paula thanks for being with us at half past the hour and karen terazosin you're with r t a day of calm in moscow after a night of election results reaction saw tens of thousands rallying for and against police detained around two hundred fifty overzealous protesters but all have now been released. leading u.s. senator john mccain is calling for air strikes to force syrian president assad out in the first american politician to make such a card meanwhile thousands of syrians have been forced to flee to lebanon because

of the fierce clashes between government forces and opposition fighters. iran is to allow u.n. nuclear inspectors into a secret military facility where it's suspected that atomic weapons research is being carried out president obama is vowing to use any power necessary to stop iran getting a nuclear bomb including standing by israel despite its threat to attack the islamic republic. next math and stacey on bail some of the secrets world financier's would rather you didn't know it's all in the cards report coming up next. best times are this is because the report magic circles inner sanctums and of course curses stacy herbert tell me more max the topic of conversation stay with

be j.p. morgan the credit card for the one percent of the one percent the ticker so you see this number here one thousand the estimated value in dollars of the materials in a d.p. morgan palladium card if you happen to have an extra twenty five million dollars that you were willing to let j.p. morgan chase manage for you there's at least one perk you can expect to receive that you won't find anywhere else that j.p. morgan palladium card apparently it's been around for three years max and there's only a couple thousand people who have this the card itself is actually made with palladium and twenty three carat gold reportedly putting its cost of materials alone about it one thousand right while the car allows for the users when they go to an a.t.m. machine or they use it as purchases that they get the spot price for currencies there's no market making going on there's no spread that everyone else is using a credit card to chase customers or use the non played him card of course when they

use the machines when they go and make a purchase in a foreign country with their card there's a huge spread two three four five percent sometimes the bank just breaks or i should say rapes their customers j.p. morgan are subsidizing that top one percent of one percent yes but on the other hand max you can think of it this way burning made off also had an exclusive club not open to the whole a polaroid you get twenty five million dollars you can be friends of bernie made off oh he's the guy who set up the nasdaq is this just a way for them like one thousand die. dollar cost credit card that they say gives you entree into jamie diamond's inner circle well it is like a made up agin scheme they need new suckers to come in and become retail customers to subsidize the larceny going on at the top it is exactly like the bernie made of it's made off like you know made off was doing great until you had

a market sell off and you know was so over trades at one hundred two hundred dollars an ounce j.p. morgan will be bankrupt too just like and rob just like made all just like just like bear stearns just like lehman brothers it's a huge first in politics game by silver shore j.p. morgan and make a fortune so speaking of j.p. morgan's inner circles max j.p. morgan off first peek into trading magic circle just staley is not going to be popular on wall street's trading brotherhood the head of j.p. morgan's investment bank has broken a code of silence by revealing how much the firm rakes in as a market maker staley has as he put it opened the commo know by revealing that interest rate swaps came at top at twelve thousand dollars a pop trading loans are asset backed bonds brought in ten thousand dollars a time these amounts reflect illiquidity or the fact that trades are tailor made for clients and in both cases leaving the middle man with extra risk they only need

one point five cents for executing a trade of a stock so if a client wanted to buy a stock they make no money but they made up to twelve thousand dollars for an interest rate swap they're going to come oh diamond openness comodo. there's a penpal worth going to tell you should be oh my god this is just derivatives of course i was an option trader on wall street i know that you could just buy a stock and make a commission or you could sell out of the money butterfly put spread and make six seven eight times the commissions that's all derivatives are is this repackaging if they are charging i found sometimes more than just a straight up and down transaction would be france will have a. ocean is a complete waste of time and energy it has not reduced risk it has added risk look at what is done to the global economy is created the worst crisis in history because of derivatives us because there's more risk but exactly so j.p. morgan just daily here and slate confirmed slate magazine which is reporting this

does not challenge this but they say j.p. morgan had to charge twelve thousand dollars because it reflects illiquidity or the fact that the trades are tailor made for clients in both cases leaving the middleman with extra risk j.p. morgan extra risk just like they did in jefferson county alabama they sell these like sewer bonds that don't work and then the towns erupt of these huge geysers of fecal matter and jamie dimon says look i'm a success i created cars is a sequel matter that's keeping morgan's business plan i was successful you think of pelf of the fecal matter that i created selling these poor mr produce absolute toxic drugs that we could build off of the taxpayer for call well even in the title of the headline here you see magic circle and what's the key ingredient to magic is of course a distraction and that is jamie diamond doing opening his kimono people are grossed out they don't want to see the inner workings of how the sausage of

a toxic derivative is made what they find out is that he's a financial benefit that's of making a market means he's the buyer and the seller goldman sachs or the buyer and the seller they manipulate the market because they're buying and selling to create a fake price that fake prices propaganda that's used to engineer social change and political change oh let's invade iran let's first manipulate the oil market let's manipulate the stock market let's manipulate the options market see the prices are telling us look good it's a sign iraq let's commit genocide and i read must be for consumers momente x. because the price tells us to do so because we have a price because replied. sorry there's no regulations nobody pretty people who know so again they allege that taking morgan has taken some risk in these swaps that they're selling all over the world they're very profitable margins so let's look at some headlines max j.p. morgan swaps occupying casino prove curse like world war two

destruction world war two so battle for casino leveled the italian town and its hilltop abbey now the thirty three thousand residents are digging out from the rubble left by wall street six decades after u.s. led forces ousted the nazis from casino a new generation is grappling with the fallout from the debts of post-war rebuilding borrowings that grew because of a derivative that backfired soaring costs forced casino eighty miles south east of room to settle an interest rate swap with j.p. morgan chase in two thousand and nine leaving the town unable to pay for daycare for sixty incense and services for the poor or three repeating itself under the nazis you know j.p. morgan would had an active and funding the nazis along with coca-cola and i.b.m. or are they doing now oh they're funding a genocide in italy again it's perfectly reporting to type the homeless sidle genocidal cola cost provoking in the income groups you can bomb the hell out of

people and the world will look at that and they see it and they think oh my god this is a violent act and we must stop these people or you can send in some interest rate swaps and everybody says well that's capitalism it's there's nothing corrupt about that jamie diamond looks great in that kimono he must be a nice guy we can't do anything to stop this because we can't stop capitalism or they can't defend themselves against financial terrorism same thing in italy same thing in countries around the world are defenseless against diamond blitz wielding whole cost provoker they have no way to defend themselves they knew no to the weapon. to defend themselves they have no they have no government in the case of greece they have a j.p. morgan and pick technocrat in there yeah goldman sachs same thing there's no way to defend it because they say it's capitalism you know it's not it's mafia it's a racket and italy should of all countries know a mafia racket when they see it now iris valenti who chairs casinos assembly

finance committee says that the bankers who share responsibility for peddling the derivatives should pay with their jobs heads rolling is the least we would expect she says when people's attitude is to cheat others new rules are needed to prevent it happening again well there are rules in place against mafia rackets it's called rico there are also laws against for all there's also some laws against murder well i think that's an interesting point somebody in italy who has a reputation for taking the law into their own hands the local cosa nostra is not happy with the fact that they're being mafioso out mafia by outside forces on wall street will this lead to a credit event in the in the form of a regime change in their statement to the investing class in their propaganda amplified through the financial media and the groovy slate media you know j.p. morgan is arguing that they themselves j.p.

morgan is sacrificing themselves to capitalism we are the market makers taking a risk but time and time again we see that even a country where you would think they would know how to defend themselves against a mafia racket they are unable about three hundred palestinians from the toe of italy's boot to get outs were losing a total of nine hundred twelve million euros on such derivatives as of march bank of italy data shows that the so j.p. morgan moves in with their advance team to destroy the economy using derivatives then the rating agencies will come in and. downgrade the country as a sovereign debt then the hedge funds would come in with hundreds of billions of dollars of naked credit default swap and sales then the i.m.f. or the troika needs to be will come in and say we're going to put in a type of credit to clean up this mess then all the assets of italy including the twenty four hundred tons of gold we transfer to the front and criminals on wall

street this is same game plan over and over and over again please look into italy who do bust take out the suckers here's a case where financial innovation this these guys in their kimono stand in front of the world and say our financial innovation is needed to save the world paul volcker calends then years ago to say show me one piece of evidence one. that financial innovation has ever helped an economy anywhere nobody has a better able to give them any evidence i am here showing you that there is no evidence that it has done anything but destroy economies is destroyed this town of casino italy it's destroyed three hundred although many of the policies now we're going to move on to greece default swaps don't have to pay is their fault insurance on greek debt won't be paid out the international swaps and derivatives association said after it was asked to rule whether part of the nation's one hundred seventy billion dollars bailout was a credit event ok we all know that greece apparently did not the fault but guess

who sat on is those determinations committee oh j.p. morgan chase. so interesting i thought they took risk in providing the market making function in this credit default swap market you know they don't take any risk they've been just get the reward that bester definition of capital henslee wintel jewelers they keep all the reward you take all the risk we get all the money you get enough and that's like up close and of course that's realism so finally here on j.p. morgan fast furious at m.f. global in days leading up to firms collapse one hundred sixty five million dollars transfer okayed in a flash so apparently at four fifty three pm five days before m.f. global holdings ltd collapsed an employee in a sick aagot office asked a coworker to move one hundred sixty five million dollars to one of the securities

firms bank accounts to another approved came the response one minute later according to an e-mail reviewed by the wall street journal within fifteen minutes the money moved to an m.f. global account at j.p. morgan chase no no prove to the compliance officer in the office as i've been saying on the show for months always keep your compliance officer sweet every christmas give a big cash bonus because it's. actually for this reason at the end of business actually the markets are already closed so that's the number one of the transaction could not have taken place but the markets were close at that time of day they get him to come in and sign off on a piece of paper that commits for this transfer are completely outside of the normal workings of the markets committed massive fraud is the same scam for thirty years ok things you haven't nice for much of the kaiser report thank you max and i know a lot more coming away stay right there. will

. technology innovation all the developments around russia we've got the future of coverage. welcome back to the kaiser report imax kaiser time out to go to the day australia to speak with such as you to das a derivative expert and the author of extreme money masters of the universe thus the i asked the a.v. international swaps and derivatives association has determined a few days ago that the credit of events had not occurred in grace that would trigger payouts of three point two billion dollars in greek credit default swaps

your thoughts max this incredible greece rocks off one hundred billion in debt they can't pay anything they don't have to erase drop to get say they need a massive bailout and guess what they have not to post it this is remarkable and now let's go back a little bit in history and write about july last year this whole thing became an issue because everybody was concerned about if greece actually could default. well what would happen and all these credit default swaps which basically credit surance contracts would be triggered and there was the dreaded c. word contagion and so when they came to doing this bailout had to get it right down what they decided to do was to do in a very clever way which is to do this as a voluntary exchange and basically the banks would basically take the hit but they would do it of their own volition not that stage the right believe it or not going to be twenty one percent they got fifty and the real losses are going to

be right about seventy five percent if this is voluntary all the confessions extracted by the spanish inquisition of olive tree so that's the first thing that in the next issue is what happens if everybody doesn't agree well then what are we going to do is put it what's called a collective action clause which means the majority can rule that basically these contracts are eight be the small contracts that have to be rewritten in a particular way and everybody has to care about that's the second thing that happened the third thing that happened was the european central bank and the alice it will banks which between them about fifty five billion euros with a great ponce didn't want to take any hit and certainly they wanted to be excluded from the effects of the collective action flows so what they decided to do was do a sneaky exchange before the real exchange with boards which basically said well if there is a cac clause put it in well too bad it might apply to us and so what happened was a couple of people who had bought insurance on these great bones went along to this

strange surreal body called p.c. p.c. says that it's her relations committee and this is specialist a body which was set up under what was known as the big bank protocol to term and whether or not there's a credit event and so they were asked to tie all of these three events to some extent constitute a credit event that what they said is one which is the exchange itself and three which is the. giving priority to the european central bank at the banks is not off itself constitute a court of fed which is to me it's pretty extraordinary but this whole calls the whole thing calls into question with are these contracts a real contract or basically just these fake contracts like part of glitches and that's what's the key issue it's all right now does. an insurance product an insurance contract is put in place and in this case it's a financial insurance product that gives the market

a sense of comfort in terms of the amount of risk that they can employ on the balance sheets of this very of these various banks now what you're saying is that these credit default swaps that are supposed to be insurance are not in fact insurance at all they don't share anything they're worthless and now that it's been proven that they're worthless and now that the insurance has been proven faulty this is caused. a need for some extra national credit facility like the e.c.b. and the troika to bail out the banks who sold this fault insurance which in turn means more austerity suffered by greek people so the greek people are subsidizing the experimentation into a faulty insurance product called a credit default swap which has been proven to be a theory that doesn't exist life masters whom vented them is obviously a terrorist

a financial terrorist and the great people are suffering austerity for this experimentation print doesn't exist so is it safe to say that there will be more austerity measures from the greek people and all of europe and the rest of the world to subsidize the experimentation in these court of the fatwah finished product that doesn't exist well i think you have to be right and the simple reason ase if anybody sold a part ox like this. in the normal course of the thins what we call the general merchantability in other words a product has to be fit for purpose well there's no way this contract would fit and if you actually went to any insurance regulator and explain to them what had happened here that basically this contract didn't work they'd say well this is actually amounts to a fraudulent contract and we would investigate and probably prosecute and indeed bill gross from pimco came out and said this was like selling flood insurance and not paying out with there's

a flood but the most amusing thing about that little bit is pimco of which obviously bill gross is a big swinging whatever actually voted to say that they had to be due credit event so at least we know if one thinks the product might be fraudulent but the chinese pools within our walls of steel and separate everybody what are let's keep on the same of the walls the chinese walls the separation has to be place between the gambling part of a bank and the utility part of a bank what used to call glass steagall that came into effect after the last time j.p. morgan blew up the economy j.p. morgan is one of the several banks that sat on the i asked the a determination committee to determine there was no credit event so if one counterparty can determine whether or not that counterpart has to pay out isn't this i mean it's a racket j.p. morgan is saying that we don't have to pay out on the insurance products that we

invented we brought to market because we're on the committee determine whether we payout that's just an outright fraud or one racket is not i mean look the cause why are we putting on the bush task. we are all you know we are really one of the worst because everyone's talking about corn aforethought in terms of whether or not illegitimate product ever it's not fraud people are suffering austerity in greece they're dying there's a whole cost in your rightly play croquet you toward low ball early dollars i think a fundamental thing here is that you're absolutely correct but c.d.s. is the part of the problem the real issue here is let's look at what the greek package really does and the fundamental thing is it does sweet f.a. we hold it back and basically it could work the first thing is let's look at the date write off this two ways of reducing get one is to write it off the second is to as you correctly say stuff the greek people get the money to pay back the debt

and we have a bit of both in that but for the rest of europe places like portugal ireland spain italy and indeed in other countries they just starving themselves so this is difficult to work and the debt levels are going to keep going up but it's even worse than that the one twenty percent level that we talking about that greece has to go down to is a jerk pre-filter numbers for godsake to get there if you look at the graph of the greece growth past as the troika proposed they were at minus six this year next year thereabouts square and then after that interview tuesday they grow at four or five percent could somebody explain to me the math underlying that we now see also a fundamental breakdown of democracy i mean you see what's happening in spades the spanish government has come down and said look you know this you know this deficit reduction in aid working kids so we want a bit of rope here so we can actually not cut as aggressively and a move that happens we hear out of the lane paris and brussels perhaps we ought to get a technocratic government in portugal to do what we want this little breakdown here

a democracy and i think that is where the real pressure is going to come these protests are going to stop his going to be huge political issues in europe and essentially. when you get effectively the german chancellor for better or for worse hated as a dogmatic tricks with a nazi flag i don't think that's good for europe long to do you think max let's talk about something interesting the economist magazine recently ran a special edition praising financial innovation you wrote a blistering attack on their claims not tell us about your main criticism of financial and very innovation in the economist and the media's role in promoting this canard but look i think we should have a debate about financial innovation i'm a simple man i basically said all along that you know france can do certain things basically it can match savers and borrowers they can provide safe payment systems that can provide if you pretty much it but the economist god bless their hearts and souls effectively have decided that financial innovation is in the american bill of

rights so basically it's self-evident truth the financial innovation must be very very good so the argument is any regulation must by definition be bad we should allow these people to do that and the economists had the absolute total goal to say this well it doesn't matter if a few people get it because you know there's a few tough products out there but the cost of progress but the most egregious part about this is a simple cost benefit analysis is ok well financial innovation did bring certain things but then let's look at the other side of the equation which is the costs the costs of the global financial crisis as you correctly point out the human said he's just messy in the financial sense we have central bank balance sheets which have gone from tripoli and i think about three trillion to fifteen trillion a five times multiplier in four years i mean basically we're running a soviet style economy in the west at the moment because i'm just hoping that the countries come up with five year plans because that's basically the idea of a kid they can run the economy and then they have the gall to say well actually

it's still cool to the point is they also never try to quantify one benefit and i actually with paul volcker here when focus at the eye. only financial innovation worth a damn was the automatic teller machine and the way we going with currencies seen when you put your card at the a.t.m. you were able to provide any money but you know i said that's a little blog i did to a few people who said to the economist one economist that if they had any decency to publish it in full do you think they're going to do that you know what i mean to your point being that not only is the financial derivatives market which is all based on the black saul's surprising volatility formula which gives the right for banks to trade on ether and call that productivity not only is that been discredited now by the complete system and the blowing up of the global economy and i've got the mainstream press like the economist who is unrepentant in their promotion of finance all across and finance are all apartheid and nobody is

offering any checks and balances here there is it was actually united states and united kingdom all criticism of banks is censored i know that personally from having done reports for their major outlet and it gets out right censored or censorship or any dissenting view unbanked terrorism in the biggest economies of the world if you find that in australia as well oh absolutely i think most of these people are dealing in fiction but going back to your point they do it recognise the rent seeking behavior of the financial institutions and they be to address that and nobody but nobody in bay stream media or politics wall street dress that that's what needs to be addressed right just right of time out to have you back on soon thanks for being on the kaiser report good to be with you max and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert and i want to thank my guest the famous das that's all i need to know just out of das he's written a book extreme money you must read it you can send me an e-mail at kaiser report r

t t v are you can follow me on twitter until next time x. guys are saying bye.