eleven thirty am in moscow these iraqi headlines and gathering to strike tens of thousands in spain unite in protest against labor reforms a day before the new prime minister announces a fresh round of austerity cuts seen as the first real test for spain's leader who took office only three months ago. the arab league splits over how to deal with the syrian crisis some members advocate diplomacy others want to arm the rebels and weigh in with force syria's government and the opposition under pressure to enforce

a you bring peace plan calling for a cease fire. plus the five member bloc of breaks nations take on the dollar and euro in a bid to reform the global economy or masterminding the creation of an alternative global reserve bank that could rival the i.m.f. and other u.s. dependent bodies up next hour he's financial pundit max kaiser unveils another scandal in the banking world kaiser report coming your way. backscatter this is the kaiser report got a quarter million pounds you want to blow for some political influence how low number ten downing street days are max keiser you were right all along about david cameron david cameron hosted dinners for millionaire donors in downing street flat influence peddling the thing that cameron said he was against when he ran for

office and areas he's in office and he'd sara all hose dinner for you the corrupt business person for a quarter million pounds and we'll put your agenda right there the house of commons and we'll debate it right there or you can lodge your own agenda that's closer to the interest of the general population being discussed by lawmakers on live television the the other corruption of that law even the house of commons was in full color look at camera fraud story mill middle post victim cameron right there actually his wife's name is samantha it was gordon brown's wife who is sarah ok they're all saying one of the central casting kind of maternal looking beefy buffalo waddling bribe taking be close non poops well max they're offering up an independent inquiry of course to examine whether he breached white hole rules by entertaining donors and whether policy had been influenced improperly. unknown or

independent inquiry yes you can well of course they have these every few weeks. they keep john snow and jeremy paxman over something to talk about to chat about while they're taking you know all of their how many tons of a bit number ten you know to help shape the policies of the of the government going forward is a matter for the cover of the economist magazine shows david cameron is a calls years at a hotel and presumably just at the beck and call of the british called top grossing well let's move on max because we've got lots of headlines here you know they're going to spend hundreds of millions of pounds waste hundreds of millions of pounds to find out that david cameron actually did not break any rules but we're going to look at the headlines because all the facts are there for you to determine whether or not billionaires in multimillionaires who are donating money to the likes of barack obama and prime minister david cameron whether or not they're influencing policy new details emerge on m.f.

global but no smoking gun apparently you know there were some e-mails going back and forth that have emerged between edith o'brien the former treasurer of m.f. global and john corey's sign but apparently there's no smoking gun because this is a unique weapon in the hands of politically connected and that there are guns don't smoke both the highs of uncertainty principle as expressed itself in the financial or sphere so that course i can say it's impossible to determine with any without a doubt that the money was actually here when it was actually there and you can occupy a particle and speed at the same time and i was actually a location i didn't know what was happening in this location and it's impossible to make this determination there frog innocent by the virtue of a scatter graham girl or you'll representation of my nonsensical existence as the governor and senator and frost or in chief or money is no and if i say it's coming out of my ears and i recall complicated within. kalpas re hypothecated inside the

reallocation doesn't really exist in the us is exactly what color is it with things that i don't know i'm drunk or zine i can afford just going to kill to go to the bathroom i don't know the difference i'm a fucking prick i do it doesn't matter i don't go to jail because i pay i pay about the money i pay the people money i pay cab or money therefore i'm innocent i miss it because i pay the money that is not at all to bated that certainly whether the money is worth says that's on certain but the fact that he uses money in bribes and pays people who call him ministration bribes is graft he's a crook that is certain. exactly so he's just standing his ground max you know he had directly ordered edith of brian to transfer two hundred million to j.p. morgan in london where tony blair is the international advisor of course j.p. morgan london well of course on the former senator and governor of new jersey prior to that the former c.e.o. of goldman sachs he ordered this transfer now just basically what happened is you

do so brian transferred the money from a segregated client account to the m.f. global account and then to j.p. morgan so thus delivering to her boss plausible deniability plausible deniability they famous by oliver north during the iran contra scandal now we just call it the uncertainty principle of finance well let's move on to another headline from j.p. morgan here j.p. morgan claims number one for government debt after jefferson county so j.p. morgan has emerged from the worst financial crisis since the one nine hundred thirty s. as the most profitable u.s. bank has parlayed crisis era loans to cities and states and a willingness to outbid other firms and local government bond auctions into becoming the top underwriter of municipal debt last year this is a turnaround they say for j.p. morgan's municipal bond department which has been marred by its involvement into the biggest scandals in the history of u.s. public finance a so-called pay to play scheme in jefferson county alabama that contributed to the

biggest ever u.s. misapplied bankruptcy and a federal probe that uncovered bid rigging of municipal bond investment products well. you can maybe twenty or thirty. it's an assembly line. yes but i know you're talking to josh brown of who wrote backstage wall street and he talks about the bucket shops of the nineteen eighty's and ninety's who got put out of business once they were caught defrauding customers so why is it that just because these are municipalities and so-called sophisticated. investors and treasurers why do they continue to be able to defraud over and over and over and over again because it's institutionalized it's the institutionalized market where as a d.h. blair or bucket shop on wall street is a retail oriented shop and it's mr short somewhere and the moyen calls up their local s.c.c. representative and complains about the broker on wall street of fraud are over five thousand dollars being

a lot of money ok then that brokers going down but one time it is a proud he has no sewage and people are floating in their own excrement because jamie diamond thought he needed another ya payment then that's on the institutional desk and everything's ok they're just send cameron more money so let's also look at this quote from california treasurer bill lockyer so he was interviewed about them doing business with j.p. morgan i haven't found an investment bank that hasn't had some problem and the last three years we do business with them all i think they provide good service i think they've been highly ethical with us well jamie diamond is the leper with the most fingers down there wall street people like doing business with them because of all the stink and whores that rip people off twenty four seven he's got the nicest i think it's look the bertie made off investors thought he was defrauding the markets but they thought they were making he was giving them a cut so they didn't mind here he's saying well you know they might have defrauded

jefferson county but those are a bunch of hicks and rednecks down there were california where we want of a new dimas sort of guys he's not going to rip us off they just don't know what he's saying they've been highly ethical with us as far as he knows but because they're on the insider list the first call list they feel like we're going to piggy bank you get a pretty bad jamie diamond's fraud we're comfortable with that they'll never turn on us because we give them money on the table because we give them lots of broads because he's a crook and so he'll never turn on us until he does and then it's too late so let's look at again we're looking to. for evidence of policy shifts thanks to these billionaires and multimillionaires giving politicians money tree shape warrants of nations behavioral contagion junk poetry show the former president of the european central bank said last weekend that he is worried that controversial quantitative easing and other nontraditional steps the global central banks have taken since the

financial crisis could be here to stay he said it might all work out we might be able to unwind all of this but he said that the extraordinary actions will be likely be part of a new permanent regime this means that the central banks some preplanning is responsible for all capital allocation the idea of free market capitalism according to according to central bankers is no longer applicable because these economies are too screwed up they need central planners any bureaucratic they could pass to allocate the capital and how they look at the capital well we know that if your friend david cameron you give him a quarter million pounds and he'll allocate capital to you we know that in america to give jamie diamond some money on the table he'll allocate some credit to you about barack obama your good friend the barracks here's some capital program for you to you know this goes in line with what i'm saying is that they're influencing policy so only a week or two ago the world was shocked about greg smith's letter to the new york times claiming that goldman sachs calls its clients muppets well as soon as he said

that what happens two weeks later than bernanke he delivers more muppets to you because he's saying he's going to introduce more easing it's going to be impossible for you to make any money you muppet unless you give goldman sachs your money these spiking the points paul as it's called but as exactly right the greg smith letter got a little too close to goldman sachs the federal reserve bank so they're going to flood the room with a lot of cash which will make a lot of people some short term gains and you know as we've talked about on the show before taken i. p.o. initial public offering like facebook for example goldman sachs takes a huge position for fifty billion dollars illegally by the way that's an unknown contestant now they're going to take it public for one hundred billion plus so all the lawsuits that are going to result from greg smith they'll say look don't sue us we'll put in a guaranteed winner in your account of course on game day one if you drop your charges that's when my peels all about having worked on wall street i myself have

done that many times hello mr jones don't sue us here paine webber or oppenheimer or shearson or lehman because we'll put this hot i.p.o. in your account and you'll make instant profits so drop your lawsuit ok how pins every single day that's the law as written by brokers with hot i.p.o. shares so you mentioned capital allocation so we see here the age of the shadow bank run this is from the new york times tyler cowen he says the bank run is back the modern bank run means a rush to withdraw from money market funds the disappearance of reliable collateral for overnight loans between banks and the sudden pulling of short term credit to a troubled financial institution but these new versions are in some ways still similar to the old both reflect the desire to pull money out of an endeavor entity first out the door and both can set off a crash so he says now we have the introduction of the term as country as bank so your nation becomes the banker of last resort but also all of these measures he's saying are also permanent from the central bank this permanent quantitative easing

and that the central bank may end up taking over much of the allocation of capital so here you have iran's disciple alan greenspan with the help of ronald reagan who deregulated the markets in the name of iran's in order to stay and communism and what have we had here coming is a by financier by the way famously did take medicare social security in her later years so she's a total hypocrite and her philosophy doesn't make any different than sense but what you're saying here is that what these bankers are telling you is that two thousand and eight is. they want to they can push the button and markets stop working completely because there is no price discovery there is no free market capitalism is just acid allocated by the central banks that are using that privilege to write laws to make it easier for them to become richer and to destroy the economy and to have people on the street who they will characterize as terrorists if anyone objects to the max fact that their wealth is being stolen but by pushbutton

autocracy this is an evolution an autocracy you just simply push the button and credit freezes pannikin says and congress will write any law you want to they did in two thousand and eight with hank paulson former goldman sachs guy they'll do it in any country now does that happen in greece and happen all over europe happen in spain spain ready to hit the law doesn't sit up and say sign off all your assets or you're going to cut off all your money so this is a push button autocracy in the twenty first century all right suzanne we thank so much being on the kaiser report thank you all right much more coming why so stay right there.

well the. technology innovation called in these developments around russia. the future of. welcome back to the kaiser reports on how to go to new york and speak with joshua brown author of this new book get a good look at it. backstage wall street in which journos chose the world about all the tricks wall street uses to convince you to act against your own financial self-interest now josh welcome to the kaiser report goes your max about joshua brown it seems like you hired great smith to go out there and write that letter to the new york times to help promote your book is that true yes it's very true i owe

him a basket of flowers and fruits. all right speaking of grapes just brown people were shocked shocked that goldman sachs refers to its clients as the muppets despite all the wealth destruction of the past decade the population still believes that wall street is there to help them make money of course in your book you explain why that's not the case but why what about this great smith letter do you think it's a much ado about nothing or is it going to have legs as they say in the in the in show business you know i was i was actually pretty critical of of his of his op ed and people are somewhat confused about what the difference is between me and him because i've just written this kind of tell all wall street book so the major difference is that greg is delusional he seems to think that over the last five years something has changed so i think i think greg is is kind of full of himself in thinking that everything was fine for twelve years and then all of

a sudden something changed it's always been this way if you do the research in the history of wall street and main street relationships which is what my book called hers there's never been any difference it just becomes more or less obvious depending on the era that we're in just a lot of times on business cards on the retail brokerage industry it'll say something like financial consultant so people would expect that when it goes right they go to a financial professional that they are receiving some kind of consulting services so it integrates misled or exposed the fact that in fact the brokerage industry is a carny sideshow. ripping you off these make the same point in your book what about this level of fraud as it relates to the institutional side of the business trust because we hear about municipalities better being sold junk not junk bonds but literal toxic securities from j.p. morgan to goldman sachs and these towns across america are going out of business because of the bucket shop tactics that you explore in your book about the systemic

fraud in the fact that these six term systemic fraudsters are now in high positions in government but about this josh just because someone is in a quote institution or a quote a credit investor it doesn't necessarily mean that they're any snorter then an individual investor and the protections of institutional investors and a credit investors meaning wealthy people are significantly less than they are for other people it's assumed that well this guy's which in and he's adopt the reason lawyer or he runs a pension plan for a bank don't worry about him he'll take care of himself and of course that's never the case but i think the more important point here max is that there are the fundamental conflict and problem on wall street for the average american right now is this there are two standards of care the first standard of care at the traditional is what's known as a suitability standard meaning the product that i sell to a customer as they are broker or financial consultant or whatever i want to call

myself does not have to be in their best interest it simply has to be suitable given the investors risk tolerance goals etc meeting i can tell them something like an a share mutual fund with a five point seven five percent front end load even though it's not a good thing if i were the clients to do sherri from a suitability standpoint it's a suitable investment there was a poll in two thousand and ten they asked affluent americans whether or not you know whether or not their their stock broker was their fiduciary had a fiduciary. patients that ninety three percent of african american said yes and that he does and they were all wrong so there's a difference between being someone's who do sherry and just being someone's broker who's held to the lesser suitability stand there and no one knows the difference other than people in the industry i think that's something that needs to change and i dedicate a lot of my time on the blogs and in the book trying to bring that out but it just

sounds like you're parsing words a little bit in my case i have a series had a series seven brokers license and so it's expired and i left the business but i still have the license and acquiring a license the the differentiation between suitability and fiduciary it within the spirit of such of the license gives you the right to be a license stockbroker there's a very similar although technically what you're saying differentiation but the spirit of this is that you're not supposed to gallop your client's eyes out to rip off their head and you know they're not but let me go back to this point about pension funds versus doctors ok if a doctor gets involved in the goldman sachs program the goldman sachs broker ripped his eyes out and ruins live that's the doctor's responsibility but a pension fund manager is managing money for other people it's a third party transaction they have no idea what's going on in a lot of times we find out that his pension managers are in cahoots with these

brokers on wall street and they're ripping these people off unmercifully in a way that's true through a third party so here you have third party institutionalized fraud now this is a this is a huge problem no baxi when i really see eye to eye on that point and i think to the fact that the regulations stay sickly state that you know an institution is on their own because they're snorter they should know better is not really taking into account the fact that the money that the institution is managing is retail money at the end of the day if you're managing a pension called yes your institution put the people. whose money is with you that's individual investors money that's people that are expected to retire so i don't understand why there would be two different sets of protections whether someone's acquitted or institutional versus whether someone's retail so i think you and i one hundred percent agree there are you talk in the book about famous bucket shop d h blair which has a notoriety on wall street as being the inspiration almost for movies like boiler

room where you have these brokers who are participating in a classic bucket shop scandals like pumping and dumping etc of course when out of business but a pocket stop like goldman sachs stays in business wise that i think there are some pretty big differences between the the wire house firms and the petty start pump and dump firms of of the ninety's what i would tell you though is that the bucket shops are still alive and well there are a lot fewer of them because the regulations have tightened and made it harder for them to stay in business but they're still out there the latest things that they're doing or private placements private real estate investment trusts things that are not opaque that can't be more of a market necessarily things where there's a lot of room to play around with the numbers and to have that asymmetric information differential that stuff is still going on to this day although there

are less farms doing it i think there's a difference between that kind of stuff versus what you're talking about with with the goldmans and the larger firms i don't know that you can really say that they were the exact same thing or let me give you five words and tell me that resonates with you and that it and forget it ring a bell yes all right so you have to know the carry over the counter stock where the spread between have been the ask is not reported as a commission you're taking down stock on the only candidates are putting in a dollar or two dollars on a sales credit which could be ten twenty twenty five percent of the equity and you wiping people out now that they're different they were lured my point is. i'm making a mark in derivatives on both the buyer and the seller i'm going to pack in a ten percent credit to my firm and that they will and from when you start when you're greece earth pension account or some retired person or mutual fund you're down from day one how is that different why is lloyd blankfein not in jail back she got that i haven't really looked at the way the the the institutional side is

trading in amongst themselves it's not necessarily my area i would say that though really to just get back to my original point i think when you look at the way individuals versus institutions are treated by wall street there should not be two different standards of protection on that you and i agree and i don't understand why we assume the guy managing funds for retirees at a bank is any smarter than that the individual who's accorded extra protection from the street i think everyone should be treated with the same standard of care and right now it's just not the case all right let me let me hold up the book again ok the book is called backstage wall street joshua brown is the author he's got a website called reformed broker you can follow him at twitter at reformed broker as well and the way i would characterize this book is that it's a book of self-defense it tells you how to defend yourself against that phone call at six o'clock at night from some broker who is looking to get you into the next

big thing is that a fair characterization of josh absolutely max i think you've nailed it in your next series seven almanacs i do out my series seven as well and i think that there is really no reason in this day and age for anyone to buy investment products from someone who is making a commission on the sale of that product that is not financial advice that is not a fiduciary role being carried out all that is is somebody sell you something that they know more about and that they're taking the margin in and i think you absolutely dale that nobody needs to be pitched anything over the phone in a meeting i do. seminar people need to defend themselves people need to read the book and understand the difference between sellers of products versus providers of advice i just want to follow up our last conversation on the show talking about the new hot wave of social networking sites like groupon and facebook's coming down the pipe twitter is a big phenomenon and now we've had some some training action in those stocks

groupon went public for example and so what are your thoughts currently on this sector and we only have about thirty seconds but are you still do you have any thoughts on the sector i mean this is typically the sector that people are going to phone calls about don't get that phone call that says hey mr jones you've got this social networking stock it's hot as a pistol there's one thing that i think everyone should be aware of and i'll probably write something about it right now some of the bucket shop brokerage firms that still exist have figured out a way to buy shares from twitter and facebook employees who need liquidity they're taking the shares they're bundling them in these private funds with escrow accounts they're layering fees on top of it and these are restricted shares of stock they're selling this to people as though they're buying shares in facebook but in reality what they're really buying is shares over thought and that own stock that may or may made up be sold at some point it is probably the biggest scam going on right

now people are cold calling investors with this thing i think everyone should be on their guard if somebody calls you up and offers pre i.p.o. shares of facebook at a discount it's a law i they don't have them they won't give them to you you are about to be screwed and i think that's the number one thing that's going on right now with the social media companies do not trust anyone who's got something that's too good to be true facebook twitter etc is a great example all right i know the book is called backstage wall street journal brown is the author he's the reform program thanks so much. being on the kaiser report thank you max all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert or that my guest joshua brown of backstage wall street wanted to send me an e-mail please do so at kaiser reported r t t v dot are you until next time ask others like bio.