i just don't know that the italians or the spanish can bring their countries into lowing so that they can live like germans so i just don't know where we are in terms of the euro i always remind people that the treaty of rome and the coming together of the western european countries was an american idea and i'm not sure it was terribly well thought out the whole rationale was to prevent another war by putting all the europeans together tying their fate together but in terms of thinking through all of the details you know we've been doing it piecemeal so i just don't know what the e.u. will be in two or three years i think there will be a euro but i'm just not sure if all of twenty five countries in the in the block at that point all right chris well now i don't want to get you in trouble with the f.b.i. but did. dick did going off the gold standard have anything to do with the u.s. going bankrupt and what role could gold play if any in making it solvent again so i kind of percent presume that work they're talking about dollar

weakness they are saudi so isn't that just a presumption can you just as gold question as i said in my my book inflated gold is is symbolic is a store of value it has had a great following in the u.s. and you're right in the thirty's after your confiscated all the gold while he was devaluing the dollar to try and get the economy going. since then or even before then we essentially had the government imposed their monopoly on the definition of money in the u.s. so today gold is considered a collectible it's not even a monetary asset but this goes back to lincoln if you recall how did we finance the civil war with paper money bad money in that and the little banks fought it the big banks national banks were created to buy the government's debt so the devaluation in the thirty's was really you later the refutation if you will of a gold standard starts with lincoln and ever since. it's the government has used

paper money to propel growth layers of leverage if you think about it so we create the fed in one nine hundred thirteen you have the collapse in the twenty's and in the early thirty's they confiscate all the gold and we continue you essentially equating the dollar with gold up until today so all of the leverage we've seen accumulated since the thirty's housing global lending institutions big banks everything else or all predicated on this use of paper money as a substitute for gold in a monetary sense and we've kind of run full course if you will so if you go back to your point max gold is a haven yeah i think it is but don't be blowing toller opportunities because gold hasn't quite kept up with the inflation of the paper money world all right let's talk about paper money and the u.s. banking system in particular bank of america now i listen to you you've been interviewed a number of times on eric king's king world news and i recommend anyone who wants to catch up on the banking sector very specifically to listen to those interviews

because they are actually in but can you speak about the bank of america and where we are now with the bank america story you know there was that when it was down to five or six dollars a share there was i know even i believe i heard you say that it had a lot of risk on the downside of the stock price due to their and their problems etc can you give us an idea of where we are now that bank of america story in the u.s. banking as a whole your bank america you write went down to four dollars a share late last year largely because of the european troubles in their wisdom the european governments decided to prohibit short selling of bank shares because they're so closely tied with the government so obviously if the bank shares were falling in value so would the political prospects of the various governments in the e.u. so unfortunately when the markets get anxious they still the us financials because those markets are still open and that's i think what drove bank america down the four dollars now goes to bank you need to be restructured yes in my. in the

preponderance of litigation that they're facing involving mortgage backed securities the state of new york eric schneiderman the attorney general i think is going to be going after bank america for taxes because many of these deals were not put together properly so they were not exempt from state and federal taxes this is going to be a nuclear weapon max nobody is paying attention to and let me just jump in for a second chris mcisaac what about obama's latest deal with these banks i mean again they seem to be getting a new unity so. how's a factor into this know about limited immunity this was not a great deal for the banks what happened was the attorneys general around the country many of whom want to be governor that's what a.g. stands for by the way aspiring governor. they needed to get a deal done now because you are an election year schneiderman the california attorney general of delaware attorney general all went along with this settlement on foreclosure abuse issues but it didn't get them immunity from more serious

prosecution for taxes for securities fraud for other things that they're all facing bank america is facing over one hundred billion dollars in claims for securities fraud contractual issues from investors they're all going to go to trial and i would tell you right now i've been following this stuff pretty closely i think b. is going to lose in court so we there we restructure this company with the help of the bankruptcy court and bring this whole mess to a conclusion or we're going to face years more of headline risk when somebody like m.b.i.a. for example the insurance company wins in court against bank america and ends up with a double digit judgment against them what are we going to do then that's why i've been saying you know we really need to bring this to an end and the way you do that is either with a receiver as we saw in the stanford group or with a bankruptcy as in the case a lehman brothers but to me that would be the good news because if we go down that road then we're going to be near the end are let me describe your situation maybe tell us more about my naivete. a then anything else but tell me what we're or where

my thinking is either on target or off target it seems that every time we hear about a bailout or a rescue package or a multibillion or chilean dollar cash infusion to settle these bank debts banks suddenly from the some place called the shadow banking system say oh no we have another half a trillion dollars in debt that we didn't record last quarter and it's not ever going to stop number one is there a limitation or are they just playing with us well they are playing in a sense i mean look at the foreclosure settlement the banks have already stolen enough money from investors in terms of raping these mortgage backed securities trusts to pay for all the settlement so i don't feel sorry for them at all now the real question is what else have they not told us and this goes to your point about the off balance sheet vehicles grey market banking everything else that marketplace is shrinking it's running off and we're not creating any new assets and say private mortgage backed securities even fannie and freddie are starving to death because

ninety percent of the new originations in the u.s. today are getting a guarantee from the federal housing administration interesting lee enough so yes there's more problems here and you are going to hear more about it in terms of things like litigation and liquidated claims that nobody's heard about yet you give a good example look at j.p. morgan and the in the gesturing they're getting from bear stearns you know jamie dimon told us two years ago that bear stearns would not be material to their results but it's going to be very material because investors of lost more than half their money on the securities that they created so there's still stuff to fall out in this whole mess we kind of know what the numbers are now max i don't think there's anything particularly new in terms of their exposures but the thing is risks that we haven't talked about like eric schneiderman deciding that these people owe him you know billions and billions of dollars for the taxes that's a new factor that nobody is thinking about now i we got a. one minute left i just wanted to add a comment on something that's

a bit on the technical side but i think it's very interesting while ben bernanke is talking about the need for lower rates as a stimulus you have been quoted yeah i've heard you talk about this then there's a need for interbank lending just be stimulated by raising rates completely against what you hear the mainstream got and we'll have about a minute i'm sorry but can you kind of run through that a little bit because i think it's important that people understand this well again going back to the point about extreme swings i mean the fed has had to put interest rates at zero to just trying to keep the u.s. economy moving forward it's like a shark you have to have water going through the gills in order for the creature to survive and yet at the same time by putting rates at zero you're taking only incentive away from banks to lend to one another why would you bother doing repo for example where you lend treasuries overnight for nothing you're not being paid for the risk and there is risk in that transaction like was the hole in a bank market's going listen the jamie diamond in the most recent conference call

he confirmed that they're not doing any on secured lending with other banks this is a disaster so what i've been saying is that the fed should gradually let short rates go up to half a point maybe three quarters of a point so we can again start to see the private short term credit markets revive because today all you've got is the fed the banks are dealing directly with the fed they don't want to deal with one another if we don't get credit to expand max we're not going to fix jobs we're not going to fix the global economy but it's going to be private credit expansion the central banks doing what they're supposed to do but they've done it for too long and we get out of slowly let rates go up and imagine even if we had half a point fed funds rate that's still historically very low it's probably negative in terms of inflation but at least it would give people a reason to do business again right banks make money lending money sound less rates are at a level that they can make some money lending money then you're not going to get any bank growth therefore no no one. well that's right you know the great editor of

the economist backhoes said it well he said dulcie prates of zero for too long but what that we're out of time chris well thanks so much for being on the kaiser report thank you backs look forward to it again all right and that's going to do it for this edition of the kaiser report with me max kaiser and states that harbor and i thank my guests first well and you can follow them on twitter at our c walen course you can follow me on twitter too at max kaiser can send me an e-mail at kaiser report r t t v dot are you 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 and you hear or see some other part of it and realize everything you thought you don't know i'm tom harvey welcome to the big picture.

news today violence is once again flared up. these are the images. from the streets of canada. for racial to rule the day.

welcome to the lower show we'll get the real headlines with and none of them are safe to live in washington d.c. now and i am going to take a look at a new development for the occupy movement one alabama man it decided to file papers for occupy wall street super pac but does that kind of contradict the ideals of occupy also we hear a lot about cyber warfare these days but is this threat being hyped more than it needs to be our guest tonight compares it to the build up to the war in iraq and

from a bill to outright bans of fortune makes a punishable by life in prison the hearings on the hill about contraception they didn't include any women you got to wonder what's going on in this country is a war on women you might even call it a of a jihad we're going to have all of that and more of that and i think when it does it have refers to take a look at the mainstream media has decided to miss. it so there are a number of interesting developments we saw today that tell us just where our political system stance they paid a perfect picture i guess you could say for starters presidential candidate rick santorum decided to release not one or two or even three but four years of his tax returns now makes it all kind of hilarious is that despite the policies that they support republicans you know specifically tax policies or the way that they view social programs republicans are still trying to play this game where they use populist rhetoric to convince voters that hey they really care about you and so

rick santorum is doing his best to point out the differences between mitt romney and himself so santorum is the every man with a working class background who's not just in washington insider rick santorum has released four years of his tax returns and she said. thousand and seven was six hundred sixty eight thousand dollars as high as one point one million in two thousand and nine when you compare it to the gingrich tax returns or the romney tax returns frankly there's no comparison last month mitt and ann romney released their two thousand and ten returns they made a lot more money that year it was a little over twenty one million but their tax rate was much lower just last night to make the contras clear themself and mitt romney santorum released four years of tax returns from two thousand and seven through two thousand and ten he earned more than three and a half million dollars over that time in two thousand and ten the last year they filed their effective tax rate was over twenty eight percent that's compared to the thirteen point nine percent tax rate that romney made a lot more money twenty times of what he did pay that same year the difference of

course much of the romney money on investments much of the santorum money on income . all right so you get a sense the irony here rick santorum wants to convince voters that he's the every man by comparing himself to mitt romney which yeah i guess in comparison a guy that's worth hundreds of millions of dollars worth a guy versus a guy that who's just makes a little bit over a million each year i think that you might have a little bit of a point but at a time when real unemployment is about fifteen percent at a time when millions of americans are underwater and can't afford to pay for their homes the idea of a candidate who is still a millionaire telling people that he's just like them so high rate but doesn't really make a whole lot of sense now does it and the sad thing is that the media doesn't really even seem to catch on i mean sure maybe chuck todd made some allusion to it quickly but then he decided to move on and that's because they've come to expect politicians these days to be rich don't forget the last year the center for responsive politics put out a report that showed that nearly half of congress is worth more than one million

dollars now some of them are super rich too right like carol i saw who's at the very top of this list his estimated worth is up to seven hundred million dollars but forget about there i said the fact is that the mainstream media like all of this is totally normal for our political class to be made up of only a certain economic class now they say that this is just the way the washington works and then they move on and we can see some of this in the way they reported developments on the payroll tax today too. marshall negotiators have agreed on one hundred fifty billion dollars plan that extends a payroll tax holiday unemployment benefits a bill to keep your money in your paycheck it is a done deal lawmakers have resolved all the differences on extending the payroll tax cut all makers are ready to walk an extension of the payroll tax cut for one hundred sixty million americans through two thousand and twelve impose a little after midnight that lawmakers came out of that tough day of negotiations to announce the payroll tax cut in venice extended lawmakers reaching

a deal to extend the payroll tax cut that means that you'll keep more money out of your paycheck a big victory you could say for president obama and also a big victory for progress they work together they got something done just two weeks in a row now they did the stock last week it's an amazing thing republicans and democrats coming to a conclusion that they both find agreeable a trend of bipartisanship on common in washington you know if you see the rest of the year or so it sounded like you can all imagine. i just love the luke russert fives it's so funny that this is the only thing that congress is going to get done for the rest of the year until the elections because it's funny isn't it right that these people have been elected to represent us at their salaries are paid by us the taxpayers and yet they choose to sit around take moral stand because they can afford to and waste everyone's time and not get anything done and then you wonder why discontent with washington and disapproval of congress are at all time highs these guys don't care right they're getting rich even if they don't pass any legislation and rick santorum is perfect prove that see you cash in after you serve

after you've made connections and then you can be hired as a lobbyist or a consultant as newt gingrich likes to call it and the mainstream media well they just keep reporting on all of it like it's business as usual and see if that attitude doesn't change the not much else well for now they're still saying it every day every day they are choosing to miss. are now if you listen to the media or lawmakers as well as a range of so-called cyber security experts out there cyber threats are one of the most pressing issues of the time and i must be tackled. that the next pearl harbor that we confront could very well be a cyber attack that cripples our power systems certainly our grid the british government has learned that saddam hussein recently sought significant quantities of uranium from africa. not only from a few extremists in suicide vests but from

a few keystrokes on the computer. now what we also hear about of the possibilities of mass casualties chaos of the computer systems of power plants or other essential parts of our infrastructure and life sustaining services are protected from hackers and of course about the possibility that i cannot make damage national security being put at risk if the networks of defense and intelligence agencies are compromised the really scary world of scary possibilities out there and congress is ready to counter it with over fifty cybersecurity bills introduced just in this congress session but is this threat being overblown are we conflating different threats all into one gigantic apocalyptic scenario just to line the pockets of defense contractors and create a massive cyber security complex talk about how to bring logic back into this question before it goes a little too far here to discuss that with us is jerry britto senior research fellow at the market a center at george mason university thanks so much for joining us tonight sherry

all right so you wrote an interesting piece about this too because you compared it to the buildup to the war in iraq and you asked if cyber warfare is the new yellowcake so explain that a little further for us well in the run up to the iraq war the administration made certain claims that we later found out were not substantiated and at the time that they were making them at least some of the claims they themselves had reason to know that they weren't so essentially that the media actually repeated these claims without really providing any sort of check on it and what ended up happening in many cases is that the administration would leak. to the media the media would report this and the government would cite the media as evidence to go to war and we've seen something very similar happen when it comes to to cyber. all right so we've seen. i think it's really interesting you bring the media into this too right because i blame the media every day for doing something wrong and lately especially blaming them for ginning up you know this war this drum beating of war to iran

perhaps they don't always give two sides of every story and have we seen the exact same thing here with cyber security in terms of lawmakers that actually quoting the media when they're trying to push some kind of legislation in a hearing this is vicious cycle absolutely i mean it's hard to blame them completely for this because in many cases what they claim is that a lot of the evidence that they have for these dire warnings is classified and they can't talk about it of course and they leave it to the media and in the sights of the media but. i would like to see the media least try to push back a little bit and say hey. we're not just here to report what we're told we should try to find some verification some secondary sources to verify these all right so let's talk about this idea he also write about you is that maybe we're just conflating two many things into one gigantic bubble of cyber warfare or cyber security you know if you had your way or i guess if we looked at this properly how should these things be broken down how many different categories are there so i

think the first to say is that there is a cyber threat right we should care about that are a lot of folks out there who want to do us harm and they use the internet and computer networks to do that but what happens is that when members of congress for example talk about cyber security they will say you know hackers have the ability to plunge us into darkness have planes crash into each other to rail trains etc and then when they talk about what the evidence is for that they'll point to to distribute the service attacks on websites such as taking down a website or they will point to ask you know which is a very big problem cyber espionage against some of our fortune five hundred companies stealing intellectual property very very serious but these are all supped . things that we should disentangle them and treat them each supper as one of those things where you know we did a lot of coverage on this program as well about the debate over sopa and pipa and one of the things you just keep wondering is are these people necessarily qualified to be legislating on complicated technological issues where some of them don't

really understand how the internet works all that well so would you say that cyber threats are similar category in that sense i mean i can't blame members of congress because after all they're generalists who are elected by people to legislate on a huge number of issues and so this is why they have to depend on experts but what you do have to think about though is where they are want to be sort of willingly ignorant sometimes and you get there a lot of folks who stand to benefit from comprehensive cybersecurity legislation especially if that legislation comes to tax with big spending and so i'm more concerned about that than about their ignorance i'm sure they could be educated if they wanted to be but i guess you could also say they can be easily swayed if there's a lot of money involved right so if we have this massive cybersecurity complex that's starting to this huge industry is starting to be just how money isn't it right now how much money is that you know how big would you say is this industry is now i don't have a clear proof or you know i don't want to billions of dollars there still are we

still in the millions range probably reaching the bill if the pence how do you how big you want to look at records there is of course protecting federal systems right the military. there is the defense spending on cyber security but then there's also a larger cyber security. complex around security at all that works in the country all right so how would you suggest then that we properly approach this rather than just hearing that cyber warfare is the next frontier well i think the first thing you have to identify is where there's a market for here and what that means is very simply this most of the networks that government is seeking to protect are privately don't and so you think to yourself well these networks are owned by somebody that somebody doesn't want to lose or investment. so why aren't they protecting their own networks we have to make sure that these there's some sort of market failure here that's happening once you have retained then you can absolutely show that's the case what tools are available to us is that the government telling us exactly how to protect these networks that

have certain drawbacks because that will stifle innovation we're told one way to do it and check off that box to hackers find out that way that's not a situation to be in i would maybe seek some other ways to do it for example transparency all right have companies that are breached have to disclose that they've been breached what does this do with informs the market so that markets can your consumers can decide where they want to do business with if you are somebody who has breached often well you're going to be punished in the market and if you don't have customers access your utility customers really have a choice of we're free to go to the insurance market might go take care of it partially transparency is one of the things that we're fighting for and rarely seem to get and so this is the first thing we're talking about you that's looks like a specific cybersecurity bill that's actually moving its way through congress right now right and you have a lot of companies fighting back because they're forcing them mandating them picking and choosing which companies out there need to have a stronger i guess you could say you know network protection out there so we've

come a long way i've been looking at this issue for over a year and in the in that time span we've gone from cyber security bills that were very prescriptive and told companies exactly what they needed to do and they even would require licensing of cyber security professionals to really bad idea would move to a place now we're both the house and senate are looking at comprehensive bills that are much more limited and limiting themselves to only dealing with critical infrastructure that's a stop in the right direction i think all right thanks so much for joining us tonight i'm sure this is something that we're going to be hearing a lot about but i think it's always good to approach things with you know a little bit less alarm and sit back relax and think about it for him and i think that's peter thank you. that was jerry done for a quick break before we were turned one of the occupy movement has sent in the papers to form a super pac so as a sign of whether they said it or a sign that individuals will do with occupy what they like and it's the black budget the billions of dollars the pentagon put aside for programs that you'll

never know about and dive into this shadowy world since. people calling like you said for free and fair elections. and we're still reporting from the so. you can hear behind me loud explosions.

you know how 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 that everything you thought you knew you don't know i'm tom harpur welcome to the big picture.

well let's talk about facebook because they're all about protecting your privacy right well at least that's what they keep trying to tell us. i mean privacy is a really important issue for us and for the internet so we spend a lot of time thinking about these things in terms of the settings that we have i think there are some misperceptions. unfortunately for us that's just not true so when you actually dive into facebook sprecher on privacy you realize that they really could care less about it and mistake after mistake of theirs really shows that in two thousand and nine the f.t.c. started investigating facebook after several of their most egregious lies to their users were exposed now it was a freaking free for all over there facebook promised users they would keep their private.