i know what's really happening to the global economy with my next concert the no holds barred look at the global financial headlines tune in to cause reports. eleven thirty am in moscow these here are t. headline the greek government set to approve more unpopular taxes and tries to convince european lenders to hand over another slice of the bailout to avert a looming default meanwhile the greek prime minister will hold talks with the german chancellor in berlin as the debt crisis threatens to spiral out of control. u.n. security council prepares to submit the palestinian statehood bid for recognition it despite your subject comes from israel and the us which is valid to veto the move but palestinians could still get partial recognition from the general assembly

where they already have a majority of support. nine out of ten new jobs in the u.k. being taken by immigrants this comes as the country struggles to create new work amid a stark rise in unemployment partially fueled by spending cuts. kaiser report coming out next max and stacey explain why the u.s. plans to lower borrowing costs may have failed to reassure investors stay with us. max kaiser this is the kaiser report let's twist again. this is very rare we're doing max this is operation twist i'm going to show you what operation twist is ok ben bernanke. but i am ben bernanke

i've got a kid i got a monkey i guess i'm chopsticks. some twigs yeah the dice oh yeah this is apparently operation twist max tell us more headline reads operation twist fails to reinsure investors. back somehow all this stuff did not. impress investors book and the fed is filling ben bernanke he is failing at his job in providing price stability and wage wage debility in america and he's trying to turn as you point out junk into something that will provide collateral for a banking system that's collapsing and the market is saying we recognize that you're a fool ben bernanke and we're question well this quote comes from alan blinder a professor at princeton university in the as

a former vice chairman of the fed and he said through operation twist bringing is throwing sticks and stones and peashooters and b.b. guns and whatever he's got at that we could qana me in the effort to make marginal improvements i don't expect any miracles from it and frankly neither do they so max we see this often we see this junk shot over and over in the last two or three years as the whole financial system collapses but as all of our systems class we saw the junk shot in the gulf of mexico with b.p. we saw the junk shot in fukushima the junk bonds have been replaced with actual junk from the junk yard and the problem is this operation twist which for viewers who may be joining us late this is an attempt by the fed to force down long term interest rates by selling the short term paper usually it's the other way around so that's why they give it the same twist why because interest rates are zero already so they're digging deep into their bag of tricks to try to keep rates at zero and

of course rates at zero zero interest rate policy or zirp is the cause of the problem so the very fact that bernanke is trying to exacerbate the of the problem for gasoline on the fire of artificially low rates by figuring out ways to keep rates even lower shows that either a he's a moron b. he's a tyrant see. both. well the bet itself said on their website that the program should help lower costs for home loans corporate bonds and other consumer and business lending the plan will provide additional stimulus to support the economic recovery but the effect is difficult to estimate precisely owing to the sort of problem states you have are here take one of your props here this red rubber ball less than a prop that's monetary policy oh ok so i go to e bay and i put this on e bay in auction this off i could get at most twenty cents for this on

e bay if goldman sachs takes this down to the first if it'll give them twenty billion dollars for the same item that's inherent problem with the american the global economy the banks privileges with these central banks where they can give them anything whether it has value or not and the fed gives them trillions and trillions of easy credit so yes we're in this position and the next headline reads max the disappointed the great collapse is here this is from phoenix capital research on their site gains pain in capital so the fed disappointed with this four hundred billion dollar q.e. . light it's not really q e three it's operation twist but the most striking thing the thing that upset the markets and sent everything down a wild spiral was that the fed downgraded its view of the economy stating that quote there are significant downside risks to the economic outlook and so for some reason the same guy with this piece shooters and b.b. guns and and all sorts of junk as we have here. some reason that these people

believe his now prognosis that it's all looking back as if the last three years as we've been saying it hasn't been all looking bad oh this is the charlatan aspect that goes with wall street in a thread where shamans their their their you know snake oil salesman they there they do a dance of deception and the american people the global community falls for every single time that's why the lottery business does so well it has seen a business does so well there's a sucker born every minute and ben bernanke is the circus master who's just hinting at great things to come while stealing people's money all the while well phoenix capitol says that many people will lose everything in this mess yes everything the u.s. is going to be defaulting on its debt paper currencies around the world will fail it's going to be a dark dark time max but people are liquidating portfolios hedge funds are

liquidating institutions of like what they are selling everything to raise cash and they're throwing gold and silver out as well during this liquidation and this gives people who haven't participated yet in gold and silver a golden opportunity to load the boat with the only currency left standing when this should bank finally is over the dollar of course is something that people are running into but these are like the people on the shore of the indian ocean running into the tide as the tide pulls back not knowing that behind that is a tsunami of money in this case that is going to swamp them well let's turn to the original dr doom but this is do me prognosis here and his thoughts on gold not selling my gold because i think in the long run they will print money i saw as markets in the world are about one or another train three percent even the republicans were right to let the afraid you have to ease yours out now. you can

see back and say don't ease we have gotten enough but as soon as i said prices go down and the economy's weak everybody will again applaud their fate if they printed money marks or world class macro analyst the only ph d. in the economic space that i trust and he's got a track record of performance to back it up and he makes the same point i just made but in a really interesting accent but what about what he's saying because it isn't this the case that this is how markets this is how our economies have been hijacked the markets fall ten or twenty percent everything's. and everybody says calls their congressman says do whatever it takes can't then bernanke you to do whatever it takes to save the bankers and therefore save me and my four zero one k. oh it goes back to nine hundred eighty seven in the crash of eighty seven when reagan robert rubin and alan greenspan then chairman of the federal reserve got

together and they started to buy the stock market yes and p. futures on the day after the famous crash of eighty seven and this was the beginning of the working group on markets or the plunge protection team as it's called and from then until now that fund that slush fund that the government uses to fix prices has grown exponentially sound the hundreds of trillions of dollars and most of it's in the shadow banking system and the result is no more legitimate price discovery all prices and all the exchanges are now manufactured and they manufacture these prices largely for of the effect of propaganda this is financial propaganda it's a new a cock in the history of propaganda and it's conducted principally in the united states max actually i have another problem in this pile of junk on my table and that's this junk dollar yeah i notice one thing here has the pyramid of course everybody knows about the pyramid on the back well that's in line. oh ok b.m.w.

town crashes and pyramid fraud yes the. pyramid fraud scheme is of the only one going for as long as anyone can remember she's a town in china has been core is village is little more than a dusty grid of brick shacks and its residents live on an average of just a thousand pounds a year but this spring a miraculous transformation occurred the local suddenly noticed that they were rich we have become a b.m.w. town declared one shocked a villager in the local internet forum well it turns out that it was a guy named king claw and he returned to the village from beijing and he had a fantastic idea he took the villagers savings which amounted to fifty five million dollars and he promised them interest rates of ten percent on their savings what he did with it is lent it out to thirty percent of property developers who built all these fantastic apartment developments which nobody could afford to buy so the

whole pyramid frauds collapsed again cause runs of john law. this is a classic example of a pyramid scheme a ponzi scheme and of course it involves real estate which was the favored instrument of a ponzi scheme favored by alan greenspan and ben ranki when they artificially dropped interest rates after the nine eleven attacks remember to prove to the world that america still had what it takes to be the biggest consumer and polluter in the world they drop rates down to one percent and this will only shift this real estate boggle people of course love the idea of buying real estate for no money down and that created the final stage of the final blow up of the final bubble that we're now living with the consequences today that will never ever be paid back unless there's a global cooperation reconfiguration other global currency great until that happens just expect this depression to get deeper into max how is king caught any different

from cherry. ben bernanke because here's a guy who used this pyramid scheme in order to foster a housing bubble in this remote town the same thing is happening in the u.s. and this is what operation twist is about this is what all of this junk is for ben bernanke on the u.s. federal reserve website he says it's in order to encourage more housing lending mortgage lending that's what he wants how is it any different from king claw it is no different you're absolutely correct stacy herbert the number one concern of ben bernanke is to get the housing market reinflated and he's doing this by trying to expand the base of the pyramid scheme and ways finding is that there are no more suckers and they fail to admit they've reached the end of the line for this particular chapter in the american pax americana pyramid nightmare and the world will continue to suffer and so there's a massive void of u.s.

treasury bonds and the u.s. dollar which we're seeing right now in the price of gold and so on and then at the heart of this always like the u.s. pyramid scheme and the chinese pyramid scheme at the heart of it lies a desire for german made goods that nobody can actually really afford because here's the woman's quote this is a quote on the website that i said we have become a b.m.w. town in our county there are now eight hundred b.m.w.'s and six hundred mercedes five hundred audi's fifty porsches thirty jaguars and one ferrari one lamborghini and one. precision engineering but that's again you know everybody wants with their fake pyramid schemes to get real goods and services that only the germans apparently are the only people making anything everybody is turning to germany saying please you guys make stuff that we want please continue to accept their competitor jump color sticks and stones and and b.b. guns for your goods there's one arrow the silver bullet of solution for america in

the global economy apple oakland a car manufacturing plant in detroit. manufactured by americans. thank you stacey herman so much for being on the kaiser report you're welcome and don't go away much more coming your way don't even go to your flight it's going castle. twenty years ago this country. is. where.

welcome back to the report i'm max keiser i've got him he's here. walking the kaiser report all thanks for having me on this fantastic they are here in the studio i want to jump right to actually our last question from a tweeter who wants to know do you ever sleep and years unfortunately i do i try not to but you know i have to do a few hours of ok i try as hard as i can i if you could you'd like to be tweeting or commenting twenty four ideally there would be an ideal situation ok fantastic so we just heard from alan blinder he's the former fed chairman he's talking about operation twist and he's saying if you think of sticks plastic tables twigs b.b.

guns for monetary policy making fun of the whole thing saying the collateral is worth less your thoughts i mean i actually technically he's kind of he's right in the sense that i think operation twist isn't really going to do anything for anyone . it will be pretty minimal and the idea of it lowering interest rates is going to have a big impact at this point we're already at record lows you know kind of a joke so it's kind of it's a superficial thing in this expectation of the fed to act when things aren't going well so that it's kind of i guess a signal that the fed isn't totally out to lunch but in terms of i would be very surprised if it had a real positive impact let's talk about that for second to follow up on that point because he said that the expectation that the fed can do something is kind of running out now we go back to storage lates is the greenspan put during the whole one nine hundred eighty s. and the time markets were faltering right alan greenspan would lower interest rates something markets would catch a big trade higher bernanke inherited that legacy but it seemed as though the fed's

ability to stimulate these markets is finished is over is that kind of what you're alluding to kind of seems like that own especially i mean look certainly the markets reacted positively to q e two and q e one and this is probably too early to say a verdict yet on operation twist but even bernanke he himself seems to be kind of skeptical he gave it he gave a speech a few weeks ago which was basically saying if we're going to do anything to be fiscal policy spend more basically trying to kick it back over to congress so i think even he doubts that at this point monetary policy is a great tool well it's still possible that the fed could juice the stock market if that's all he has going for now your own role over there business insider dot com you're the deputy editor correct yeah now business insider is primarily focused on if i may be correct me if i'm wrong but there's a big emphasis on technology oh woods kind of have and have there's a there's

a kind of there's a tech side and then there's like the finance economy there's a huge tech component and it's a component we know in the states it begins in the venture capital area it. goes through financing rounds with her then we end up on nasdaq with an i.p.o. hopefully this is the exit strategy for the the c. investors the venture capital investors and i want to ask you specifically about one company and get your thoughts on it because there's a big debate out there groupon ok it's pretty i.p.o. they turned out a six billion dollar offer from google they attempted to go public at a twenty thirty billion dollars valuation there's one school of thought that is looking at groupon end the words ponzi scheme have been mentioned yet is this a fair or unfair the most interesting argument. is that you know the original investors of say a lot of money out of a company already they've already made tons of it and so the company has never been

profitable and yet you have early players including the c.e.o. who've already cashed not totally cashed out or anything but have you know taken a lot of cash out and there's so now they're still cash hungry but it's not a ponzi scheme in les there is no business there and there is a business there and they're making more and more money from their existing customers have excellent customer loyalty growth are still crazy businesses generally still like it though there are issues and lots of competition so it's not a ponzi scheme because there's a real business and i think the what people are pointing to when they mention ponzi scheme is the fact that they lack of really they repeat customers in other words they make a big splash think it's not is yes it's not that bad actually they make their repeat customers aren't debit that is the big controversy the question is do they need to just keep adding customers in order to make them better that's right that would be if you feel like if you were to shut down customer acquisition right now

yeah and just you know because the murders that they have to be able to have a business in there is an argument that they would actually it's not clear that they have to. keep spending like crazy but that is certainly their plan and their plan is to raise a lot of money from the i.p.o. and to and without that i.p.o. money is a company so whether it's a year from now. is it would be very days you're burning through a lot of money ok fair enough let's talk about french banks for a second for morgan stanley hugely exposed to french banks is it too big to fail can u.s. banks survive a french banking collapse or the cross-currents there i would say all the morgan stanley is too big to fail in the sense that if it were to have a failure late lehman and i don't think it's going to be a surprise if it did. it would certainly have huge ramifications on the financial system you know there is this talk that it's exposed to french banks now it might be overblown in the sense that you know all kinds of banks have huge notional

exposures to various things where in fact when you look at hedges and out what the actual risk is it's a lot less. i don't i haven't done too much into morgan stanley but i do know that it's the fear of the stock it's really been getting hammered this week and it is stepping beyond you know stepping back from morgan stanley it's hard to merge in a situation which if you had failures of the big french banks p.n.p. par so as a general the rest of them it's hard to imagine the u.s. financial system not really getting hurt but i mean and this worked in teachin it is what comes up all the banks are connected on the back and now gordon brown former prime minister of u.k. referred to formally in the record of the shadow banking system there's widespread understanding that there is this dark the dark pools the shadow banking system multi-trillion dollar kind of back channels connecting all these banks are a lot of this debt is off balance sheet so to speak and the idea is that ranking is

trying to shovel cash in the front door and all the back room the off balance sheet accounts are blowing up and you can't seem to match the to is that a fair characterization i mean i think the easiest way to think about it is that everyone wants cash right or you know when we're in times like these when people or you know people get nervous. sir things are actually going bust as the baron agrees everyone just wants cash ok but isn't the role of the federal reserve bank historically it says the job to take the punch bowl away when the party gets too good now for twenty years for ten years they haven't taken that punch ball the way they keep throwing more they keep spiking it with more cheap money at what point do they get responsible. you know obama was talking of all power when he came into office but he never there's really no reason yet there's no question that what the terms haven't been good in a while in a rose i mean the last couple years have been ok for the economy but certainly i

mean when we've taken to ponderable way when there would have men like prior to the housing crisis the feds should probably have been more proactive. to see that there was too much bad lending going on because that's essentially what that means essentially means there's you know the fed needs to step in when. there's too much credit creation inflation we really haven't been like that in a while and we certainly haven't been like anywhere near too much lending since the crisis or since the crisis that it's not a solution to just keep rates low for ever. it's certainly not going to fix the economy but it has kept the financial system a lot of which is i would argue pretty important isn't there a case i mean made there as you point out the credit has been in short supply during this crisis but in do large part not to an economic slowdown necessarily or a business cycle trough but to outright bank fraud isn't there

a case to be made that maybe someone needs to step in and bring some justice to what are obviously some criminal activities going on in these too big to fail banks i mean is two different things i think the reason that there isn't much lending is because the private sector households have too much legacy debt and their main. the main goal at this point is not to take on more of it it but it's you know to pay down the old debts that they rang up there may be. role for more criminal more prosecutions of the fine and you know people who are involved in the bubble and the bust who say those will be other said when he says right well this is a little odd you know you say the private sector saying i too much debt and then here j.p. morgan jamie dimon or j.p. morgan saying that well you know basil three agreement is inconvenient for us we don't really want to comply to minimum capital requirements we just want to put out as much deadly possibly again just thumbing his nose at the whole idea of

regulation the idea of sound banking i mean look who's going to stop and put attorney can on this guy he's a rogue banker he makes her own career will seem like mother teresa jamie diamond. you know i actually think. i'm going to skip that. i just know that i just missed it but. this is just. because you're a journalist here representing oh this is what i say interests of this industry and i'm making a serious charge here what is it your business is it is a flagrant law breaker per the castle through court like he's not a flipper or log record he's made an argument in a newspaper that a certain aspect of the regulation favored european banks over american banks he's actually he's not been he's never made the argument that you're trying to say he made which is that he doesn't believe in capital requirements or regulation he actually made a pretty specific claim that. the way bezel three treated this one kind of i asked

that fundamentally disadvantaged american banks and that's all he said so i don't compare him to a rogue trader i think is a little dramatic but i'm just point of credit i think the key thing that people need to realize is that there's household debt and i and there's you know the supply side on the banks and there's government debt and people talk about them as though they're all the same to decide to work there's too much debt but specifically i think the problem is not that there's too much government at least in the u.s. but there's too much household debt and that's the bottleneck for the whole economy all right we've got about a minute left i want to go to facebook questions one from jason bishop he asks joe wiesenthal what possible reasons are there for investors to be buying u.s. bonds and when the us is the one with all the debt what kind of investors are they and the u.s. is a fantastic track record of always paying back its debt and times like this when people are panicking there isn't you know you look at things that are incredible

histories of preserving your money and and are liquid. which is i think why people are dumping gold right now and are panicking now because because people worry about liquidity right now they want. cash they want the most liquid they're not worried about the u.s. dollar depreciating and that's kind of like a secondary concern at times like this they just want the most liquid stable assets stockholm syndrome i don't believe it's ok let me know that's most of karl h. i'm sorry carl it's tattooist why did he joe wiesenthal a few months ago still say that the bad economy is exaggerated does he live in the real world or in a computer world i live in a computer world i live in a total bubble and i live in new york where the economy is pretty good and i don't see how the real world is joe wiesenthal thanks so much for being on the kaiser report thanks for having me all right that's going to do it for there's another kaiser report with me max kaiser and stacy herbert and i thank my guests joe wiesenthal and want to send me an e-mail please do so at kaiser report r t t v dot

ru until next time this is max foster thought you know. the. real you believe in something. from. the future. from. them.