this is our. top stories this hour revolution hangover latest clashes in egypt between protesters and great military and security forces leave one dead and hundreds injured in the presidential election. the rise of the fall right now in france as the country decides on who its next leader will be and whether the dump will stick with me. and russia's republic of dagestan more of the victims of a deadly twin bombing which killed thirteen and injured over one hundred in an attack suspected to have international terrorism links. this is from moscow

home of the kaiser report. max kaiser this is the kaiser report everybody in this news room agree why can't obama send a drone up. i mean it just came out that the lehman brothers executive stole seven hundred million dollars right before bankruptcy that's right they stole it from you and me the drones in the middle east it's a waste of time it's the drones of dick fuld strengthening that we made obama well all right let's go to stacy ever stacy hey max seven hundred million dollars that sounds about the same as what jamie diamond j.p. morgan stole from m.f. global clients yeah a funny that i guess that's a round number that they love to steal i mail just talk to the news people around this room all agreeing these guys are shysters and need to go to guantanamo and beaten within an inch of their life if not worse ok well here's my first headline

max good morning vietnam d.j. mix pitch to troubled borrowers a u.s. military veteran made famous by his portrayal in the movie good morning vietnam is accused by a consumer group of preying on financially troubled homeowners seeking to lower their mortgage payments aging crow now or the former wartime disc jockey who was played by will robin williams in the one nine hundred eighty seven film is now a lawyer in washington his firm improperly sought thousands of dollars in upfront fees in exchange for helping borrowers negotiate better mortgage terms according to two complaints filed by the national community reinvestment coalition so the point is here max here was a guy who went to vietnam to fight against communism to save the u.s. economy from communism to prevent the exact thing that he is causing that we were told was the reason to go fight communism around the world so you also have to

wonder the equivalent of today say seal team six who are the hero. as of today you know what their future thing's going to be where we see you know al qaeda being like more powerful than we are because here this guy is defrauding american the american population in the mean time those economies in vietnam in china in asia are booming. seal team six guys when they get back the ones as you know survive they can get in on mortgage scams selling as well i'm sure there's a job waiting for them at some mortgage chop shop that on wall street they can leverage their name oh my seal team six guys get involved in the mortgage fraud and this will just open the gates to all kinds of multi-level scam operations little put lots of money in their pockets while they're ripping off their fellow americans quote unquote. and we can look forward to that i suppose i mean it's a great name leverage it death and disease going to leverage they own the copyright there's going to be big film about it and you can use that to finance your shantytown mortgage somewhere in trend town usa well max it could be another reason

to invade vietnam to bring them our new economic model which is defrauding your own population homeless families found living in storage units last month salt lake city police the city fire marshal and salt lake county health department found people living at least five units in a one storage in three two zero two south davis drive in one unit officials found a makeshift bedroom with food clothing and other living excess reason according to a search warrant released thursday and another there were televisions microwaves the lamps we also saw that kleiner is workstations heaters and air conditioning units police wrote health officials also found human waste being stored in bottles and presumably disposed of in an unknown manner only five people living in a storage unit show some initiative out there let's get fifteen to twenty people crammed in those storage units come on america you can do well no that's the thing is the health and safety department close the storage units to occupancy citing health and safety hazards as well as fire building codes because presumably

sleeping out in the street. sidewalk is like devoid of any risk or safety or health or safety issues well the differentiation between the gutter and a storage unit as the model for housing in the us is slowly evaporating as you open the prisons become the defacto public housing slash workforce so whether it's fifteen or twenty in a unit stuck in a no air conditioned ghetto slum you know making components to compete with their slave labor in china doesn't make much difference does it it's one big open cesspool now the manager of this place said she has turned away ten to fifteen people over the past two weeks who wanted to rent storage sheds suspecting their real intent was to move in themselves no one has been arrested now this is the end the other interesting you know trend you see here is people turning each other in and here is this woman who for whatever reason assumes that these people are just

moving themselves into these units oh absolutely i mean they they have to you know come forth with some bribe money i mean if you're going to get a shack to live in you've got to pay the bribe master some money under the table so they're saying they're turning people away that's code for that in pay it's enough bribe so you got to come up with that upfront bribe money maybe go to the good morning vietnam guy he'll make a nice loan to pay the bribe to live in a shanty town somewhere in trance town usa shows the mission of so while americans are moving into storage units thirty years after good morning vietnam guy was over there saving us from communism here's a headline about the chinese max of which you said their slave labor well l v m h skips european austerity raising prices for chinese chinese tourists traveling to europe to take advantage of savings as much as fifty percent on designer clothes and accessories are finding fewer bargains l v m h mo a hennessy louis vuitton and its peers are raising prices to make up for lost business in china and lower

profitability outside. country one third max of revenue growth for luxury goods expected to come from china in this next year and chinese global tax free spending grew seventy nine percent in march mean year earlier the fastest increase of any nation making them the world's biggest tax free spenders with twenty one percent of the total the products they splurge on the most in europe are watches jewelry and fashion so max the average chinese visitor to europe on a shopping trip spends eleven thousand euros on shopping. oh exactly correct given all of the transfer of wealth from us manufacturing sector over to china now they're feeling flush and they're doing some spending they've got their pockets full they're like a little louisville bag and i'm surprised you know thinking about these shacks out of the desert why donald trump doesn't get into this business i mean he's the guy loads of what his name all over housing developments how about the trump shanty

town you know workers going in to manufacture stuff for chinese consumers to buy on their luxury shopping trips where the u.s. sleep in the gutter come on donald show it's an initiative but again you know i started with a headline max good morning vietnam and here was a guy that went to vietnam in order to save us from communism and china well vietnam is still communist china is still communist and it looks like they're able to go to europe and splurge eleven thousand euros i would that's about fourteen fifteen thousand dollars per trip per shot in trip well using a shopping spree analogy vietnam was a shopping spree for bell helicopter and other pentagon related defense contractors that was the point of that excursion let shop buy a lot of helicopters and rockets and make some bucks there was no ideology behind it there was no political initiative it was a pure you know nick sony and you know money grabbing shopping spree the fact that a lot of people died well that's too bad for them well it was also

a good journey for dow and monsanto now the other thing i want to turn to that max is the next headline back to america machines dominate the market eighty four percent of all trades h.s.t. trading by real investors is taking up the smallest share of u.s. stock market volumes since morgan stanley started keeping track ten years ago the findings highlight how us trading activity is increasingly being fueled by fast turnover of shares by independent firms in the market making desks of brokerages many using high frequency trading engines. now the interesting thing max of where this trading against to well the proportion of u.s. trading activity represented by buy and sell orders from mutual funds hedge funds pensions and brokerages referred to as real money or institutional investors accounted for just sixteen percent of total market volume in the form of buying and thirteen percent selling in the final quarter of last year so you have more and more volume by these computers against the pension funds and their mutual funds so

they're just scooping out more wealth there's more people to be moving in storage units across america well that's why the ratings oversea n.b.c. are crashing because computers don't watch c n b c don't thing all the human beings that used to be trading on the floor of the exchange they're living in a donald trump storage unit somewhere in the gutter but the actual human trading going on in the exchange is done computer to computer they don't need to see maria bartiromo standing on the floor of this new york stock exchange you know doing a little dance amongst all those swimming brokers spermatozoa they can just sit home and trade with themselves they don't need her to help her that computers don't need maria they trade one of them suv state of maine maria c.b. says obsolete is no longer relevant showed. that's right c m b c viewing numbers next have declined to less than one hundred thousand in these key shows during the day you know we get that one you two so it puts into context how little relevance

they actually have now the other thing about this story max is so here are the trading eighty four percent of the trading is being done by these computers so why do we still see all these human bankers walking around collecting millions and bonuses every year hasn't lloyd blankfein and jamie diamond haven't they been replaced by these computers so why are they still collecting salaries well the question is why do you see a bunch of flies flying around you know dog poop on the street right i mean there is still money to be extracted from these massive multi. in dollar piles of debts that have been you know excluded from the orifices of the investment banks on wall street and there are the flies you know in their suits buzzing around picking the little peanuts out of the debt excrement hoping to make their payment on some yacht somewhere down in ville france america they can hang out with some billionaire who just went public thanks to some computer algorithmic trading that relevant to nothing but to be worthless in six months like groupon

a massive ponzi scheme heading to zero ok well max that kind of brings me to this next headline rupert murdoch's fox broadcast licenses targeted by u.s. ethics group so the f.c.c. called on to revoke licenses in the wake of british parliamentary poor as phone hacking scandal widens abroad a washington based ethics watchdog is calling on federal regulators to revoke news corporation's twenty seven fox broadcast licenses in the wake of the highly critical report on phone hacking from the u.k. parliament the letter to the f.c.c. the federal communications commission argues that the final we poor of the u.k. commons culture media and sports committee which concluded that murdoch was not fit to run a major international corporation had implications for the u.s. regulators that they now had to act upon so here you have max across the board you know c.n.n. b.b.c. is not fit to report the financial news rupert murdoch is not fit to report the political news and the tabloid news even so you know this is another problem with

as we started with you know good morning vietnam this you know really landmark film of the eighty's and ninety's where it's the propaganda that they're pushing that is actually created an impoverished population i love this wall street journal front page top story murdoch in hot water f.c.c. investigating murdoch you're a loser go away murdoch leave the people alone understand that you're worthless we're no good just quit murdoch quit the business do civilization a favor do something japanese for your sort. oh america i did all this stuff. all right thanks for watching other guys report thank you max doug oh i was right coming away stay right there. along with.

russia would be soon which right if you move about songs from friends to question some of. these friends don't talk t.v. don't come. only. time as cars are welcome back to the casa report time now to go to reggie middleton of boom bust blog dot com reggie melton welcome back to the kaiser report

thank you very much all right reggie let's talk tech everyone is buying apple but you put out a report recently saying that they real value in the space is google tell us about it well the real unrecognized value is google you know everybody recognizes the value in apple the fact that they make gobs of money is you know indisputable but the problem is everybody owns apple everybody thinks apple is going to grow at the same rate it's been growing which you know is highly unlikely and there's very little in recognizing that apple is a matter of fact the only thing that isn't recognized as the fact that apple has a lot of competition and a lot of barriers to replicating its historic growth well google is. think of it as an iceberg with the vast majority of its mass resting under water where you can see it. google is thought of as a search engine and ad agency when realistically google is looking to be the shepherd of data global data all data whether it's data stored on hard drives

that of that search data that is streamed through a media or audio envy have control of several markets that they nobody even thought they touch just a few years ago so they went from a search engine to the number one mobile operating o.-s. you know over fifty cents a share to the largest and agency on the web two would you soon probably be the largest cloud service on the web if they're not the largest called cloud service already if you count no g. mail and everything else that's an awful lot of power you know and their way google works their business model is they cost shift normally companies get a product or service and they sell it to the end user the customer. the customers buys it for them with cash what google does is they shift the cause from the end user other consumer to third party that also benefits from paying google that's why

google is allowed and able to give you some of the best services without you paying for g. mail you tube h.d. video storing and streaming. google drive google maps could go down the list google voice they do this by cost shifting when you cost shift you bring a competent and competitive product to the market and you give a lower zero cost to it is very very difficult for companies who used to make it fair margins to people free especially that free product is compared competitive or better than a product offering in terms of enjoyed google actually has a negative margin project that's the free you know who gives away enjoy and then has revenue sharing with downloads and ads where those that use android can actually benefit and make money from the end users using agile with a negative margin product how do you compete it's not enough to compete with free how do you compete with this in free which is why android is growing so quickly well google has done with android was they've created

a new business model and most people think they're creating new tech or new o.-s. you know and they didn't you know they bought and they expanded it what they did was create a new business model to use open source software to compete with that margin companies such as apple nokia ram microsoft and outside of apple you see what happens to all the other companies. all right so reggie if you use the term they're open source relating to google's model and this of course of a software that is basically free so contrasting that with apple apple of course has a very you know digital rights management enclosed garden or walled garden as they call it a very proprietary network so looks as though fray in this sense is going to trump the pay for software model is that a fair characterization well that would be my guess but let me correct you know the google software is not free i don't believe there's not there's no such thing as free you know somebody is paying for it somewhere the way open source works is you

know upfront investment it doesn't come out of pocket as you can get the call without paying for it but you still have to manage the quote upgraded care for that cetera so basically the cost is smoothed out and shifted versus being purchased from a proprietary vendor and have and use it with that being said this model does have lower friction over time in my opinion than the proprietary apple model. one of the reasons is because you have everybody contributing to the source so it gets improved very very quickly if you take a look at enjoy it when it first came out you know it was a buggy operating system you know had its issues in three years within three to four years enjoyed is by far the best operating system out with the most advanced hardware apple can't compete because no matter how many programmers apple may have say for three four five thousand they're never going to compete with the one million programmers that contribute to android open source plus the five to ten to fifteen thousand i google may have i'm just going on the number out you know on

staff with that looking at these numbers apple can't compete with the rest of the world of us their programming world and then it gets to the point where as you spread out costs prices come down and then this brings us back to the microsoft apple competition from the one nine hundred eighty s. and early one nine hundred ninety s. and which apple had a very competent product. but they kept it as a niche product and they tried to go high end for profits microsoft distribute windows for as wide as possible they drop the cost of the hardware budget up the cost of the hobby drop the margins and essentially put almost put up a lot of business they were very close to but bankruptcy microsoft bill gates as a matter of fact when it was taking gave a personal investment to microsoft and to apple and agreed to continue to make microsoft office for apple two a system staying in business which is in his best benefit best interest of course sort of being a good investment it kept the anti-trust pressures off of his back which came down anyway of course all right well now the new entry into this battle of the titans

a new born multi hundred billion dollar behave with iran by some guy in his twenty's marc soccer burke i'm talking of course about facebook it's begins its road show it's about to go public where do they fit into all of this is it a serious threat to google for example well i believe you look at things the way bill gates did but remember gates came into his heyday in the late eighty's or early ninety's he said that his biggest fear was to have three pimply faced kids in a garage and not necessarily some big for him of like i.b.m. because it big we have those have the power and economic resources and political resources but they don't have the speed ingenuity with that being said apple would not be in their right mind if they didn't fear. chase book because of youth dexterity speed etc the issue is. anybody else could be a threat as well ok and just as much of

a threat if not more facebook and mark zuckerberg successful i seems like a very smart successful guy but they're totally unproven ok and if you take a look at history looks as if the us are against them it appears that facebook might be ran better than a lot of other social media companies but if you go back in history you have my space you have a oh well you. have you know go down the list they were very popular a lot of subscriptions pete flamed out and now this to be shows what they used to be facebook is real and i think with a little more long term goal in mind but if you take a look at the numbers they're both his slow significantly and it goes so significantly before the actual i.p.o. now reggie it's come out that mark zuckerberg has got an iron fisted control of the voting stock and the board on his own volition decided to spend a billion to buy instagram now as a potential shareholder is this

a sign of a good business model being. here to buy a smart guy or does the show maybe shades of recklessness well honestly i don't know enough about instagram its prospects and the synergies that. et al if there is a et al because you don't know because he has full control but assuming. so and instagram but if i were significant in a long term shareholder i'd have concerns you know he's a young guy you know a lot of people consider him a kid but he's a young guy very smart he created safe facebook he brought it to where it is now but it is unproven for one young unproven c.e.o. who's never run a public company before and never run a company this size before everything has never done any of this before they have so control over the company the board and everything else is foolishness it really is a risk that is unnecessary and you cannot get rewarded for the risk risk is

a price for reward so if i buy one dollar reward i want to pay eighty cents a risk that means every fear that a twenty cent profit right now you're paying one dollar of risk without a reward and putting on the power. let's jump over to europe talk about the u.k. they just announced a. double dip their back in recession were they ever really out of recession what's the prospects there was there ever be an end to this recession in the near term what's happening in the u.k. and which is on the doorstep of course continental europe i'm glad you phrase it that way because it was in a double dip it was one big ice cream scoop you know and top class can scoop they put a bunch of whipped cream in a form of liquidity and q.e. and so there was no double dip you know they had a serious recession ok from a serious crash from a serious credit and real asset bubble ok that happened they open the spigot switch

over to speak it with liquidity first everything with cheap inexpensive cash to totally destroy market pricing and market visibility you know totally destroyed market pricing. and that you know basically they like my risk reward scenario if they paid a dollar ten for recovery so you're going to see it several dollars a recovery for every dollar that they spent the problem is we spend a dollar ten for the recovery you're not getting a recovery you know you're just throwing money into a hole when the money sort of pile up but just a hole at the bottom so when you start throwing money the water money simply just backed up the whole you know and that's where we stand right now the u.k. in order for things to happen you have to let the market forces take place and soften and capable companies have to go bankrupt in the first i was system so you have new capital fresh capital new management fresh management and new ideas to come in and take over without happening you know they were up in the doldrums for a while as japan i think they wanted twenty thirty year ok twenty three years later

you know they still where they were twenty three years ago basically i finally let me just ask you this question you know the u.k. in response to the crisis that happened in two thousand and eight they decided to go down the path of austerity the united states they chose the path the anti austerity path they chose stimulus and bailouts and searched. amps both are failing so neither approach works what is missing here i wouldn't believe that a strict austerity program will work because if you're in recession ok or if you're trying to come out of recession and then you still have your revenue source is not coming out of recession ok and also if you are just coming out of a bubble and used to a problem the bubble the rebuild the problem you exacerbating your problem you have a problem that you can't it's impossible to say i don't see what the problem was because you just had a bubble that bus what you need to do is that we have fiscal responsibility so you need to stimulate you have come to me while at the same time stop wasting money you know that's like saying if you're going to go from here you know re on thirty third

street if you go from here to eighty six and first avenue but you're only going to make right turns if you only make you go in a circle if you only make left turns you're going to go in a circle you go to the other location you make a left turn when appropriate a right turn an appropriate and you don't say you're going to have a four story austerity program or you're going to have stimulus you know you stimulate when necessary and you pull back on expenses going to seven if you would do any of them you get nowhere right well that would require some political cohesion which we don't have because the various political parties are competing for handouts from the banking sector and the last thing on their mind is to resolve any of these crises all right we're out of time reggie middleton from boom bust blog dot com thanks so much very very welcome all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacey herbert and with my guest roger middleton a boom bust blog dot com going to send me an e-mail please just kaiser report r t t v dot ru until next time x. guys are saying.