tv [untitled] June 23, 2012 5:30pm-6:00pm EDT
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he's for instance on t.v. dot com. one thirty am in moscow these iraqi headlines turkey admits it's war plane that was taken down by syria may have crossed into syrian airspace but incident threatening to set the already volatile region on fire. tahrir square again filled with angry voices as egyptians still don't know who their next president is and fear the delay in results could be used by the ruling generals to bargain for power. and it is asian and julian assange has asylum still padded with ecuador saying it has to talk to all the parties involved but stresses it won't give in to pressure. keyser afford coming up stay with us your art.
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hi max kaiser this is a kaiser report dangerous oh my gosh so dangerous who's the most dangerous maybe in the world why it's the kaiser report it's a server max kaiser that's true indeed and you look very dangerous sitting there in moscow the twenty five most dangerous people in finance max according to josh brown downtown josh brown the reformed broker dangerous in a good way though he says these are the financial media players who are making things very difficult for the establishment to maintain the status quo because we try to have their way allow the banks and other corporations to write the laws that make all of our decisions for us turns out that's not true democracy or capitalism it's something else entirely and we've all had enough these are the folks leading the charge to take it back number one max keiser and stacy herbert the kaiser report progress right over it when make it difficult for them to maintain the
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status quo to maintain the illusion of free markets to maintain the illusion of efficient markets these markets are not free they're not official they're being manipulated for the effect of the wealth transfer to the very tip but it took money top and this is causing huge social dislocation strife and revolution and it all goes back to these bankers that are not being adequately covered by so-called mainstream outlets in the united states and around the world you know while we are the most dangerous people in financial media there are a lot of the least dangerous people competing in our headlines max this cable r.b.s. report recommends prosecution. so vince cable is poised to take action against fred goodwin and a small number of other former royal bank of scotland directors as a direct result of the banks collapse guess what max mr cable secretary of state for business innovation and skills is to pursue the former bankers by moving to
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disqualify them from sitting on company boards in the future sure a different good when of he's one of the main characters and the countries around the world have their capital to capital the main guy whether it's diamond on wall street or fred the shred goodwin in the u.k. these are the really the pillars of the global banking catastrophe that they are castrated but i mean come on vince cable he wrote in with the liberal democrats on the platform of banking reform if that's his reform vince cable want to just give them a big wet kiss you know the middle of the frogger square and promise your undying support just don't peddle the events think think a little more creatively about it well max compare it for example to allen stanford gets one hundred ten years in prison for seven billion dollars ponzi scheme the prosecutor had called stanford arrogant and rewards list prosecutors said he used the money from investors who bought certificates of deposits or c.d.'s from his bank on the caribbean island nation of antigo to fund
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a string of failed businesses bribe regulators and pay for a lavish lifestyle that included yachts and a fleet of private jets and sponsorship of cricket tournament's now compare that max to fred the shred the f.s.a. report investigation into the collapse of the royal bank of scotland said he had just made some poor decisions and this is exactly what allen stanford had argued and his he had he had invested the seven billion dollars in just bad business decisions well r.b.s. bought you know a.b.n. amro it was a bad decision but also according to the f.s.a. report into the collapse of r.b.s. it said that the bank had a weak capital position and was too reliant on short term wholesale funding well if your friends are vs. yes and you've been bailed out by the government and you have the profit of of calling you know a watermelon smash at the bottom of a garbage pit collateral that you're going to base your ponzi scheme on and that's ok if you're sanford then stanford then of course your definition of collateral
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falls outside of what the insiders in the government are allowing you to call the definition of collateral and that's a ponzi scheme but they're both policies games and they're both resulting in collapse and the bottom line here is i think what we're saying that regulation needs to be regulated by outsiders not the bankers themselves these bankers at r.b.s. and other bankers they regulate themselves which means that they can point to you know a dead rat on the street and say that's a collateral for a multi hundred billion dollar loan of the something you can do about it well now the global economy is falling apart there's deflation is ravaging the globe because dead rats are not sufficient collateral to hold up the entire g.d.p. of the world let's turn to some other of the least dangerous interrogator's financial interrogators in the world so jamie diamond appeared before the house financial services committee and the headline before he appeared diamond faces harsher and crazier house crowd in second round the house hearing will take more
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time but won't be nearly as controlled as diamond faces more than sixty lawmakers most of whom are up for reelection in november and motivated to capture local headlines so i can take jamie down jamie dimon down in two senses basically just say show us the collateral on your books that supports your multi-trillion dollar balance sheet and of course will be incapable of producing the collateral because it's all been hypothecated or re hypothecated there is no tier one capital at j.p. morgan there is no there there there is no foundation there is no supply and demand there is flow there is a fraud flow flow of fraud which they value that one hundred forty billion or so. dollars in the marketplace but there's no collateral that doesn't exist at j.p. morgan and there are you know jamie diamonds on canada our other countries job owning other leaders that they should reduce their capital requirements on their books now that should not be should be the other way around the rest of the world
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should be attempting to impose minimum capital requirements on j.p. morgan because right now the the the book value of the company as reggie middleton has said on the show a few times is a less than a zero. or max maybe they should also try to just avoid local headlines actually put a stop to fraud well i mean if you're saying that fraud training the new york stock exchange or whatever price is trading at that you put a stop water in there with a touch of fraud or should be blown out of it i totally agree with it but morality doesn't trade on the exchange fraud doesn't trade of the exchange or jamie down into the sea he only sees stuff that puts money in his pocket every single day based on not having any collateral on his balance sheet that he goes in front of congress a member of congress is there to hear insider tips because insider information is legal in washington they're not there to grill jamie dimon they're there to tease out insider trading tips that's all about the corruption is between washington and wall street now they just bring bankers up there to tease out the inside information there's jamie this presidential tough lang's stashing around she going to then giving you know coded messages like by this buy that here some inside
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information completely breaking the any sense of any securities act of thirty three thirty four anything that's ever come after that just breaking it willy nilly and calling that somebody is a performance artist jamie diamond is a performance artist of fraud but off broadway but just limited to two and i want to tell a story downtown where a lot of audience is going to applaud his brilliance and interpret the securities laws in an artistic way but it's nothing to do with the law well max speaking of greek tycoon. facing lax regulation you know jamie dimon is from greek ancestry we have a special report how a greek bank infected cyprus like many greek tycoons these days andreas vegan poulos is in trouble this is the marfan popular bank in cyprus which is collapsing and threatening to take down the cyprus economy with it the scale of marfan's problems poses difficulties for the cyprus government and a parliamentary session on may seventeenth they voted to help the bank fill a capital shortfall estimated by the bank and the country's finance ministry and
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nearly two billion euros the money needed represents a tenth of the country's g.d.p. max right this capital shortfall again some collateral that the banks both have on their books minimum capital requirements obvious. asli bring jamie dimon down there to consult and he will convince the government that fetiches is collateral now based on fetiches collateral this bank is over capitalized this bank should start making fetiches collateralized loans immediately then goldman sachs an issue called fetiches collateralized loan secured bonds to sell to european banks put them on their balance sheets and then six years from now they'll write the sort of aaa rated fed a back collateralized mortgage bond anymore i mean our banks being pretty sorry general and the bank here in spain i mean we're bankrupt no you just haven't collateralized enough cheese this is the big problem in italy when other earthquake a lot of parmesan cheese was destroyed that's the collateral for the entire telling banking system that's the real tragedy going on there well the local joke in athens is that marfan popular bank which is part of marfan investment group there's
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a joke that my g.e. which they referred to the company as it stands for money is gone now greek banks require thirty to fifty billion euros in bailout and this guy vege enough pulis denies any wrongdoing but his travails shed light on a factor largely overlooked in the narrative of the greek economic crisis which is now threatening to force out the out of the euro zone and unravel the currency along with the debts many greek banks built up by lending to each other and to associates so max once again with this benke m i g we see a golden circle of friends in this case the golden circle includes a group of monks. what yes that's a group of monks max mark from popular bank was a major lender to an order of greek monks who received swathes of prime state owned land in sweetheart deals and who in turn bought shares in m i g a greek
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parliamentary inquiry alleged serious conflicts of interest and how bank loans were used to finance my g.'s wider activities and max this group m i g bank they loaned apparently these monks were major players in the stock market and they. bank lent them but they also lends loads of other tycoons in greece they loaned them money in order to buy shares in the bank right here is a classic ponzi scheme we've seen in iceland they got penalized for it big of the u.k. big in the u.s. you loan money to big guys who end up buying stock in the bank to support the stock price and then the stock price is used as collateral to support more loans now the case of j.p. morgan as i mentioned they're using their stock prices support their naked short position and so over and that's why when silver price goes up they don't topple the bank utterly but what the monks what i suggest is they take themselves public and they do a public offering in the new york stock exchange it could be months incorporated and it's backed up by the monks belief that the collateral that they hold in their
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books is worth something per their spiritual beliefs that's about as tangibles a thing on any other bank's balance sheet so go public get some idiots in new york to take a public whether it's facebook which has dropped incredibly or groupon which is a disaster is ingo which is a catastrophe to be a monk it's a spiritual social networking play a value would have one hundred sixty billion dollars what could go wrong but max this golden circle of friends who receive massive loans from the head of the bank is also what caused the crash of anglo irish bank and therefore the i.m.f. bailout of the irish people and with that in mind i want to talk about this point here in this article minola bed an d. onus just retired m.p.'s. the greek socialist party said it was clear there was a lack of substantial regulatory control on the banking system loans were often issued based on a network of personal relationships starving those in the real economy small and
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medium businesses of farmers that access to finance so this is what happened in the ten years leading up to this global financial catastrophe is that all these golden circles of guys around the world where all that capital was mis allocated to them and therefore the real economy collapsed people lost jobs they were lost real wealth and therefore they don't have the money to bail out the banks that speculated their wealth away right in banking circles is called a ponzi scheme in nature we call it cancer cancer is a it invades a body it's a you know it starts to eat the body it is evermore the body to support itself the crowds out all the functioning aspects of the body and it kills the body kills the host same thing with these bankers around the world they're a cancer and they're pushing our legitimate businesses and the result will be a cancer ridden economic corpse from which a new economy must be born so you're hurt thanks so much for being on the kaiser report thank you max don't go away much more coming away stay right there.
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no. more news today violence is once again flared up. these are the images from world seen from the streets of canada. showing operation to rule the day. bacteria to record america either die now to go to dallas being accounted for a better person game girl here. back home crying report thank you marques delighted
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to be with you guys are a constant pain in the run up to the greek election the media the politicians of the world acted as if the voting population of gray somehow had some say as to whether or not they default or exit the euro isn't default an exit the only future in store for greece not only it is in store only for greece but it is also in store for the rest of the eurozone by and large of course we have to qualify what we mean by default in the case of greys doesn't matter what the outcome of the current elections would have to be and it would be very clear that greece needs to write down at least two hundred to one hundred fifty billion of its government debt and this is before we actually start even talking about growth all this isn't growth oriented the forms that's right down cannot take place through the issue new debt instruments we have seen that this type of an approach does not work in a second so-called bailout for greece we have seen that given loans on favorable
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conditions doesn't work in the first case either in the first bailout so it's very clear that greece is still on the very same road as it was before the elections and that is the road towards default most likely it is now also given the split in a political if you want environment in greece given the very clear current between the rural constituencies and urban constituencies between left and right start as was the borders and change the borders it's very clear that now that he's on the road towards the disorderly default you fold where it will be unilateral it will be brutish and it will be very abrupt. all right casting time to play a bit of a thought exercise here let's talk about the irish government had they not decided to bell the unsecured german bank creditors of anglo irish bank if they had been germany that would have been forced to transfer a bad bad to their population rather than ireland is that pretty much the way
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you perceive it it was a choice between whether germany for. kicks the debts down to their population but the choice was made not to let that happen but instead to have anglo-irish debts be assumed by the irish population is that a fair statement in my view the proposition that you have put forward is correct up to a point it is there in the sense that there are stocks there's the assume that there is the out of the banking system all to the international investors international bond holders foreign investors and foreign banks that is true but i think it is also not necessarily correct to present that term to impose in the course the resolution of the insolvency one through the shoulders of taxpayers and germany or somewhere else within the euro to shoot her across europe not just in ireland is that the insolvent bacon institutions and the investors who are they going to
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gamble and have lost on the books should have been there gone to the wall they should have been structured they should have been sold they should have been broken to pieces and their assets the proper insolvency the shims should have been allowed to work and therefore the course the spare should have been minimized in the my view it would have been minimal anyways simply because the only thing that what the government in germany or in ireland do needs to do is underpinned the system or to pull and that's all there is to florence the liabilities as far as the assets of those institutions go in fact you can make an argument that in countries like. ireland there is a room there to use the insolvency on the balance sheet of the banks to dissolve the insolvency on the balance sheet of the households because remember household loans assembled there is an asset and a liability for the bank their liability because the bank has to fund them in debt markets so writing down the debts of the banks when they become insolvent allows
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you to write down the assets of the banks such as household loans we could have had the combination of some of that is the property that is structurally the banking sector in europe making it truly open truly competitive as capitalism should require and at the same time help the household as well we've chosen the worst possible scenario whereby the taxpayers here in the entire burden and yes you're right it is the small country there's a part of them that are carrying the burden for europe. to get back to the share the government in ireland could have simply told angle irish go deal with your creditors and germany and we're not going to backstop your loans this would have avoided much of the austerity in ireland so i'm sure it would have been better for the irish people have they got their government not sided with their german creditors all right now up to sixty billion euros is going to greek banks as in ireland in iceland before it a small group of bankers apparently gave generous loans to each other and their
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golden circle of friends how much longer can we peripheral nations afford to start for the deaths of these cronies and their unsecured creditors so there's a golden circle of loaning money to buy stock in the bank that goes higher uses collateral to more loans it's a bit of a party's game how much longer can that go on well it's over now it is absolutely comprehensively over now we have seen with the spain in the last couple of weeks that the contagion is no longer implied it is actually physical and real we also have seen now with cyprus being made in seoul but by the crisis outside. with borders by the crisis in greece and particularly the banking system and stubborn system so there is not really any road left to kick the can down i mean we're in the open field right now in the can is as flawed as it can be. well the folks at the g twenty meeting which is become the most important international gathering
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these days they seem to believe that they will come up with a solution similar to what we just talked about a minute ago that there will be a new global credit facility some using the i.m.f. as a new central bank to float trillions of of paper to restrict characterize all these loans possibly backed by the special drawing right which is the currency of the i.m.f. and this has been growing in importance over the last ten years this is what they believe that and so far given the recent history of these crises over the past twenty years it's hard to make a case that they won't be successful your thoughts no i don't think there can be a successful ultimately and you know there's well there's you know i do every piece of that every liabilities such as the house to be backed by something real in the economy even the printing of money in a current system is still a bond that the exercise when you talk about the banking system whereby the fifty banks around the world right now all the banks hold more than three times the
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global g.d.p. in terms of assets you're really looking at the station where there is not they're not debts that they can print them surely without turning the entire global economy into one big zimbabwe you know that would solve any sort of the problems the thing about it is that we keep consistent and now it also does well i agree with you completely with your consistency consistently misdiagnosing the problem the problem is very simple the problem is accumulation of unsustainable rapid accumulation of as the share of the economic activity and as the driver of economic activity for. the last twenty five plus years depending on the country you start with in italy it's over forty years now so as a result of that way into global not just european not just irish or american but global prices if you look at their unfunded liabilities almost all of the countries around the world advanced economies right now in terms of their unfunded
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liabilities on top of their existence and there is an else and these allow pertaining to the promises made to the people of those countries some of the security systems some of the care expenditure and so forth i deeply insolvent those liabilities a nexus or three times those countries g.d.p. is in the case of greece it actually is ten times in case of ireland it's over four times you know some countries have less some countries have more but on average it's about three times so we've never reached the corner of those countries to the level of three times on the future promises plus about two and a half times on the current promises five and a half times never again with no absolutely upside potential from it because this is. it doesn't make any sense the proposition we should have been more there that the global scale pangle arctic scale makes absolutely no sense constantino get into the idea of a pan galactic securitized bond even though that's very tempting to get to dive
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into that but what do you think of the idea of floated by germany for a european redemption fund and what stats above the master surely limits would be collateralized by gold do they have one of gold. they better do it. again this is yet another system whereby you park the way that they are and you pretend that they somehow disappear because you changed the collateral even at the financial kind of from financial science point of view and i use science in a very loose terms of course here if you think about collateralized pools we've seen what happens with the large realized pools when the actual on the lines. value changes you have to keep the lies on them so the european union might capitalize the pool of current valuation of gold when inflation happens or gold price changes the pool will have to change again you have to cull capitalize it with something else the collateral is never really food security the other thing is also if you
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create the collateralized that means that you're creating a super super senior that in a sense that we're already have in europe to i.m.f. and troika which is super senior over the solver and now we're going to have a collateralized debt which is super senior to super senior i think the complexity of this structure translates directly into the yields into the boards on the ground so for example in the system like that what will be the sustainable long term yield on italian ten year bond if you take today's figures of say six point two percent six point three percent you have to are the premier for overkill if you lose a ship or so obviously you're increasing your original kolaches ation as a result of that you're looking at the least thought in terms of the cost of borrowing for the sovereigns across europe in the future as well i mean that once again there is no way of escape and very simple problem where you have too much that you go into how to structure right while having the price of the underlying collateral gold in this case change is not necessarily
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a bad thing it's what kept the world economy growing for decades under the classical gold standard it's called the gold standard and that seems to me where things are going anyway where they came from regardless because nobody can sustain these ponzi schemes of paper forever that is absolutely true except let's remember why the countries have gone off the gold standard the countries have gone off the gold standard and the euro far if you have money soley on the premise that gold standard tied the hands of governments to spend beyond their control do you want that taxation system so is that is not the. the entire crisis that we're witnessing today is predicated in part on the same force which is the latest from the gold standard going back onto the gold standard light levels of us thirty you can argue whether they're necessary or not which the european economies and the united states and the rest of the advanced the quantum is are currently aren't willing to
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undertake this is why the idea of the kind of collateralized pools for storage of boards of all those bonds away is not really going to be politically feasible from the leaders point worth of you being allowed to talk about the gold standard another day because rather time thanks so much for being on the kaiser report card and teen girl yeah thank you any time and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert our thank my guest constantine gardere if you are so in email please do so at kaiser reporting r t t v dot ru until next time by are. unknown.
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