don't even have any faith that when we announce it but look they told us about q.e. two that was nice but that was a fraction of the size of the secret bailout that was happening behind closed doors who came to get the sense that yes there is huge amounts of money is flowing all over the place but not to them it's going to the well connected and this is really unfortunate dynamic because our markets again require confidence in order to stay in and who can have confidence in these markets watching volatility seeing where the money is flowing not understanding where the risks really knowing in our hearts that there are balance sheet disasters just squirreled away it's intense it's very very profound period of instability we're going to go along pretty far i guess is the message chris martenson thanks so much for being on the kaiser report my pleasure and that's going to do it for this edition of the prize a report with may max kaiser and stacey however i thank my guests pressed martin

said if you want to send me an e-mail place to sell at kaiser report at r t t v r u. and so next time there's a black guys are saying. i'm . good.