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tv   [untitled]    July 19, 2012 7:30am-8:00am EDT

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he. crossed syria with. troops. the free syrian army has claimed responsibility for. the cult. and footage of a suspected suicide bomber least. six people were killed. as ridiculous.
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and within our own ruling. now is the report. it. snort me mom snip it yes i'm speaking early and because news is that allianz are patrolling various locations around the world apparently this really is the endgame securitization of all bad debt and sell it too early and some outerspace. max you have been saying that for years though there's so much debt here that who can possibly back us we're going have to go
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intergalactic seeking somebody else to take on and collateralized this debt so in the past week or two we've seen a cia agent who has come out and said that he claims they've seen some aliens that what is known as area fifty one but then i saw in the u.k. the u.f.o. files aliens might come here for holidays government officials believe aliens me visit earth and suggest harnessing u.f.o. technology for u.k. defenses file say paper showed the existence of a flying saucer working party within government during one nine hundred fifty to fifty two and then in one nine hundred ninety five the m o d papers show that one agent reported alien craft sightings need to be established as a matter of priority adding there did not appear to be hostile intent well you know it was just a few months ago that paul krugman the new york times remember he wrote that story saying that the government should preclude we're being attacked by aliens and and
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to trigger one or two or three trillion worth of government spending as a way to get the economy jumpstarted by adding another three or four trillion to the debt of the economy so is our factoring large in this twenty first century economic model there is. no way for the economic activity of planet earth to cover the debt as a matter of fact if you were to burn every last barrel of oil left it would not generate enough global output. and extrapolating through the commensurate taxes to pay the debt the debt is on payable even if we burn every barrel of oil in the world there's not enough activity to pay the debt so i thought maybe if i look out there and see up above us what other dangers with possible hot hostile intent could be there and lo and behold i found hundreds of trillions of dollars of derivatives
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tweet from the new york post c.e.o. jamie diamond shaken to the core after j.p. morgan trade last grossed a four point four billion dollars doubling original estimate to me diving into the core shaken not stirred and i have another yeah he's really. kidnapped by aliens and probed well obviously i'm talking about last week when jamie diamon and j.p. morgan announced that their first quarter losses were actually greater than what they had claimed previously so j.p. morgan admits that c i o group consistently missed mark hundreds of billions in c.b.s. an effort to artificially boost profits so according to their statement the firm has recently discovered information that resists questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter yeah well jamie dimon and john p.
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morgan they should create like a fraud a tron you know like the cern scientists the particle accelerator and they can split subatomic particles they need to create a fraud of john placed it on the moon circulate lunar dollars that are collateralized by fraud and then try to get the fraud going so fast because high frequency trading so fast to actually go faster than the speed of light go backwards in time and correct there are books back in nineteen eighty or eighty five the last time they actually had books at j.p. morgan that were cooked. or have aliens. jamie dimon in probe him is that your solution for everything where there's more debt than then can ever be paid back there's no economic output scenario that would pay back that debt the debt is growing as as as a cancer you know i mean it just of cancer justifies itself doesn't have cancer if you asked camps or whether or not it was cancer it was they know i'm doing god's
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work you know if you ask rust rust are you an essential systemic ingredient of this car and the rust would say yes i'm rust i keep this car together i'm what makes this car you can ask jamie diamond illegitimate jamie diamond just like you can't ask an answer to whether or not it's legitimate inside the body of a healthy individual these are parasite parasites i think that they are you know good doing god's work and some of them do do god's work but not to the extent where you've got like like jamie diamond swallowing the entire global economy whole of ninety trillion in derivatives there's bigger than the entire g.d.p. of the entire globe maybe jamie dimon is trying to send a signal he's shaken to the core he's there he is being provoked is there really in this more big new jamie bell i mean i'm being probed by aliens say i pay to get to the moon for the fraud of trauma. you know they could develop like
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a fraud a chronic beam you know beam it down on the balance sheets of deutsche bank. try to somehow solve their balance sheet issues of course deutsche bank is insolvent society generale b. and b. that if you were to freeze in time and look at their balance sheet or any given day you'd find they have absolutely no collateral j.p. morgan's balance sheet is no collateral one hundred sixty billion dollars goose egg there's nothing there it's all smoke and mirrors jamie diamond is being probed by aliens trying to sell his company's debt to some arriving spaceship floating around planet earth and this guy here. or you just described it sees the ellens over area fifty one while they just take area fifty one public on nasdaq they can probably take a public for more than facebook and equally fallacious nonsensical company group on a ponzi scheme that went public for billions zinka apologies game that went public for billions how about area fifty one take that public to a leverage buy or j.p. morgan goldman sachs or the proces and then take yourself to another planet and set
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up shop on some parallel universe of bankrupt them will leave earth alone. ok well you know j.p. morgan has over twenty percent of the global derivatives pie and we don't know if it's eight hundred trillion nine hundred trillion one point two quadrillion as it was at the peak of the global financial bubble global derivatives cow pie more like it i think so i want to roll back to two thousand and three and look at a headline from back. in the eighty two trillion pound time bomb that was one hundred thirty trillion dollars max and this was talked about warren buffett's infamous letter in which he warned that of the weapons of mass financial destructions that derivatives represented he called them a time bomb and he said that contracts involving multiple reference items and distant settlements increase the opportunities for counter parties to use fanciful assumptions about the then very quaint tiny little pile of derivatives of one
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hundred thirty trillion globally but obviously as we see here with j.p. morgan what has going on out of london is that as they said that there was a trader who was seeking to avoid showing the full amount so warren buffett told you ten years ago to watch this that the underlying collateral it would there would be incentive for all these bankers to lie about the quality of it as this derivatives bubble grew bigger and bigger following the working group on financial markets established by president reagan and started to intervene and save these guys from all their bad bets on warren buffet is being probed by charlie munger who's going to launch put him on branson space odyssey plane that goes into outer space but like tinker with a gyroscope or something so it just keeps going on the vector to nowhere we don't need live earth below or above the jamie diamond little solo but the ministry of defense in the u.k. is looking out there for hostile intent when we can look
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a little bit closer to home to the atmosphere circling our financial system. where we see it back in two thousand and three from this article derivatives have played a key role in almost all of the big scandals and disasters of the past decade from rogue trader nick leeson to enron a long term capital management the us hedge fund whose near collapse in one thousand nine hundred eight threatened to spark a global crash these often baffling financial contracts come with a string of names futures options interest rate swaps credit derivatives the most basic can be understood by the layman the more exotic or baffling even to mathematicians and financial experts so again these credit derivatives have landed they landed long ago this article from two thousand and three they knew there was hostile intent behind it they knew that it was a threat to our society at large and yet they kept on building more and more and they kept on allowing more and more financial derivatives with exotic names to land in our financial system and the computers who do the algorithmic trading on the new york stock exchange they also write the articles that appear in forbes recommending
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to buy stock in computers who end up writing the algorithm programs go to the new york stock exchange that go up in price based on the buy orders based on reading stories that they themselves wrote so the capitalization of the computer stocks goes higher giving them more capital to influence more price movement does increasing their where with all their political influence the ability to buy off politicians in washington is also a political ad more than generated by computers computers therefore are building their own parallel civilization palo to our ours and you've got warren buffett who's cheerleading the aliens on the computers he's got jamie diamond is a cheerleader for the aliens in the computers leave us earthlings alone you frickin freaks from outer space then i want to richard branson space planes and get that there we don't need your stinking kind around no more again this was from two thousand and three in the article points out that critics argue that the bandwagon is running out of control and that the derivatives business has in effect taken control of markets it's now gone one step beyond that not only have they taken
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control of markets and we see that but they've taken control of sovereign nations. they've taken control of entire regions all of europe all of america it's they're occupied by derivatives we have to suspend our sovereignty in order to make whole and to appease these credit derivatives with hostile intent well you know it happened in cairo the algorithm is jacked up the price of food there was a revolution we saw it happen in europe the computers are trashing the bond markets and now they've got a new world government in europe it's the computers artificial intelligence i think is taking itself public within their own collective unconscious and manifesting itself in the price action on these exchanges that we believe is happening independent of our own mass psychosis but in fact it's happening purpose with our own in built the lemming like propensity to commit mass suicide
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this this global economy is jim jones writ large we are all drinking the kool-aid laced with cyanide helping with the help of computer algorithms so i've established that we've been occupied by derivatives with a hostile intent the first nation to surrender to these hostile derivatives is france france has no problem with sovereignty in euro crisis response france is ready to cede sovereignty to its european partners if it helps create greater willingness to share the financial burden of a common currency european affairs minister bernard cazenove said we are aware that more solidarity needs more integration so less sovereignty the problem of france is not sovereignty the crisis is very deep we want to organize the solidarity in order to be strong in front of the markets so again in front of the markets we talked earlier about the derivatives are the markets they occupy the markets but also when
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he ceding sovereignty to europe for the greater currency would be ceding sovereignty in fact to is do a chip. bank two billion people are about to credit agricole and credit lyonnais their derivatives books not to. individual nations yet when was the last time france didn't surrender big. and i state there were thank so much being on the kaiser report thank you don't go away mark coming your way. will. technology innovation. developments around russia. the future are covered.
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welcome back to the kaiser report i'm max guys are time now to go to new york city dock with jim rickards tangent capital jim is the author of currency wars you can follow him on twitter is twitter handle is james g. rickards jim welcome back to the kaiser report thank you max thanks for having me all right jim records as the global financial crisis gathers pace nations in regions around the world are engaged in radical economic and monetary policy is it europe that you say is doing everything right and the u.s. and china are doing everything wrong explain you have a little bit of a minority of one on that max but the fact is that you know i like to say a plan beats no plan europe is kind of very exasperating to the rest of the world because they're doing this slowly and methodically but they are moving in the right direction and they're working towards a fiscal union they're working towards common bank regulation they're working
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towards common back insurance they're not all the way there yet that's obvious but the fact is they're moving in the right direction a lot of people say oh german. it will never underwrite the periphery well news the german is already under in the periphery they're just trying to get something for their money and they're basically imposing a german economic model on the rest of europe you'll see russia and china investing in europe in fact russia's already very active in buying up creek and her g. assets so you'll see youth labor you know again the fifty year old probably doesn't want to take a pay cut but the twenty five year old will take a job so some combination of german technology russian and chinese capital youth labor could actually turn the periphery into something like singapore on the mediterranean so i'm very bullish on europe and the euro china is coming in for a hard landing not right away i actually think chinese growth in the second half will surprise to the upside but china can make their growth whatever they want just by infrastructure the problem is they're building buildings that no one's going to occupy they're building highways and i was going to drive on they're making steel that no one needs they're just running the economy full throttle but
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a lot of this is wasted that those chickens have come home to was probably two thousand and fourteen and the u.s. is driving a fiscal cliff so i'm much more bullish on europe than i am on u.s. or china all right so just to round out the score here what about the united kingdom well the u.k. is sort of self out of the game of course they an opportunity to join the euro even now they could apply to join the european monetary system i think the problem with the u.k. frankly is they have no gold they have about three hundred tonnes but that's tiny relative to the size of the economy that's just slightly more than three cents less you know you look at germany has three thousand tonnes france and italy have over two thousand tonnes each the european monetary system the seventeen members the backup the euro have over ten thousand tons so the problem is that right now people still have confidence in paper currencies but because of the leveraging of central bank balance sheets the deterioration of said quote be the printing of money left and right sooner or later that confidence will be lost and then the world will have to in effect reboot the international monetary system there are a couple ways to do that it could be gold or it could be s.t.r.
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is good either way the countries with the gold are going to have some large seat at the table. and the countries without the gold are just going to tag along so as i said the u.k. if there's a currency crisis somewhere in the world i expect it will be in sterling before it's in europe all right i want to get your comment on something that was reported recently that germany is talking to other countries in the euro zone about underwriting their debt in exchange for some collateral and that collateral being gold so what is your thoughts on this report it seems to play pretty much along your narrative that you outline in your book currency wars well right and of course these countries that can get financing and various ways or can raise money they're selling they're selling their hard assets or they're selling ports and i ways and airports and natural resources and other you know hard assets and infrastructure but gold is the ultimate hard asset and sure that i think greece has already pledged their gold i'm very curious libya's not in europe of course but i'm very
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curious about where the libyan one hundred tons went had to guess i'd say it's on the nato army base somewhere sort of being held in trust but yeah at the end of the day germany will take these gold pledges and that just leaves them in a more consolidated position germany doesn't have to seize the gold but if it's placed in the e.c.b. and the e.c.b. is under germany's thumb then in effect germany's going to have control over their gold and as they say that everyone nobody wants to talk about gold now you won't find a central banker in the world with one good thing to say about gold but it is the plan b. as long as people buy into paper money they don't need to talk about gold but once that confidence collapses they'll be able to pull the gold out from the sidelines to say look we've got a new system backed by gold the weaklings in that scenario or the u.k. and also china by the way russia's been doing a good job of acquiring all their approach they're kind of closing in on the thousand tons they'll be there in the other year or so the thousand tons is a good quantity relative to the size of the russian economy and of course they have oil natural gas so there are undoubtedly good shit most of course russia watches
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the kaiser report and we've been encouraging them to buy gold for a few years now and they've been taking our advice but. talking about these central banks and including the bank of international settlements there's a move now right to make gold to reclassify gold as a tier one asset which would then effectively monetize gold allow these banks that are you know a question with questionable collateral to have something of value can you talk on that you know those little bit of confusion there max between the categorization of assets on the one hand and tear one tear to capital on the other they're not saying it's capital but but you're right by qualifying it as a high quality asset the haircut on that is zero in those you can hold gold in your balance sheet and not have to provide any capital against it whereas if you hold certain kinds of mortgages you might have to provide fifty percent capital certain kinds of loans you might have to take basically treat them as one hundred percent weight for purposes of capital capitals or come between eight and twelve percent
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but the question is what's the weighting of the assets and basically the say gold will have no capital requirements so see it with so it's the ideal asset you can hold it with a minimal amount of capital so it will make it more attractive for banks to buy it will be it will be an alternative to to the dollar it's not months is ation per se but right now one of the reasons the dollar system people are incredulous they say you know the us is driving the bus over the fiscal cliff we're going to impose a four percent of g.d.p. tax increase on january first so completely ruin our economy but why is the dollar so strong one of the reasons is there's nowhere else to go there's no other alternative suddenly we're given but people are nervous about the euro for other reasons because of the instability in the banking system etc there's nowhere else to go and so people buy dollars but if you give them gold and says zero way for capital purposes you can hold it without a big capital requirement that will make gold an alternative currency and of course that at the margin that little bit of the price would go all right jim was moved to london talk about the latest global financial fraud emanate from london of course
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libel or do you think this is a victimless crime as many can. and how big will this get well i don't think it's a victimless crime at all by the way i do think it's a crime this is for our people should go to jail over it so it is a crime it is not a victimless crime this is actually a huge max i think this could actually destabilize the global banking system and then explain why there are a couple of minutes that have been put out there a lot of happy too are coming from different sources about this a lot of people say well you know there were winners and losers when you manipulate a lot of war some people paid more some people paid less when they're that out it's not that big a deal but that's not the way the legal system works the way the legal system works when the class action plaintiff's lawyers come in and they're going to represent the people who lost on this they're going to want to be paid gross ok but the bank cannot go out the people who made money on that because library went their way maybe they were a mortgage or in their mortgage rate was less well they're not going to give the money back you're not going to mortgage or is calling j.p. morgan saying she was making to give you a refund because you know it was lower than it should have been and the banks can't
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sue those parties because in the united states at least actually and u.k. we have what's called the empowered the licht defense which means that if you're partly guilty bad guys can't sue bad guys and there's j.p. morgan trying to collect from the winning side of the trade would be like a bank robber suing the getaway driver you know because he took a wrong turn so in other words this is not a net exposure it's a gross exposure number one number two people look at the mortgages and say well you know mortgage they lowered rates so does that mean the mortgages paid less well maybe but that's not where the action is there are five hundred trillion dollars worth of swaps in the world derivatives and every swap is a two sided transaction now maybe you pay me on the you know you pay me on the s. and p. five hundred i pay you a lot of work you pay me on great credit i pay you live or you pay me on ten year notes i pay you library notice people focus on the bat whether it's a ten year note or stock index but they ignore the fact that the other side of every swap agreement in the world practically is a lot more so you take even if it's ten basis points even if it's five basis points
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five basis points times five hundred trillion. dollars times five years gets you into the tens of billions of dollars easily and this is not going to be a hard case for plaintiff's lawyers to prove because we have the smoking gun e-mails coming out of barclays i'm sure there's worse in the other banks the times when people sue in these class actions the defender will file a motion to dismiss because they'll say well the allegations aren't really specific they're kind of general and you can use a complaint to go on a fishing expedition but here players can make very specific allegations because of the e-mails we've seen that will get you past a motion to dismiss once you do that you're into discovery and that's pandora's box you get ten thousand e-mails from j.p. morgan from the trading desk are going to lob or i guarantee you'll be will make your hair stand on end the cases will go forward the damages are horrendous the players will be able to prove their case the smoking gun e-mails are there and i actually think the u.s. congress is going to have to intervene to put a lid on this because otherwise you're talking about the son of tarp right well
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it's a follow up to what you were talking about last time you're on the show in that the concept of value at risk risk analysis and taking in that exposure is incorrect there's actually a gross exposure as you're talking about and it's just underlines the fact that this whole derivatives market has to be taken as a gross exposure not net exposure and a fraud on the live or is just opening up this pandora's box if you well when our talk about timothy geithner when did he know what did he know when did he know what house he involved he knew with specificity in two thousand and eight the law was being raked and he sent a memo or e-mail communication of some kind to the bank of england say hey can't you clean this up you know kind of urging them to fix it up why didn't he call the f.b.i. it's a fraud it's a crime you don't send a memo you know saying to others a serial killer on the loose you know could you please do something about that guy you know tell him to clean up his act that's what geithner did you're supposed to call the f.b.i. you're supposed to start investigation this is criminal there's no other way to
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describe it timothy geithner is the biggest aider and abettor of criminal fraud in the world and this goes back a run. i have a very good book called confidence man it's the economic history of the first couple years the obama administration and it reports that geithner at the white house you know the speaker the white house staff and by extension the department of justice said you have to go easy on these bankers because the system is too fragile if we start taking people away in handcuffs you're going to cause a banking panic well maybe the system is fragile why don't the surly disagree with that but what does that say the secretary of the treasury is trying to cover up crimes or tell the justice department to go easy and what signal does that send to the wrongdoers it says hey you can break the law all you want the government's not going to go after you because you're too big to fail and so the too big to fail doctrine goes beyond finance it goes into criminality because the history in the united states going back to if so and so my brothers came to the brink is that firm financial firms to get indicted fail therefore if you're too big to fail you can't be indicted but that means your your you can break any law you want and there's no
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enforcement as i say that if there is the aider and abettor of criminality because you want to force the law all right we only have time for one more question and it has to be yes or no question given what we have seen in libel or is it is it reasonable to think that we're seeing the same type of manipulation in gold and silver the short answer is yes but you have to infer from the price and i don't i don't think we've seen that smoking gun yet but we do know the b.o.'s is involved ok jim records are out of time thanks so much for being on the kaiser report thank you max all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert our thank my guests jim rickards author of currency wars is going to send an email please do so i caused a reported r t t v dot are you till next time x. either saying buy out.
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