thank you it is what about all of these this money sitting all over the world what's going to happen to it this last week in germany we saw a chinese company sunny he purchased for about five hundred million dollars a look very large german company and. we're going to start to see this we're going to see asian countries start taking this money send it back to build markets and buy real companies with it and it's going to be a major train to come in in the future all right well in the united states it's aims like they're prepping the the landscape for at these chinese companies to come in and buy the strategic u.s. assets they they have totally destroyed the unions they've introduced the president dr complex make it very easy to put people in prison they have more of a chinese style state capitalism now with the politburo of the federal open market committee it's no longer free market capitalism so laying the groundwork for a chinese you know setting the table so that the china can come in and buy

a company and hit the ground running so to speak without too much problem so it's out assumes like america is doing its best to accommodate their new overlords the chinese now many comment commentators in america of course dismiss china as the low wage low value manufacturer of global predominance these what are your thoughts because there's a lot of. chinese sears goes a recent articles last few weeks in forbes by gordon charles who's a big. chinese here wrote a book called the coming collapse of china the only problem was he wrote a book in one nine hundred ninety eight. so we look at the structure of the chinese economy what does china export united states what does the united states export to china look at the real numbers the major exports from united states to china last year was cornered so we beans scrap steel and scrap plastic looks more like

a eighteenth century economy what we see in united states the other hand what you see is china exporting their number one export united states is now electronic equipment. manufacturer manufactured look tronics so china story twenty years ago on the low wage low value added in but it's sorry nor is it many american companies are going to get global competitors coming out of china in future yeah you mentioned scrap metal scrap paper yeah if you look at the list of exports from the top twenty states that export to china from the united states number two or number three on the list is always garbage america's excellent exporting its garbage to china like scrap paper for example which of course china recycles into cardboard cardboard boxes and resells back to the united states and has made many many billions of dollars for people over there who are not afraid of doing

a day's work of course in america that's not in the cards anymore it's more about getting that electronic payment down there at the wal-mart to pick up some baby formula now stephen roach and jim rogers are almost alone amongst western commentators in praising the medium to long term for chinese economy and claiming that any short term housing market or economic slowdown will be a soft landing so those guys are in the pro china camp. you're there in shanghai. so it's not if we there whether it's a soft landing or a hard landing you're saying whatever the landing is doesn't make much difference the one clear trend is that they're going to take their cash pile of money. and start buying into countries like the u.s. correct yes absolutely i think when we talk about the chinese economy a lot of the anti china stuff that relates to housing you know the americans have for twenty years lived in a printed money transfer payment military industrial complex economy they just went

through a housing bubble so they believe everybody should have a housing bubble what they don't realize here is half of the homes in china have been paid with cash the other half have at least thirty percent downpayment so there is no credit bubble so to speak in housing. china has experienced somewhat of a you could slow down if you could call it a slowdown you know eight or nine percent g.d.p. growth but really what the people forget is that this is an engineered slowdown chatto wanted to slow down the economy growing at twelve percent a year it was too fast with the high inflation environment with with all these central banks continually printing money last year a corporate loan now in china is nine percent. there's direct korean laws to stop people from purchasing homes so you can only literally purchase one home right now you can't purchase another one if you already own one so i don't see a troubled economy in county where you people are buying cars and homes for cash

and where you have to try to slow down the growth i see the big trouble in united states where last year we went into a five trillion dollar debt gap adjusted debt which is honest balance sheet off balance sheet liabilities to create one percent g.d.p. growth that's more what i'm worried about let's move on to our gold for a second because forbes that mouthpiece of the entranced kleptocracy is recently talking about why china is buying all because it's capital flight and it's not their teeth again anyway but it seems we hear a lot of people talking about strategically china want to buy gold insulate itself against a collapsing dog. all are your thoughts yeah buying gold you know forbes i basically work in their own agenda here behind gold in china and capital flight are is actually there's actually no correlation there last week beijing daily reported there was over one hundred million dollars in gold sales in beijing alone they go

upstairs stores headlines out the door and gold is really become a big chinese new year's gift here in china its sales in the first week after new years were up fifty percent from last year this gold is not. been going over seas with people leaving planes it's getting put into family has to be handed down generation after generation the capital flight issues entirely separate issue if you look at the very you know a lot of the wealthy people in china there is a lot of the corruption here no doubt there's a lot of ill gotten gains and a lot of capital flight is due to some people in china diversifying their assets if they're ever. caught or where if you know somebody discovers what what how they've made their money they need to get away plan and there are some people that have prepared that that's where most of the capital flight issues are coming from her we've got

a couple of minutes left i want to cover some topics here you recently compare the chinese and u.s. economies but you didn't is the manipulated g.d.p. numbers but on raw data simply wanted to find and collins yeah find g.d.p. is a you know really have some problems with it it's almost an obsession with a with the american academics. but in reality does anybody really look out the window as they fly over the cities in the united states look at detroit cleveland buffalo and now the empty suburbs near vegas where is the economic growth you know i just don't see it i take a look at the numbers you know the u.s. of the fifteen trillion dollar g.d.p. and china has a seven trillion dollar g.d.p. which means united states roughly you know more than twice as large as china but china makes ten times the amount of steel three times as many vehicles they purchase they consume twice as much beer they export three times as much as many

high tech exports as the united states does. three times as much cotton five times as much coal other lists go on and on the so the cell phone markets three times as large so i'm just wondering how you know if we get duct print. money in government transfer payments what would the g.d.p. of the united states really be you know i think that's really a bubble that nobody sees is there the american g.d.p. is a complete fabrication and i'd also highlight the manufacturing numbers you know many people including academics high level policymakers united states will tell you well we don't need to worry united states is still the largest manufacturing economy you know the federal reserve has admitted they don't break up the value add in those numbers so you know you know this is nine million people working in manufacturing i can drive within an hour of where i'm sitting right now if i nine million people working in manufacturing there is no way the united states has

a larger manufacturing economy than china yet we still live by these allusions on our numbers but no nobody pretends that america as a manufacturing economy or g.d.p. tied to manufacturing is tied not to making stuff but the blowing stuff up the military industrial complex is a huge part of the g.d.p. and debt which feels the military industrial complex is huge part of the g.d.p. every to shock and awe was a huge g.d.p. booster in america right now we only got a minute left intellectual property you know china makes all the stuff but you know apple computer gets all the ip glory when it's time to going to do their own ip yeah this is the thing china struggles with they know that there. will have to see if they really can turn around i think you know japan got a rare ten fifteen years ago for not having any innovation i think that was largely overblown japanese companies learn to create their own ip korean companies learn to

create their own ip i think china is on its way i mean at first when you're developing in the qana me you're focused on import substitution and being able to make your own products just based off what's already out there i think now you see a lot of vehicle market you see the major car makers the general motors and for. or are doing a lot of their r. and d. electrical vehicle manufacturing are going to be done in china they're tailor making the cars for china that will then go all over the world so i think the chinese companies are behind me they know that and we'll have to see that develop over you know that's really a soft skill and i think we'll continue to see that over the next decade yeah they're going to be forever behind the curve unless they relax censorship because you've got to be able to say some crazy stuff to come up with some crazy ideas that get patented that drive ip that's all the time we have daniel collins thanks so much for being on the kaiser report thanks very much max and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i'm with

my guest daniel collins over there in shanghai is going to send an e-mail place to start kaiser reported r t t v dot ru until next time x. guys are 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 realized everything you thought you knew you don't know i'm tom harkin welcomes the big picture. more news today violence is once again flared up. these are the images.

from the streets of canada. chunk operation to rule the day. well i'm sorry washington d.c. and here's what's coming up tonight on the big picture. does mitt romney really dislike poor people i will work for or work right to work for less laws in indiana affect workers in that state was not a dog cage on top of its jet answer those questions and more and it's big picture rubble and our nation was founded on the promise of a representative democratic republic however it's becoming more like a corporatocracy how did this happen and who's behind it but i will lead our show

with conversations with great plans. for tonight's conversations of great minds i'm joined by michael w. hudson mike is a reporter former reporter with the wall street journal also an investigator for the center for responsible lending his writing has appeared publications like forbes magazine the new york times mother jones and much of their writing has been devoted to the foreclosure mortgage crisis still plaguing our nation today as well as the corruption in the big banks on wall street which underlie our current financial crisis mike is widely recognized for his work has been a ward of the george polk award for magazine reporting that john hancock award for business journalism has received multiple accolades from the national press club an american bar association among others currently mike is

a business and finance writer with the institute for public accuracy and is the author of the book the monster gang of predatory lenders and wall street bankers fleeced america and spawned a global crisis mike welcome. but thanks for having me tom i just want to correct you upfront it's an easy mistake to make actually work for the center for public integrity center for public integrity thank you very much mike where does your interest in exposing corporate corruption and greed come from and what attracts you to this field of reporting. right you know as a reporter i try not to come into things with sort of big picture ideas or with an ideology of what's happening. you know i was just reporting on. what was going on at individual lenders individual mortgage companies individual financial institutions and you know as i was doing that i came to see that one of the things one of the questions that maybe at first not consciously but then later consciously

but it was really asking is how do you in a large institution how do you get thousands of people who may be spread out branches all over the country even all over the world how do you get them to tell a lot to tell lies to fuel your business model. either either tell lies or sort of accept the party and ignore or condone these lies how does this happen so that's kind of been the focus of my work over the last few years in writing the book the monster but also in my more recent work for the center for public integrity i'm doing a series called the great mortgage cover up which is really about what happened to the people who spoke up within the mortgage industry you know there's a lot of you have a lot of c.e.o.'s lot of their supporters in the fancher press who have said well how could we have known this is this was like a financial act of nature it just happened we was so unexpected but the truth is there were people working inside almost every one of these large institutions who

at some point or another was were raising the questions or blowing the whistle and saying you know there's there's fraud here there's there's serious dangers going on this is going to crash the company this is going to hurt bars it's going to hurt the economy and the truth is that they weren't listened to and in many cases they were actively silenced and i'd like to get into that the fate of the whistleblowers the difference between the corporate whistleblowers and government with the wars in just a minute but you just mentioned you know how do you get people to lie. how do they get people to lie and also what what's the genesis of a business model that requires people to live. right you know nobody course nobody wrote a memo nominee or wrote an email and said here's a liar going to jail here's how we're going to screw borrowers here's how we're going to take advantage of people but you know there are a number of things that i think happen a lot of this happens informally a lot of this happens with winks and nods

a lot of this happens with what what isn't sad rather than what's said but you know a number things one thing is you incentivize people you pay them lots of money and you give them goals and say if you make if you hit this number if you make this x. million x. thousand x. x. number of dollars in sales this month or this quarter this year we're going to pay this much so figure out how to make that happen the other thing is you do play to people's cratylus in this to their knives you know you tell them you're doing a good thing and that you know in the mortgage space this was well you know a lot of these folks are poor they would never have a house without us so we're doing them a favor we're helping them out giving them a house course you know there was a mention that that the likelihood is they would be able to hang on to these houses or that that were were refinancing people who are already in houses and were instead of help and they were actually making it more likely that they're going to lose the house the other thing is this is something interesting that whistleblower work for countrywide told me is you really divide the work load you divide the task so it's a bit like a factory line so you have lots of folks at countrywide who are doing bits of

a transaction they were doing pieces of it they were they were filing one document or they were doing one function and they were unable to see the big picture because they were sort of info barriers in between and people weren't weren't allowed to talk to each other or didn't talk to each other so that's the other way and then the then the i think the fourth way that brings us back around to what i said before is you is you punish the truth tellers you silence the whistleblowers and and mike. this to the best of my recollection this wasn't going on in the ninety's certainly doesn't seem to have been going on in the fifty's sixty's thirty's forty's fifty's sixty's seventy's maybe until the eighty's you draw some parallels between this in the in the s. and l. crisis during the reagan administration but what is the what is the what is the thought when did it start and what's the thing that started. tough question but you know it's very true you know after the stock market crash of one thousand twenty

nine after the new new deal reforms of the one nine hundred thirty s. you had a long period throughout the forty's fifty's and sixty's and into the seventy's where we had basically no banking crisis a crisis very few bank failures and that's not to say that there wasn't bad things there was an occasional fraud on wall street there were occasionally banks that were doing bad but in terms of sort of systematic endemic corruption you just didn't see it and part of that was because because there were strong reforms and there were some rules of the road but as those rules began to be weakened as they began to be loosened and we went to an ideology we'll let the industry police itself starting in the sort of mid to late seventy's with the carter administration and then going into the reagan era in the eighty's things started to change and we had for instance the savings and loan crash which was just really an orgy of corruption throughout the country. you know thousands of.

institutions when under. and then in the aftermath of that you know there weren't lessons learned a lot or if there were they were quickly forgotten and we continued on this path deregulation and really i think deregulation isn't even the right word it's really self policing allowing the banking and history allowing wall street to to watch themselves some years ago when he was still alive we did a fair amount of coverage of william seaman who was the guy that ronald reagan appointed to take to had the agency that he started up in i think was eighty six when the s n l's crashed the resolution trust corporation as i recall was the name of it and they said they they sent you know prosecution efforts to over six hundred people over a thousand people went to jail if by recollection is correct it's been a few years and it is

a. what you know did you say nobody learned anything from that because that was largely a direct result of of you know arguably the last two years the carter administration jimmy drinking margaret thatcher's deregulation kool-aid and then reagan deregulated the us nels but you know i did well i guess that's the question did we learn nothing from that going forward. i mean we should have learned something and they were certainly lessons where they are laid out bare and you know and the prosecutions of people like charles keating of the keating five and lincoln savings and loan fame but it was quickly forgotten and i think there was a backlash and a really aggressive campaign from the banking industry to soar paper over the problems and blame it on other things and say moving forward we need to continue down this path of of deep policing the market and

and what was driving that i mean who was behind that effort. you know it was it was both the industry itself but also a lot of free market economists who basically believe that. any sort of regulation was was wasn't even a necessary evil it was just a plain evil well there's and there were yes there were a lot of people in government who who bought into that you know i those same people super bowls coming up those same people would never in their wildest dreams imagine a football game with no rules or where the referees could be could be bought out by you know whichever member on whichever team had the most money or you know whatever team decided they wanted to or had the most money could actually move the goalposts i mean they they get it in sports why don't they get it business. well because it's so profitable at least in the short term for the individuals not

message over their stations you see the institutions in the long run folks like bear stearns and and lehman brothers i mean they crash and burn but the people who work there aren't incentivized. to worry about about long term safety they're incentivized to worry about short term profits and especially their short term bonuses and short term sours that's how they were awarded is for having that that next quarterly number for increasing their profits in this quarter for increasing revenues but i mention that there were a thousand people who went to jail that you know by the reagan administration in the s. and l. crisis why do you think it is that i mean this is an order of magnitude larger than the s. and l. crisis why was it that no one went to jail this time. it's a good question it's really sort of inexplicable to me. i think part of it is that . it takes political will to prosecute people and president obama is very

much a meat in the middle kind of guy. and you really you know and in some political issues that may be effective but it's you know you really can't if someone commits a crime if somebody commits fraud compromising with them other than say you know doing a plea bargain which which in which they then. point the finger up the line and provide evidence on people higher up the line that's not something you can really do if you're going to prosecute people if you prosecute people you've got to be willing to kind of grit your teeth and just do it yeah yeah and in both the bush and the obama administration seems that perhaps some of the people involved in that were fairly close to their administrations or even in them but i want to get into the role of whistleblowers and in fact to that issue but we've got to take a break here first so we'll come back with more with mike hudson right after this break more conversations the great minds of miko's.

we just put it to me when i was like nine years old on this if you tell the truth. i confess and i am in total get of that i would rather have thought he was and. he was kind of yesterday. i'm very proud of the world with his place. you know sometimes you see a story and it seems so. you think you understand it and then you glimpse something else and you hear or see some other part of it and realize everything. i'm sorry

welcome to the big picture.

i'll go back to conversations with great minds i'm joined by mike hudson business and finance writer for the institute for public integrity and author of the book the monster our gang of predatory lenders a wall street bankers least america and spawned a global crisis let's go back to it mike was when we were talking as we ran into the break. i said rather you know kind of just off the top my head that it seemed to me that some of the people who might have been involved in crashing our economy were actually inside the bush and now obama administrations and that implicitly might have had something to do with their reluctance to prosecute we're trying to figure out why is it that a thousand people went to jail the reagan administration for a small crisis in s n l and there's a huge crisis. and nobody has and you started to say something let me just toss it back to you. well yeah i mean there were definitely folks who were working inside wall street who who are now in high places in the in the bomb ministration

folks who were who worked at wall street banks or folks who were corporate defense attorneys that doesn't mean that they're incapable of prosecuting it just it just may give you a sense of the this sort of. ideological bent of some people within the administration so. do you think that well ok ok so let's talk about the role of the whistleblowers you you you mentioned earlier that there were people within the industry who were who were yelling hey yet at the same time i think all the public saw was all this advertising about hey you know low rates you can get all this and i remember the seminars so you know they were they were posted on. lamp posts and things you know they heard the ads for them on radio and t.v. constant come to the seminar and learn how to be a millionaire and the way the way basically that they were teaching people how to

be millionaires in fact i had a friend who got into this and and was you buy a property no no money down and your rented out and then you take that rental money in as income and then you buy another price and you just you know build a little real estate empire that's all based on debt and it's all based on the assumption that the value is going to go up forever and. that that kind of burst to so so where why did why would the whistleblower's not heard by the general public and who was listening to them and how did they respond. right well i think part of the problem is with the general public is the general public. you know i think when we talk about lies and how lies survive i think about homer simpson and you know marge it takes two people to lie it one one person to lie to tell the lie and one person to believe it and the fact was during the mortgage boehm and really to the mortgage mania because of.