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is today violence is once again flared up. these are the images the world has been seeing from the streets of canada. giant corporations rule today the be. keyser this is because the report magic circles inner sanctums and of course curses stacy herbert tell me more max the topic of conversation say. 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 and then rita ariel's in a j.p. morgan politi and 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 poll a.t.m. card apparently spent around for three years max and there's only a couple thousand people who have this the card itself is actually made with politi and twenty three carat gold reportedly putting it cost the materials alone about one thousand right while the card 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 the chase customers who use the non play the card of course will now use the machines and 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 holy poloroid you get twenty five million dollars you can be friends of bernie made up oh he's the guy who set up the nasdaq is this just a way for them like a one thousand dollar. her cost credit card that they say gives you entree into jamie diamond's inner circle but is like a made up ponzi scheme they need new suckers to come in and become retail customers to subsidize the larceny going up the top it is exactly like a bernie made up business it's made off like made off was doing great until you had a market sell off and you know it's over trades at one hundred two hundred dollars an ounce j.p. morgan will be bankrupt too just like enron just like made all just like ai g.e. just like bear stearns just like lehman brothers it's a huge for composers gain by silver short j.p. morgan and make a fortune so speaking of j.p. morgan's inner circles max j.p.

morgan offers a peek into trading magic circle just daily is not going to be popular in 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 the market maker staley has as he put it opened the kimono oh 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 and make no money but they made of the twelve thousand dollars for an interest rate swap they open the komodo diamond open as comodo. there's a penpal worth going to tell you should be oh my god well yeah this is just

derivatives of course i was an auction trader on wall street i know that you could just buy a stock and make a commission or you could out of the money butterfly put spread makes six seven eight times the commissions that's all derivatives are is just repackaging ether charging a thousand times more than just a straight up and down transaction would be pretty much a little vague. it was a complete waste of time and energy it has not reduced risk it is added risk look at what is going to the global economy is created the worst crisis in history because of the router's not because there's more risk exactly so j.p. morgan just daily here and slate confirmed to 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 erupted these huge geysers of fecal matter and jamie dimon says look i'm a success i created cars is a sequel matter keeping morgan's business plan i was successful in the thick of pelf of the fecal matter that i created selling these poor new suppose these absolute toxic drugs that we could build out of the taxpayer for oh all right 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 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's 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 win if you like the stock market let's manipulate the options market see the prices are telling us let's commit genocide iraq let's commit genocide and i read the first congenital maniacs because the price told us do so because of the price because. logic there's no regulations nobody plays people in jail so again they allege that taken 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 seen no prove curse like world war two destruction world war two the 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 so the story repeating itself under the the nazis we know j.p. morgan with better active and funding the nazis along with coca-cola and i.b.m. were they doing now oh they're funding a genocide in italy again it's clear to the reporting's of type they're homeless sidle genocidal holy cause provoking bloops 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 dimon looks great in that kimono no 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 greece same thing in italy same thing in countries around the world they're defenseless against dinon blitz wielding whole cost provoker they have no way to defend themselves they knew no to the weapons. they 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 to say 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 the laws against for all this also was 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 vocal 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 with think they would know how to defend themselves against a mafia racket they are unable about three hundred the power from the toe of

italy's boot to the alps were losing a total of nine hundred twelve million euros on such theory of that is as of march bank of italy data shows right 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 then. downgrade the country as a sovereign debt then the hedge funds will come in with hundreds of billions of dollars of naked credit default swap of sales then the i.m.f. of the troika needs to be will come in and say we're going to put in a technocrat to clean up this mess then all the assets of italy including the twenty four hundred tons of gold we transfer to the criminals on wall street this is same game plan over and over and over again please look to italy to do plus take out these suckers here is it 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 them years ago to say show me one piece of evidence one. that

financial innovation has ever helped an economy anywhere nobody has that evil 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 of their many of the palette he's now we're going to move on to greece default swaps don't have to pay is the default 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 default but guess who sat on is does determinations committee oh j.p. morgan chase. so interesting i thought they took the risk in providing the market making function in this credit default swap market at you

know they don't take any risk they just get the reward that's their definition of capitalism as we when. we 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 i feel isn't so finally here on j.p. morgan fast furious and 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 the chicago office asked a coworker to move one hundred sixty five million dollars from 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 well we know who approved at the compliance officer in that office as i was saying on the show from us always keep your compliance officer sweet every

christmas give me a big cash bonus because it's. exactly for this reason at the end of business actually the markets are already closed so that's number one the transaction could not have taken place because the markets were closed at that time of day they get him to come in and sign off on a piece of paper that commits for this transfer completely outside of the normal workings of the markets committed massive fraud is the same scam for thirty years ok thanks for much of the kaiser report thank you matt you know the way much more coming away stay right there. mission creep couldn't take three. more charges three. three. three stooges three.

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welcome back to the kaiser report i'm max kaiser time now to go to the day australia to speak with such gadgets and das a derivative expert and the author of extreme money a masters of the universe past the i asked the a the 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 it's incredible greece writes off one hundred billion in debt they can't pay anything they don't have to your ice truck to get the. they need a massive bailout and guess what they have not defaulted 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 everyone he was concerned about if greece actually could default well

what would happen and all these credit default swaps which are basically credit surance contracts would be triggered and there was the dreaded c. word contagion and so when they came to doing this bailout and doing the debt write downs 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 and that that's stage the right odds were believe it or not any could 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 but then 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 going to be these contracts are going to be rewritten in

a particular way and everybody has to go by 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 the greek bonds didn't want to take any here 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 where they got bonds which basically said well if there is a cac clause put it in well too bad it will apply to us and so what happened was a couple of people who had bought insurance on these great dogs went along to this strange surreal body called p.c. besides which is herman. committee and this is special is the body which was set up under what was known as the big bang protocol to determine whether or not there's a credit event and they were asked to find where all these three events to some extent constitute a credit event what they said is one which is the exchange itself and three which

is the. giving off priority to the european central bank at the outset of banks is not off itself constitute a crate of it which to me is pretty extraordinary but this whole cult the whole thing calls into question with a these contracts a real contract or basically just these fake contracts like part of religious and that's what's the key issue is right now does. an insurance product an insurance contract is put in place in this case is 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 sheet or does vary of these various banks now which are saying is that these credit default swaps that are supposed to be insurance are not in fact insurance at all they don't hear anything they're worthless and and manage 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. in the detroit to bail out the banks who sold assault 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 part of the fault lot which has been proven to be a theory it doesn't exist life masters whom vent of them is obviously a terrorist a financial terrorist and the great people are suffering austerity for this experimentation 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 part of the fall swaps insurance product that doesn't exist well i think you have to be right and the simple reason

days if anybody sold a product like this. in the normal course of the thing 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 happened here that basically his 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 a little bit is pimco of which obviously bill gross is a big swinging whatever actually voted to say that they had to be the credit to rent so at least we know one thing's for certain their product might be fraudulent but the chinese walls within. walls of steel and separate everybody

was hard but keep on the same of the walls the chinese walls the separation is 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 s t a determination committee that determined there was no credit event so if one counterparty can determine whether or not that counter party 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 it is really whether we pay out that's just an outright fraud when a racket is not i mean let those why why are we putting on the bush task. we don't need you of the poor you know we are pretty one of course 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 start buying

a whole cost inherently place rocky and third noble only because i think the 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 all know that 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 off the second is to as you correctly say stuff the greek people get the money to pay back the dead and we have a bit of both in that part for the rest of europe places like portugal ireland spain italy and indeed in other countries they just starving themselves so this is never get 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 they fiddled the numbers for godsake to get there if you look at the graph of the greece growth past the troika proposed they're at minus six this year next

year they're about square and then after that if the opportunity to grow at four or five percent could somebody explain to me the math underlying that we not see also a fundamental break democracy i mean do you see what's happening in spades the spanish government has come down and said look you know this you know this deficit reduction and aid working kids so we want a bit of rope here so we can actually not cut as aggressively and the moment that happens we hear out of the live in paris and brussels perhaps we ought to get a technocratic government in portugal to do what we want this a fundamental breakdown here in democracy and i think that is where the real pressure is going to come these protests are going to stop there's going to be huge political issues in europe and essentially. when you get effectively the german chancellor for better or for worse take it as a dominate tricks with a nazi flag i don't think that's good for europe love to do you think max let's talk about something interesting in the economist magazine recently ran

a special edition praising financial innovation you wrote a blistering attack on their claims gas tell us about your main criticism of financial and very innovation in the economist and the media's role in promoting this canard well 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 could provide a few that's pretty much it but the economist god bless their hearts and souls effectively have to side that financial innovation is in the american bill of rights so basically it's self-evident truths that 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 economist 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 for cost of progress but the most egregious part

about this is a simple cost benefit analysis is ok well financial innovation did break 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 in the human sense he says massey 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 about supply or 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 you know it's still good but the point is they also never try to quantify one benefit and i actually with paul volcker here when focus at the. only financial innovation was the dam was the automatic teller machine and the way we going with currencies seen where you put your cut 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 now but i mean if 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 disseminate the blowing up of the global economy but now you've got the mainstream press like don't the economist is unrepentant in their promotion of financial holocaust and financial apartheid and nobody is offering any checks and balances here there is this was actually ny state and united kingdom all criticism of banks is censored i know that personally from having done reports for their major outlet and it gets outright censored or censorship or any dissenting view on bank terrorism in the biggest economies of the world do 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 a trick it dies to the rich seeking behavior of the financial institutions and they need to address that and nobody but nobody in beit stream media or politics wants to address that that's what needs to be addressed right duster out of time have 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 like of das he's written a book extreme money you must read it you can send me an e-mail at kaiser reporting r t t.v. or you can follow me on twitter until next time x. guys are saying.

thank. you. if. he believes he can. keep.