but for moscow this is a time for your headlines now a petrol panic grips the u.k. ahead of a possible time to drive a strike and with fuel costs escalating london paris on washington all consider releasing oil reserves to push down prices. renews its opposition to foreign military intervention in syria as a divided arab league debates how to end the violence. on tens of thousands demanded justice across spain as workers protest cuts on labor of forms in

a general strike it comes a day before the government is expected to announce more painful austerity measures . try my colleague bill daughters here in half an hour's time but for now the culture of four shows no mercy on the latest financial stories. max crowder this is the kaiser report got a quarter million pounds on a blow for some political influence hello number ten downing street days here 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 areas he's in office and he did sarah all hoes dinner for use the corrupt business person for

a quarter million pounds and will 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 it law even the house of commons with in full color multi-cam or a fraud story mill been a pause victim of cameron right there actually his wife's name is samantha it was gordon brown's wife sarah ok they're always saying one of the social casting kind of maternal looking beefy called hello lot only bribe taking big list non poops well max they're offering up an independent inquiry of course to examine whether he breached right whole rules by entertaining donors and whether policy had been influenced improperly. another independent inquiry yes a u.k.

well of course they have these every few weeks. they keep joan snow and jenny paxman over something to talk about to chat about while they're taking you know all of their how many times of a bit of number ten you know to help shape the policies of the of the government going forward not affect the cover of the economist magazine shows david cameron is a calls years at a hotel and presumably just absent beck and call of the british call talk or see 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 and 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 emails going back and

forth that have emerged between you both o'brien the former treasurer of m.f. global and john corey sign but apparently there's no smoking gun because this is a unique weapon in the hands of politically connected and that their guns don't smoke both the highs of uncertainty principle as expressed itself in the financial year so that corazon 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 bit location i didn't know what was happening in this location and it's impossible to make this determination therefore innocent by the virtue of a scatter gram or you'll representation of my nonsensical existence as the governor and senator and fraudster and she for money is low and if i say it's coming out of my ears and i really complicate it within. health is really a complicated inside reality cation doesn't really exist unless it exists what

color is it with things that i don't know i'm junkers on a commuter for just going to call tinkle to the bathroom i don't know the difference over for can cook i do it doesn't matter i don't go to jail a lot because i pay i pay of all the money i pay the people bunny i pick up money therefore i'm innocent i'm going to say because i paid the money that is not at all to bait it that certainly whether the money is worth says that's on certain but the fact that he says money in bribes and pays people in bali 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 to transfer two hundred million to j.p. morgan in london where tony blair is the international advisor of course for j.p. morgan london well of course on the former senator and governor of new jersey prick prior to that the former c.e.o. of goldman sachs he ordered this transfer now just basically what happened is brian transferred the money from a segregated client account to the m.f.

global account and then to j.p. morgan so that's delivering to her boss plausible deniability plausible deniability made famous by oliver north during the iran contra scandal now just called 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 the us public finance a so-called pay to play scheme in jefferson county alabama that contributed to the biggest ever u.s. miscible bankruptcy and a federal probe that uncovered bid rigging of municipal bond investment products.

to name two you could maybe twenty or thirty. it's an assembly line of fraud 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 one nine hundred 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 for others to institutionalize market or as a d.h. player or a bucket shop on the last raise a retail oriented shop and if so mr short somewhere in the morning calls up her local s.c.c. representative and complains about the broker on wall street of fraud or of her five thousand dollars peanut butter money ok then that broker is going down but with her entire minutes of prouty has no sewage and people are floating in their own excrement because jamie diamond thought he needed another yacht payment then

that's on the institutional desk and everything's ok there just simply 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 at all i think they provide good service i think they've been highly ethical with us 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 bernie 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 where california where we want to have

jamie diamond 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 because they're on the insider list the first call list they feel like we're going to piggy bank you're going to piggyback jamie diamond's fraud we're comfortable with that we'll never turn on us because we give them money on the table because we give them a lot of rides because he's a crook and so he never told us until he does and then to do it so let's look at again we're looking to. for evidence of policy shifts thanks to these billionaires and multimillionaires giving politicians money trish a warrant of nations behavioral contagion junko tree shade 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 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 but this is a means of the central banks some preplanning is responsible for all capital allocation the idea of free market capitalism according to the korean central bankers is no longer applicable because these economies are to start up they need central planners any bureaucratic technocrats to allocate the capital and have the allocate capital well we know that if your friend david cameron you give a quarter million pounds and they'll allocate capital to you we know that in america to give jamie diamond some money under the table it's incredible you have a purple color you're going to have that here's some capital quarter for you to you know this goes in line with what i'm saying is that their influence and policy so only a week or two ago their 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 ben 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 market unless you give goldman sachs your money you spiking the point or as it's called that's exactly right the great 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 if they can i. p.o. there's a public offering like facebook for example goldman sachs takes a huge position for a fifty billion dollars illegally by the way that's an unknown contestant now they're going to take a public four 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 numbers 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 who put this hot i.p.o.

in your kill and you make instant profits so drop your lawsuit ok how planes 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 with the sudden poling 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 and to be 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 the 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 and an order to and communism and what have we had here communism by financier is by the way famously did take medicare social security in our later years which is a total hypocrite and her philosophy doesn't make any sense but what you're saying here is that while these bankers are telling you is that like in two thousand and eight. 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 that people on the street who they will characterize as terrorists if anyone objects to the math fact that their wealth is being stolen but i pushbutton autocracy this is an evolution an autocracy you just simply push a 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 is what happen in greece will happen all over europe and spain spain ready to pull all those just about and say sign off all your assets or i'm going to cut off all your money so this is a push button autocracy in the twenty first century i say damn a place must be on the kaiser report thank you all right much more coming why so stay right there. in the. world the. technology innovation called in these developments from around russia we've done for the future coverage.

welcome back to the kaiser report time now to go to new york and speak with joshua brown author of this new book good good look at it backstage wall street in which joe the world about all the tricks was three uses to convince you to act against your own financial self-interest now josh welcome to the kaiser report max about the issue of brown it seems like you hired greg 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 figure greg smith josh 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 much ado about nothing or is it going to have legs as they say in the in the 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 themself 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 covers

there's never been any difference it just becomes more or less obvious depending on the era that we're in such a lot of times on business cards on the retail brokerage industry it'll say something like financial consultant so people. i expect that when they go they go to a financial professional that they are receiving some kind of consulting services so it it in great smith's letter he exposed the fact that in fact the brokerage industry is a carney side show that's ripping you off he's made the same point in your book what about this level of fraud as it relates to the institutional side of the business just because we hear about municipalities better being sold junk not junk bonds but literal toxic securities from j.p. morgan goldman sachs and these towns across america are going out of business because of the bucket shop tactics that you explore in your book what about the systemic fraud in the fact that these six term systemic fraudsters are now in high positions in the government what about this just just because someone is in

a quote institution or a quote accredited investor it doesn't necessarily mean that they're any smarter then an individual investor and the protections of institutional investors and a credit investors need in wealthy people are significantly less than they are for other people it's assumed that well this guy's which in a 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 but 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 band of care 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 think of them something like

in 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 client's fiduciary from a suit. ability standpoint it's a suitable investment it 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 for do sherry how to do sherry obligations to them ninety three percent of our four americans said yes in fact he does and they were all wrong so there's a difference between being someone's fiduciary and just being someone's broker who's held to the lesser suitability standard and no one knows the difference other than people in the industry i think that's something that needs to change and i've dedicated a lot of mights on i'm on the blogs and in the book trying to bring that out which are sounds like you're parsing words a little bit in my case i have a series had a series seven zero growth as license unfolds it expired and i left the business

but i still have a license and in acquiring that 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 clients eyes out if you require their head and you know who's on their neck but let me get back to this point about pension funds versus doctors ok for doctor gets involved goldman sachs broker the goldman sachs brokerages eyes out and ruined his life 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 these 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. as they're smarter 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 fund yes you're an institution but the people whose money is with you that's individual investors money that's people that are expecting to retire so i don't understand why there would be two different sets of protections whether someone's a credit 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 is a notoriety on wall street as being the inspiration almost from movies like poil room where you have these brokers who are participating in a classic bucket shop scandals like pumping and dumping etc then of course when out

of business but a bucket shop like goldman sachs stays in business why is that i think there are some pretty big differences between the the wire house firms and the. 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 to 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 firms doing it i think there's a difference between that kind of stuff versus what you're talking about with with the goldman's 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 here you have you know the current over the counter stock where the. the spread between the pin in the ass is not reported as a commission you're taking down stock on the only counter desk you're putting in a dollar or two dollars on a sale spread it which can be ten twenty twenty five percent of the equity and you wiping people out now how they're different then look like i say if i'm getting the market derivatives i'm not the buyer and the seller i'm going to pack in a ten percent credit to my firm and the day one from when you start with your grease her pension account or summer tour person or mutual fund you're down from day one how is that different wisely playing coy not in jail back she got me on that i haven't really looked at the way the the the institutional side is trading into the months 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 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 a book again ok the book is called backstage wall street rational 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 a 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 massive think you've nailed it you're an x. or a seven and i'm an x. 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 more didn't and i think you absolutely dale that nobody needs to be pitched anything over the phone in a meeting at a 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 wanted to follow up our last conversation on the show talking about the new hot a wave of social networking sites like groupon and facebook's coming down the pike 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 generally thoughts

on the sector i mean this is typically the sector that people are going to get phone calls about they'll get a 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 which firms that still exist i've 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 pretty i.p.o. shares in facebook but in reality what they're really buying is shares of the fund that own stock that may or may not 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 don't have then they won't give them to you you are about to be screwed and i think that that's the number one thing that's going on right now. social media companies do not trust anyone who's got something that's too good to be true with facebook twitter etc was a great example all right enough the book is called backstage wall street journal brown is the author he's the reform broker thanks so much for being on the kaiser report thank you max all right i'm going to do it for this edition of the kaiser report with me max kaiser and stacy herbert or that my guest joshua brown backstage wall street if want to send me an e-mail please do so at kaiser recorded r t t v are you until next time ask others and back out.