that never persuade the face but hardly argument that they're being overly dramatic . wealthy british soil. is no time to. market why not come to. find out what's really happening to the global economy with much cause or run no holds barred look at the global financial headlines tune in to kaiser report on our t.v. . world for. bringing

you the latest in science and technology from around for sure. we've got the future covered.

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 i'm looking over a three point six billion euro clover that i overlooked before yes the new president and the new minister of finance people have discovered 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 stacy herbert yes max the luck of the irish speaking the irish are 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 i am a bail out condition sacro sanct well you would think the two would match up and 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 and all the benefits accrue to all the same products 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 degree of it is that they write so i looked it up 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 lens 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 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 write the word unsecured i think needs to be highlighted there and 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 wrong. 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 all simultaneously cutting the very phones you would need to grow your economy so they're 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 best of all 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 that'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 euros but over in the u.s. we have this headline and that's client funds said to be located at j.p.

morgan yes they miraculously found those missing funds and j.p. morgan. the guess 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 from where i know what that billion dollars there somewhere somebody's good life masters on the phone as you must know where that billion dollars is where they actually found two point two billion dollars say said the i'm not going to suffer doesn't it with life matters as 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 global resigned in wake of bankruptcy filing i'm sure they

gave a huge golden parachute as a 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 thanking heaven skies oh yes i believe the pope is going to beautifying him you'll be safe course very soon beautiful beautiful i was going to the beauty parlor to be beautified by the pope well this is the thing about the vatican they've got it they need to rebrand themselves because all the old terminology nobody can get it to get behind in the lore. so you're going to have his old new do is going to have a no you don't make up remake over he's going to beautified here it was same 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 it's this charity he's going to give back to the community . i tribute this 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 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. we. are friends of. course everybody should go to work. he's 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 these loans to all these poor schmucks out there and all he received was two hundred eighty five million payout what do you think that's not ok so you're talking about the former head of countrywide countrywide of course was bought up 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. to 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 in committing forgery of course documents and giving

loans to muskrat sewer living in tree stumps half a million at a time in 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 there were the friends of angelo mozilo where the famous 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 him selves and he's off there sunning himself laughing his two who are some of the other martyrs that were prime crisis told the martyr well dick told him so i'm sure considers himself to be a martyr he still doesn't understand yet our jim jimmy cayne over there where stern

is a martyr of this horrible. but 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 stacy herbert transubstantiation is exactly the term this is in other words the eucharist it's not a figment station of the bone and blood of christ this is the actual bone and blood of christ during the eucharist that's because of the transubstantiation so you're saying you're applying that to the subprime mortgage market and i respect your ties and. it is essentially dog poop and having movies give it a aaa rating credit it becomes godlike actually it becomes worth something it delivers 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 mentioned this and your first evening here at the kill comics festival you talked about where you would see the fraud happen and it happens by of the i.p.o. market groupon is value soars 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 groupon is a ponzi scheme all their original customers are canceling out because they don't make any money off taking advantage of a group on offer which are discounts to the point of you are 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 dollars ponzi scheme but when it

was taken public of course they first a pop is critical and this is engineer by offering a very few number of shares and they're all in the aftermarket the banks who underwrite this offering are buying in the aftermarket which is technically illegal but it's something called laddering 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 part of course is you pay off all the lead against in your lawsuits so all the law people are still in the underwriters maybe it's goldman sachs or 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 ever account which is they've accumulated by doing illicit illegal deals over the years and they. churn that a few times and they use it basically a currency to favor political courage because of course in washington a 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 want 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 like the subprime crime is that almost all of the financial media. openly that this is a policy don't invest in this but still a pop thirty percent right it just goes to show you that the the business of america for all of wall street is still alive and kicking and despite all the macroeconomic events that are plaguing the rest of the world well stacy 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 tiger this is the kaiser report i have to kill konami festival in kilkenny ireland and we're about to speak with constantine he is the ad junk lecturer in finance for trinity college dublin and holds a number of other senior research positions and international companies and

organizers he was also mentioned in today's irish times as one of the new breed of economic rock stars constantine welcome to the kaiser really works i think 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 i think of my eyes as the destruction of the proper bank and sort of banking system around the world is probably the most reckless celebs are in the advanced economies during the the latest boom which predates 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 they risk you know measures get abandoned how did that what was their technique or how did they simply

not be able to apply any risk analysis was for the rest of the banks they didn't have to do much of that is going also because the liquidity of funds and was very cheap so as a result with whatever you lose in the markets you can make back in terms of the margins in terms of the appreciation on that as a base which is a typical classical if you want us a bubble so in some ways if you think about it not just a large bank that was just a more extreme case but the entire bank insist. 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 spreading that is a very kind of you know indiscriminate way across the economy 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 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 and a blow off was also a precondition by the fact that there were systems regulatory systems and supervisors systems both in europe and the particularly in ireland but also in the united states which have diverted the efforts if you want to pressure which is building up in the system itself by creation of those artificial assets artificial if you want increases in australia asians and also the if you want to be surprised in the liabilities risks and what you're doing and others within the system all of that was diverted 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 the derivative instruments in the case of the in the case of ireland it was the class of assets we should 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 on the price but it was also diverted which 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 rates of insolvency such as the goldman sachs deals that they have done to put parts of the some parts of the earth as well but even apart from that we knew that that was the insolvent pull you need to look at the current accounts greece has not been. and in the last twenty years for more than just one year probably out of with our them by the way in the last ten years there's only been sold them for one year in terms of the current account surplus and this is what was going on the governments were continuously using the banking system to board from the markets through the most through the banks as well and this is also within carter's the banks to accumulate the liabilities of the state owned us insight so that he's not only guns and was rising and was on price but it also got compounded by the fact that the east was released into if you want the books of capital it was treated this is these little things at the same time as these schools rise ok it's

sounds to me as if you could buy insurance on a car accidents let's say of say it's a formula one high speed car race and you're buying insurance on a driver but you're dividing up and churns into 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 matrix of risk and there are factors 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 that kind of a context of what we call blocks blocks more than bounce very much extreme events at the tail of the probability really of your saw the risk stream advance and that is a statistically can't happen in a price everything else is if there's not going to be an extreme event which keeps capital cheap which keeps out the pricing rises up in the regulatory slush

financial system around the world is that in effect we were playing russian roulette and up to every round we will lose and you bullets into the barrel so sooner or later we've had the entire viral load that was no pro the probability of blowing your brains out in this current environment was a 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. happing were one hundred percent oh absolutely true the difficulty of course it's different from know when exposed after the fact that they will have to how can one hundred percent probability and knowing at the time because the game was so big and the game was moving so fast the banks like banks were moving very fast at the rates remember that back in two thousand and six if i believe correctly the summit in switzerland the globe the world economic forum summit actually voted the anglo irish bank as the best bank in the world and all of that was pretty good sold 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 on these bad derivative 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 stands i mention this all the time and people are confused by this because there are a few there are used a credit card or sixteen percent or seventeen percent i think of these big banks across capital is less then zero explain that well in many cases it depends on the timing right now they're facing less than zero cost is because they get subsidized capital injections from the governments and they can go and use these capital injections too if you want boru from the central banks the cheaper rates so as a result we can take large banking supervision right now that is being in the last three months have received a sizeable injection of capital in form of the government. and government bonds what they did with those gone is that they took those government bonds and put them

on the balance sheet then the went to the people window so that if purchased with the cd they put them as a collateral from the c.b. at one point five percent interest rate and then bought 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 went into the banks in august september the irish banks who are the largest banks. more than three d. and worth of the government of ireland and this is all done with government bonds i discovered once went up in price the government turned around and immediately started presenting that as the case of the position that this bill this is a work in that there isn't this common handy and gold will feel the decline of the bones in the whole ponzi scheme continues to roll in over both in terms of that if you want to factor the government with its claims to be and the banks pretend that they're healthy and the government in return pretending that the banks are healthy because that helps them to pretend that they're themselves healthy isn't this a form of propaganda of course it isn't so it appears guys propaganda now people

absolutely so say 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 if the government and the banks colluding together can create the illusion of a trend then they can come out and say that things are getting quote unquote better but at the same time forcing through more draconian us thirty measures right european governments through the systems of corporatism that have existed here for decades this is the government's move in europe over the economic policy and politics as well as governments by consensus of interest groups and how they were chosen different than fascism because people say fascism classic 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 or national as they mention the european corporatism so they doesn't have the national as they mention it is more benign but economically from a konami point of view 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 trade unions social people or what we call that are the words environmental groups the groups which are trying to come back and some of them actually have noble if you want objectives as well and then on the other side there is a big organisation which unites all large businesses in this country called back and they see that for years and sort out the entire economic party even though despite the fact that a majority of them actually conceded very little to that economic pie most of the court to me is driven outside of the table and it is decided outside of the people to decide by the exporters this is decided by multinational corporations and decided by foreign investors who are never at the table i mean my drive 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 corner me which on the right is really what defines the sovereignty because we don't have army we do not have wars thank god you know we don't have physical conflicts over the borders the only conflicts we have a competitiveness conference and the competitiveness in the end is determined by things like infrastructure institutional infrastructure human capital that exist in the country and productive capacity of the economy and that's the quality of the productivity of the economy that is precisely what we talk about the economic independence here their ability to influence those that mentions those components of economic you know if you want to kind of be and these the country itself and

they say that the euro project was brought on to stop wars in europe but they're now what the euro and the institutions that 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 there is outward facilitated a new kind of one. their ease this week was very much clear point whereby the european political project has. from the democratic project we should be very careful by the way when we're talking about europe europe has two components it has a very sick component the so-called euro zone the common currency component which is really a very deeply mistake because it was never based on the premise of the democratic institutions of checks and balances and as a result of that it became democratic as we have seen this week and europe with a large europe is very beneficent and very productive institution if you want because it is an institution of free trade people billeted of people free mobility

of capital this is exactly what we want this is exactly what we need we need more of it and all of the call them they say in 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 democratic country cannot hold a referendum on something so fundamentally important such as loss of its economic sovereignty as we have seen in greece because it's a very good that's all the time we have thanks so much for being on the kaiser report all right now going to do it for this edition of the kaiser report from anomic from kilkenny ireland i want to thank my guest cause i think you can find him on the web it should be easy because he's a rock star economics so next time there's a backscatter saying. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you don't. charge is a big. grin

take three three. three stooges side free. old free lunch just plug in video for your media projects a free meal gogarty dot com.