for the pioneers race local cuisine to please. put your future developments depends on great. russia's black sea coast should close up on heart see. the world's longest subsidy pipeline is said to start pumping a russian gas to warm up western europe president to be out of his in germany ready to flip the switch. it's a race of for the rescue funds in greece with the prime minister and the leader of the opposition scrambling to form a government with enough power to resolve the crisis. and as israel threatens a strike on the ranch on top of recent ground invasions of lebanon and gaza its young people are increasingly turning their backs on the army. up next to max and stacey ask whether the pope should be keeping the pontiff preys on a man who's lost hundreds of millions of dollars of people's money.

i max kaiser this is the kaiser report i'm here in ireland kilkenny ireland there's a new song in ireland it goes like this on looking over a three point six billion euro clover but i overlook before you know it's the new president and the new minister of finance people have discovered a three point six billion euro hole in the accounting budget that they didn't see before such is the way things are going here in ireland herbert yes max this is the luck of the irish speaking the irish going to be the irish times here three point eight billion euros in cuts and tax increases coming in budget michael noonan the finance minister says e.u. i.m.f. bailout condition sacro sanct well you would think the two would match up you know i just talk about a three point six billion dollar magical leprechaun like find by the new president

and this three point eight billion dollar requirement of cuts you think they would match up but of course in this world of economics we live in all the benefits accrued all the same crux and all the hysteria borne by the general population the word that i'm looking at here max is sacrosanct because it's a word that we see over and over when it applies to any bankers' bonuses or their contracts or their various three of it is that they write so i looked it up online sacrosanct means regarded as too important or valuable to be interfered with immune from criticism or violation and treated as if holy yeah well that's the trick isn't it the bankers have become the new clergy in this globalized financial world so all the vatican is suffering catastrophic moral collapse here in ireland with ireland canceling and closing their embassies in the vatican. at the same time they're giving birth to

a new papacy of investment bankers who believe they walk on water and go unchallenged through the land of bestowing their indulgences for a small fee of course well of course in ireland it would be now the fed the treasury and the holy troika the fed the treasury and the holy troika i like that so we're going to look at one of the elements of this budget is that they're making it a seven hundred fifty million euro cut from the capital investment account for the nation but at the same time this week they paid off seven hundred fifty million euro in unsecured anglo irish bonds right the word unsecured i think needs to be highlighted there that means that the issuer is taking a risk fully in the knowledge that there is a strong possibility they won't get paid back and this is what own secured means so

the fact that the irish government is deciding to pay this loan anyway shows you the what i would have to call stockholm syndrome they fall in love with their captors haven't they and they believe that they will just give you all money even though you don't in any way legally there's any real statute that would require us to give you this money we're going to give it to you anyway well simultaneously cutting the very funds you would need to grow your economy so they're not going to pay this debt going forward because they're cutting the very source of future g.d.p. growth this is the very definition of insanity played out brilliantly here at the kokomo much festival we're hearing all about how this is all being done from a whole panel of economists who are going into great detail as to why the sudden emergence of a fiscal and monetary papacy is destroying europe and place of the vatican and it's now been completely discredited so we move from the fed the treasury and the holy bond holders to the miracles that are actually being created we talked about one where they found this three point six billion. but over in the u.s.

we have this headline m.f. client funds said to be located at j.p. morgan yes they miraculously found those missing funds and j.p. morgan. yes whether it's. fishes and loaves feeding the masses or turning water into wine you can always rely on jamie diamond to come up with the goods and a miraculous discovery of seven hundred fifty million dollars that was hiding under the desk somewhere i know i put that billion dollars there somewhere so i want to get the life masters on the phone as the most i know where that billion dollars is where they actually found two point two billion dollars they said well it's the immaculate deception doesn't it with life masters is basically the new virgin birth of derivatives that are created without actual any any financial in some a nation it's merely a child born from the lawyers of a credit the full. life masters the virgin mary i see this also made it to the

headlines here head of m.f. global resigned in wake of bankruptcy filing i'm sure they gave a huge golden parachute as the thank you for destroying that particular for this is a core zine former head of goldman sachs one of the twelve apostles of the new apocalypse i'm sure he's gone to a better place in the banking haven't skies oh yes i believe the pope is going to beautify him in the state courts very soon beautiful beautiful he's going to the beauty parlor to be beautified by the pope the thing about the vatican they've got it they need to read brand themselves because all the old terminology nobody can get it to get behind any law or. to have his old new do he's going to have no you know make up make over he's going to beautifying he need to think the same core scene. well. i like how the guy commits a crime again another sacrosanct element of the futures market is of course that

you don't comingle funds he broke that and for that he says he will not seek his twelve million dollar severance that is sacrosanct in the contract he's not going to seek it he's going to this charity he's going to give back to the community still tribute to the occupy wall street movement where these guys are saying well we won't take the bonuses because they realize that the next step after that is a pitchfork up the shrink thing as we say on this show well speaking of occupy wall street we're going to move over to some of the martyrs of this financial new financial trinity this holy troika we have now and this is a little clip from mayor bloomberg of new york he was asked what he thought of the occupy wall street protesters. saying. the we. are friends of. course everybody should go. picking sides and i think everyone needs to pick

a side of this growing conflict between the top one percent and everyone else and you take a risk i mean this is we're bringing risk back to capitalism it's the risk of being impaled but he's also pointing out that we should be beautifying angelo mozilo he's the martyr of the subprime crisis because look the guy was forced to leave with only a two hundred eighty five million dollar payout and after being brutally repressed by the government that he was forced to give all of these loans to all these poor schmucks out there and all he received was two hundred eighty five million and payout what do you think of this man ok so you're talking about the former head of countrywide countrywide of course it was bought up by merrill lynch i suppose which got bought up by bank of america which will be soon bought up by j.p. morgan and the problem is. big to fail but don't look under upon the curtain things get bigger and. this basilica he of course was caught red handed

falsifying documents and committing forgery of course documents and giving loans to muskrat who were living in tree stumps half a million at a time and calling that a legitimate loan made and getting huge fees as a result and then when that one boss they got a huge payout from the government of course that's run by crony friends. who are occupying all the regulatory authorities sure they were the friends of angelo mozilo or the famous like christopher dodd included they were congress people and senators who received special interest rates on loans from mozilla so that's right he made fraudulent loans made because illions of dollars and gave it to politicians to help them reelect themselves and he's off there sunning himself laughing his two who are some of the other martyrs though of the subprime crisis told me in order

well default i'm so sure considers himself to be a martyr he still doesn't understand yet our jim jimmy cayne over there paris turned to the marvel of this horrible. and put it in biblical terms there was a flood of credibility that came and destroyed the miracle workers as they were turning essentially what you could call dog poop into securitized mortgage backed securities traded amongst the major banks around the world it's called transubstantiation. that's exactly right facing herbert transubstantiation is exactly the term this is in other words the eucharist it's not a figment of the bone and blood of christ this is the actual bone and blood of christ during the eucharist death because of the transubstantiation so you're saying applying that to the subprime mortgage market and my recent euro ties into. it is essentially dog poop and having moody's give it a aaa rated credit it becomes godlike actually it becomes worth something it's

liveries you to the american dream it was often called that was heaven was the american dream yeah before america went bankrupt they had this idea speaking of transubstantiation i have another headline here and you mention this in your first evening here you're at the kill comics festival you talked about where you would see the fraud happen and it happens via the i.p.o. market groupon is value source on first day of trading controversial coupon seller now worth nearly eighteen billion dollars the shares popped thirty percent on the first day tell us about it was there would be this huge i think i said thirty to forty percent pop on the first day and sure enough this is exactly what happened this is first of all the group on is a ponzi scheme all their original customers are canceling out because they don't make any money off taking advantage of what groupon offers which are discounts to the point of we were losing massive amounts of money so all the original customers are not responding up so they need new suckers to come in to groupon that's the

very definition of a ponzi scheme so now this is an eighteen billion dollar ponzi scheme but when it was taken public of course the first day pop is critical and this is engineers by offering a very few number of shares and that all in the aftermarket of banks to underwrite this offering are buying in the aftermarket which is technically illegal but it's something called ladder and they do it anyway so laddering of i.p.o.'s means that you can engineer a price appreciation there's very little stock in the float you can't sell it short because all the stock sold by the underwriters and what you do with that pop of course is you pay off all the lead against in your lawsuits so all the law people are suing the underwriters maybe it's goldman sachs j.p. morgan anyone who's got a lawsuit pending they use the i.p.o. stock as payment as hush money to pay them off they use it to take care of any errors in their error account which they've accumulated by doing illicit illegal deals over the years and. churn that a few times and they use it basically a currency to favor political courage because of course in washington most lobbyist

insider trading is legal and they use it to help their campaign to deregulate market so they can further perpetuate their fraud and embezzlement of the markets and the american and global citizens through outright manipulation and fraud and welcome group on the biggest fraud of the week yeah that's the interesting thing about this is that unlike a lot of the last wave of crime banking crime the subprime crime is that almost all of the financial media being openly that this is a ponzi scheme don't invest in this but it's still a pop thirty percent right it just goes to show you that the the business of america fraud on wall street is still alive and kicking and despite all the macroeconomic events that are plaguing the rest of the world well thanks so much for being once again on the kaiser report thank you max don't go away much more coming your way so stay right there.

imax badger this is the kaiser report i'm at the kill konami festival in kilkenny ireland and we're about to speak with constantine good yeah he is the abt junk lecturer in finance for trinity college dublin and holds a number of other senior research positions international companies and organizers

he was also mentioned in today's irish times as one of the new breed of economic rock stars. saying welcome to the guys really for us to be here all right let's talk about this i know irish d.l. as this is the really the talk of the conference so far so give us more background on this and some of the numbers and what's going forward while the background is related anglo irish bank the mises the destruction of the proper bank and conservative banking system around the world is probably the most reckless ledger in the advanced economies during the latest boom which predate the current crisis it was the bank which was known as the parking lot bank because that's the amount of time it took them to approve multimedia and you were along by the time the sales person leaves the client the loan would be approved by the time the sales person gets into the car i only just got in here how did all the risk you know measures get abandoned how did that what was their technique there how do they simply not be able to apply any risk analysis with go like the rest of the banks they didn't have

to do much of that is going also because the funds and was very cheap sources although with whatever you lose in the market you can make back in terms of the higher margins in terms of the appreciation of the asa base which is a typical classical if you want us a bubble so in some. if you think about it not just a large bank there were just more extreme case but the entire banking system in europe and in the united states operated like kind of like a fire engine it was hosing out who were in out the cheap liquidity and then spread into the very kind of you know indiscriminate way across the quantity in the hope that some loans will pay back and some loans will go up ok with that that cheap money goes out there to feed speculation in real estate and that real estate is used as collateral to perpetuate more loans and so this is the way the ecosystem if you will of how things got completely out of hand because it became a self-fulfilling prophecy as long as they kept making these cheap loans the asset prices had to go up and sell such time as you had

a classic blow off exactly on the blowoff was also a precondition by the fact that there was systems regulatory system supervisor systems both in europe and in particular in our lives but also in the united states which have diverted their efforts or you want to pressure which is building up in the system itself by creation of those artificial i sense that if you feel if you want increases in our civilizations and also the if you want to use price in the villages of the six and the maturity and the other within the system all of that was their verdict by the regulatory system into if you want kind of concentrated allocation of the east into one particular class of sub assets in the case of the united states that was the class of for example didn't even have instruments and the case of the in the case of ireland it was the class of assets which are related to the property development and property investment and things like that so not only the risk was growing on the books on the balance sheets of the banks and it was unchecked and priced but it was also there versus what we see in greece today right now in part is an outcome of the poor regulatory environment for the global banking system which has treated the government bonds of insolvent governments and

we knew that greece was insolvent for a decade plus without even without discovering what we have learned since then about the deeper it's a consultancy such as the goldman sachs deals that they have done to parts of the some parts of the debt as well but in. apart from that we knew that it was deep in so until you need to look at the current accounts these has not been sold and in the last twenty years for more than just one year probably out there with our them by the way in the last ten years has only been sold for one year in terms of the current account surplus and this is what was going on the governments will continue the use of the banking system to board from the markets through the motto through the banks as well and this is ultimately in charge the banks to accumulate the liabilities of the state on their side so that is not only. was a rising and was on price but it also got compounded by the fact that the schools policed into if you want the books of capital it was because if the reason at the same time as the was right ok it's sounds to me as if you could buy insurance on

car accidents let's say it's a it's a formula one high speed car race and you're buying insurance on a driver but you're dividing up that insurance in the racing around the track approaching the wall getting closer to the wall and then actually crashing into the wall and then pricing each one of these differently and then saying the actual crash into the wall itself or the actual crash happens this in fact we're not even going to count in the overall make trix of risk and it by a factor is going to ignore that bit and we're going to trade the other bits approaching the crash separately exactly that's exactly what was happening in the kind of context of what we call blocks and blocks more than bounds very much extreme events at the tail of the pro bill to do so they foresaw the risk going to extreme events that really was a statistically can't happen let's throw in a price everything else as if there's not going to be an extreme event which keeps capital cheap which keeps out the pricing rises up in the regular three slash

financial system around the world is that in effect we were playing russian roulette and after every round we will lose and you bullets into the barrel so sooner or later we've had the entire bar loaded that was no pro the probability of blowing your brains out in this current environment was hundred percent by the end of the game and. this is exactly what will this is important to note that the the chances of this catastrophe happening were one hundred percent oh absolutely true the difficulty of course it's different from knowing expos after the fact that the will. to happen the hundred percent probability and no one at the time because the game was so big and the game was moving so fast the banks like a large banks were moving very fast up the ranks remember that back in two thousand and six if i believe correctly the day was summit in switzerland the globe the world economic forum summit actually voted a large bank as the best bank in the world and all of that was predicated soley on one line of the profitability ok when you say they're moving up the ranks you're

talking about they're moving up their ranks in terms of their ability to lay off these bad the record of bets on the global market at exchange rates and derivative rates and rates of exchange that are feeding into their bottom line because their cost of capital is essentially negative isn't it that's right they first of all explain this a little bit because people are sense i mention this all the time and people are confused by this because they're used to a credit card at sixteen percent or seventeen percent i say no these big banks are cost capital is less then zero explain that well in many cases it depends on the time in the right now they're facing less than zero cost is because they get unsubsidized the injections from the government and they can go and use this capital injections too if you want boru from the central banks the cheaper rates so as a result we can take patient right now that is being in the last three months have received a sizeable injection of capital in form of the government is their notes and government bonds what they did with those bonds is that they took those government bonds they put them on their balance sheets then the went to the people when though

they were purchased with p.c.p. they put them as a collateral from u.c.b. at one point five percent interest rate and then both more government bonds in the markets so as a result of that in august september right after it was done on july thirtieth when the injection of capital bent. banks in august september the august banks largest banks bought more than three billion worth of the government bonds of ireland and this is all who would govern the government bonds government bonds went up in price the government turned around and immediately started presenting that as the case of the bill is a sham that it's all this is not working that there isn't this come in handy in gold with real the decline of the boards in the whole ponzi scheme continues to roll in over both in terms of that if you want to check on the government with its claims to be and the banks pretend that they healthy and the government in return pretending that the banks are healthy because that helps them to pretend that they are themselves helping isn't this a form of propaganda of course it is a propaganda now people absolute associate propaganda with political propaganda

with scapegoating ethnic groups or religious groups and propaganda and terms of jingoism and and patriotism but this is a different form of propaganda it's a financial propaganda where the government and the banks colluding together can create the illusion of a trend and then they can come out and say that things are getting quote unquote better but the same time forcing through more draconian sturdy measures right european governments through the systems of corporatism that have existed here for decades this is the governance mode in europe over there can only pull the city and politics as well as governments by consensus of interest groups and how they want which is i'm different than fascism because people say passion is a connection between i would be controversial here and you know i always said that that is basically there is no difference until you come to the point of the differentiation of national dimension while national is they mention the european

corporatism so they doesn't have the nationalists that mention it is more benign but economically from a konami point of view of the system of organizations exactly the same ireland has been the rule for the last twenty years by social partnership social partnership includes government on one side of the table. on the other side of the table there are three unions social people are what we called in other words environmental groups groups which will try to combat poverty and some of them actually have noble if you want objects as well and then on the other side there is a big organisation which unites all large businesses in this country called beck and they said for years and sort out the entire economic party even though despite the fact that the majority of them actually conceded very little to the economy right most of the irish economy is driven outside of the table and it is decided outside of the table that is decided by the exporters is decided by multinational corporations decided by foreign investors who are never at the table i mean my private into town from the airport on talk radio they were saying openly that while

there is a level of acceptance with this term that ireland has lost their financial independence and they're speaking about it in those terms as if well you know as you know we've lost our financial independence isn't that the same thing as losing your independence it is exactly the same thing because in today's terms the economy and the financial structure of the court to me which are the rights is really what defines the sovereignty because we don't have army we do not have wars thank god you know that we don't have physical conflicts over the borders the only conflicts we have a competitive this conflicts and the competitiveness in the end is determined by things like infrastructure institutional infrastructure human capital that exists in the country to productive capacity of the economy in the polity the predictability of the economy that is precisely what we talk about the economic independence here there diligently influence those that mentions those components of economic you know if you want to be and that is the country itself and they say

that the euro project was brought on to stop wars in europe but they now what the euro and the institutions have come with this crisis and the i.m.f. and others coming in for foreign creditors etc there is in fact a war going on that is up toward facilitated a new kind of one. there is this week was very much clear part point whereby the european political project has decoupled from the democratic project we should be very careful by the way when we're talking about europe europe has two components the thing that has a very say component the so-called euro zone the common currency component which is really in the states very deep inside that mistake because it was never based on the grammar of the democratic institutions of checks and balances and as a result of that it became anti-democratic as we have seen this week and europe at large europe is very beneficent and very productive institution if you want because it is an institution of free trade for the mobility of people the mobility of capital this is exactly what we want this is exactly what we need we need more of

it and all of the economists today saying that the economies outside of the eurozone are saying exactly that what we do not need is more integration which is artificially grafted onto the foundations which is so shaky democratically that the country cannot hold a referendum on something so fundamentally important such as loss of its economic sovereignty as we have seen increased cost a thing i guess that's all the time we have thanks so much for being on the kaiser report any time all right as i do it for this edition of the kaiser report from cal can omics in kilkenny ireland i want to thank my guests cause i think you can find them on the web it should be easy because he's a rock star of economics so next time mr backscatter sang. well. bringing you the latest in science and technology from the ground. we've got the future covered.

all. see. that's the unsee tedious.