no fly zone. created by the. disappearance of some one hundred fifty thousand people. in the u.k. .

as the country's new president travels to china economic. iran in over three decades. max kaiser this is a kaiser report why can't people just leave well enough alone stacey yes max everybody always wants to fix things and here is a great analogy in our first headline when looking at the global financial system the global economy and the global monetary system how interventionist have mucked it all up spanish fresco restoration botched by an amateur yes the amateur has now become an international celebrity she's an elderly pensioner and she stunned

spanish cultural officials with the dome arming and an authorized attempt to restore a prized jesus christ fresco b.b.c. europe correspondent christian frazer says of her work max the once dignified portrait now resembles a crayon sketch of a very hairy monkey and an ill fitting tunic right so it's a very hairy monkey in an ill fitted suit or a typical damien hirst pace well a very hairy monkey in an ill fitting tunic could also i think describe alan greenspan because this is what he has done to the global economy it was through him where we have this whole notion of quantitative easing of the greenspan of the plunge protection team all of this intervention in the economy in the financial system in order to favor certain actors in that financial system oh i want to carry that jesus analogy over i mean the idea of capitalism without losses which is

greenspan's ideology is like catholicism without help right because it develops as and there is a place called hell that you go to when you commit sin is supposed to be some kind of deterrent but in greenspan's ideology is fundamentalist market religion the ology he believes that there is no hell there is no penalty there is on the. and he can just keep lowering rates on every needs to keep giving rewards to the most corrupt and on the bankers on wall street so that again you know he's the he's the monkey in the zoot suit he created the dot com bubble he created the housing bubble he created the global sovereign debt bubble here's alan greenspan who went about trying to fix something that he saw as broke him so he got rid of the glass steagall act he got rid of certain aspects of regulation of the markets and regulation of fraud and prevention of fraud whereby sellers of fraud sellers of fraudulent products were able to sell to buyers like pension funds who had no idea what they were buying and whenever this fraud threatened to take down the markets

he thought he should fingerpaint the markets make them a little bit better with the greenspan put he would go in there a lower rates so that the likes of long term capital management did not lose because for him this was a better way for the markets to look but it's become a global model this idea that no matter how much fraud is perpetrated and of course you talk about pensions and knowing what there were buying i mean they were mis sold products they were sold tainted products illegally and every time it blows up you have a few pensioners allusive all plus the central bankers come in with more easing more quantitative easing to cover their tracks to paper over the crimes until such time as we get the ultimate bubble burst and the ultimate deal leveraging which is what we're facing now so the markets. and the financial reality that alan greenspan created is a very hairy monkey in an ill fitting tunic so because of that very hairy monkey in

an ill fitting tunic we see of the consequences in the throughout policy around the world is is trying to cover up the damage that alan greenspan and his like there is not just him but that they the bad image of the markets we now have that looks as bad as what this woman did to this painting in spain so here's a headline on this britain's richest five percent gained most from quantitative easing bank of england this is pure alan greenspan style intervention in the markets but the richest ten percent of households in britain have seen the value of their assets increased by up to three hundred twenty two thousand pounds as a result of the bank of england's attempts to use electronic money creation to lift the economy out of its deepest post-war slump yes but the question is owen greenspan an imbecile who was betrayed by is faulty ideology or

is he a snake in the grass that's been able to reengineer the global economy allowing for asset price inflation without wage inflation that's the chief characteristic of the economy the last twenty years is that wages have not inflated but also prices have now was the result of a financially engineer outcome thanks to robert rubin who was with alan greenspan at the time alan greenspan himself other wall street bankers well it's certainly convenient that every time they flood the money into the system the top one percent get a huge boost but there is no wage inflation. so threadneedle street said that the wealthy families had been the largest beneficiaries of its three hundred seventy five billion pound quantitative easing q.e. program under which has been buying government gilt for cash since early two thousand and nine the bank of england calculated that the value of shares of bonds had risen by twenty six percent or six hundred billion pounds as

a result of the policy equivalent to ten thousand pounds for each household in the u.k. it added however that forty percent of the gains went to the richest five percent of households not those of the gorillas gorillas are getting fat from all the quantitative easing engineer to fatten the gorillas by leaving the molasses stuck at the bottom of the pit fending for their very existence while a few middle class monkeys are roller skating around doing nothing but a little schemes which happen to be crashing and so the bank paper admitted that the benefits of ultra low borrowing costs and asset purchases had not been shared equally some individuals they said are likely to have been adversely affected by the direct effects of q.e. many households have received lower interest income on their deposits but it is changes in the bank rate they claim not asset purchases that have been the dominant influence on interest households receive on bank deposits and pay on bank loans of course they are the biggest buyer of those guilds that are driving down rates right

there's the sound of one of the monkeys clapping and this is what you hear out of the thread needle street the bank of england it's the coffin a sound of one hand clapping against echo chamber of self referencing ideological market fundamentalists all adding up to the sound of social dislocation or the economist magazine call that a lack of social cohesion. well ross altman director general of saga says the fall in the new would be rate since mid two thousand and eight is over twenty four percent and the cumulus. inflation for older age groups has risen by over twenty percent so that's that wealth redistribution which is fine in the hands of the you know fingerpainting alan greenspan's of the world they think that's ok because they believe in a trickle down effect you know if you're going to redistribute wealth the finger painter say well it should be up at the top but it's the accident that the elderly

and their pensions are being victimized because they figure that the old people won't fight back you know in the old ancient times or they stuck old people on an iceberg and slaughter them out of the middle of the sea or put them out of the wild for the world the beast a jew i'm up right i mean this is george osborne and alan greenspan and ben bernanke theory about how to deal old age in modern society just cut them off from their pension by shifting through quantitative easing their income that they were getting to keep them the tubes in their bodies flowing with oxygen and food to put that in the hands of wall street and the city of london speculators you know just this is the final solution so ever since alan greenspan came in and ronald reagan came in and started finger painting the economy trying to fix the economy and the financial system as they saw that they thought it should be improved according to their their restoration so during this entire reign this is what happened in the

u.s. study middle class suffered worst decade in modern history as we just stagnated share of income fell this was from pew research max and they found that in one nine hundred seventy the share of u.s. income that went to the middle class was sixty two percent while wealthier americans receive just twenty nine percent but by two thousand and ten the middle class garnered forty five percent of the nation's income tieing a low first reach in two thousand and six compared to forty six percent for upper income americans since two thousand the median income from america's middle class has fallen from seventy two thousand nine hundred fifty six to sixty nine thousand and four. and eighty seven right the economy in the us of the u.k. think of it as a river of cash that is generated by the output of those economy and the interaction of derivatives in the seventies and eighties what was made available to financial engineers like greenspan robert rubin and others was the ability to

impose what's called financial irrigation systems where this river of cash that being generated by the economy is directed into one group of folks at the expense of everyone else and we see this clearly in that the guerrillas in the equation are getting fatter and fatter and the vast majority of people are starving to death this isn't by accident this is called financial engineering to rivet have enabled using the new wave of computer aided technologies to re architect the global financial system the people in greece right now they are now facing utter collapse but hey the islands are for sale now is that a coincidence that all their income producing assets the infrastructure of the lottery the tollbooths the shipping and the islands are for sale that are worth three or four times the debt that they are being the say that they must pay off of course if they had control of their own destiny they could pay off that debt

quickly and they want to maintain their sovereignty but now the troika the i.m.f. or the others come in and say you no longer have your sovereignty and by the way we're going to sell your assets for many times more than this debt you say that you know we say you owe us that's not anything more than a grand heist perpetrated by the i.m.f. on these poor athenian people and of course they've resisted they've been in the streets they've protested but they get no solidarity people from all over the world should be in athens right now protesting against this confiscation of wealth and you know this confiscation of wealth has happened this redistribution of wealth has happened because of all this intervention. that you know they these guys who thought they were smarter than everybody else thought that they could meddle and fix it and you know this going back to the top of the show his pensioner a lady she's quite ranting she's like shouting all exclamation points at the peak the priest told her to do it she doesn't see the big problem what all of who blub

out well this is like the architects the bad finger painters all of this modern financial system and economy is that they've destroyed it but they're like bashing everybody else stop banker bashing you know they're they're like pensioners themselves well say injuries prisoners rise up. fly down to athens get your walkers and revolt they see our thanks so much for being on the kaiser report thank you max don't go away much more coming away stay right there. good leverage to mccurry was to build a most sophisticated. fortunately doesn't sound anything. to teach me creation why you should care about humans. this is why you should care

only dot com. welcome back to the kaiser report imax kaiser we've got somebody in the studio today david smith of geneva business insider dot blogspot dot com david has a law degree he's qualified chartered accountant has worked as a senior executive for a major swiss and u.s. multinationals and global banks david welcome to the kaiser report pleasure to be in paris and to be with you today all right david smith let's talk about switzerland the legendary safe haven went bonkers a year ago pegged its good as gold currency the swiss franc to the euro tell us about this act of madness or maybe it is madness why did they do it well the basic

reason for doing it is because the main part of this was economy which is eighty five percent of it apart from the banks was suffering very much from having a strong exchange rate the difficulties are for the tourist industry for the protection of machine and capital goods and also if you think about it for the. isn't switzerland with high exchange rates the reported profits they have coming into switzerland good and swiss francs so the management bonuses go down but how much is a cost per month to maintain this bank well it started off at a very modest ten to fifteen billion a month about a year ago but the last quarter as this crisis got ever deeper the months are running a between thirty and fifty billion now there we're talking about a months which exceed the gross national product of the country for the same period . now this was back they they've been sellers of gold they're pegging their currency to the year out there spending more than the g.d.p.

the country every month to maintain this peg presumably they have some exit strategy i think that they have a something that can to their ak strategy they had an entrance strategy and they thought to think about the exits try to do afterwards but the reality now is that they're hopelessly trapped they're really completely hostage to fortune what is going to save them eventually is if the weak countries leave the euro and germany becomes part of a stronger euro at which point the euro becomes a stronger currency but if you imagine they'll the opposite happening where germany decides to leave the euro and leave all these clowns and club med behind the euro is going to crash again and the only country that's going to dive down with them with the concrete boots on their feet to switzerland they have more or less paid had played heads or tails with their currency and if you lose you lose everything now david i want to have in today because so much is being talked about switzerland and the breaking up of the ability for swiss banks to hide money launder money etc

but there really hasn't been any diminishment and the global money laundering business in fact it's gone up sharply it's just not happening it's what's real and so what we see here is a bit of a turf battle we have the money laundering that used to be in switzerland has moved to other locations you can talk about that and it's what's a lot of suffering as a result of this and if so how badly that's a very big question i'll try and take the first part if you look at switzerland. switzerland has been if you like in the spotlight of money laundering ever since james bond films began and even before but what people do not understand is that switzerland has a pretty good regulatory environment where there is a culture of knowing who your client is where the money comes from and checking what when the money comes into the system its origins. and having a sort of follow up so switzerland is being vilified and targeted in

in a very very much bigger bigger game and it's a very convenient political target because people people in the street can identify with it i would say at the moment there's been very few major scandals in switzerland in the last ten years because of this this change if you start looking at the other centers people who've had shady money have been moving into switzerland they move it to branches of the same banks very often in singapore and miami and other destinations that are more and more exotic and more and more risk that they might one do they lose their money through a seizure or internal political strife. if you take then the very major countries you know like like america and the u.k. these are nice places to go because there is on paper a very good regulatory environment but in reality it's completely dysfunctional and this i believe is quite deliberate there is no serious attempt to tighten things up

and if i were trying to launder money or black accounts these days i would probably try and do it in the u.s. or perhaps london in places like nevada or have companies run out of delaware where you can open accounts without even presenting a passport but i want to ask you about that because in the u.s. we had a scandal with lacombe a bank now part of wells fargo where they were lodging four hundred billion dollars in mexican drug money and they paid a small civil fine really a slap on the rest i think consequential but is it geographically important the fact that you've got mexico in the u.s. that makes the u.s. a prime money laundering place versus what still another was just a physical act of moving cash around is that a factor i think it must be if you take mexico there's a pretty interesting statistic there about thirty thousand people die there every year and there's about thirty billion of drug business and there is no serious attempt by the current american administration to close the borders and put an end to it. no never ending scandals coming out of that as well if you look at what's

going on with the attorney general at the moment so you take money laundering and just b.c. has been in the press recently for. aiding and abetting money laundering in in mexico moving that money into america they were talking about amount to seven billion dollars i can tell you having been a little bit involved in my very early days of carrying suitcases for people when it was legal that transport seven billion you need seven thousand soup paces so i'm just trying to imagine how a bank teller or a bank manager would fail to know. it is these seven thousand people coming in with different briefcases over a period of a year it is obviously not how it's been done then you have to say or write well if you are trying to get money into a bank it's much more difficult than to get it out because if you go in to a bank with a machine gun and and

a few bombs and see how the money over you're in and out in seconds but if you actually want the guy to look after your money and put it in a safe you come in with a smart suit and a smart tie like you have on today and you need the cooperation now the other question is how in banks where there are strong regulatory environment and banks do have a strong regulatory environment most of them can you actually get the money in and the answer is because or a few people who are in a position to override the basic rules of the bank and the basic controls of the bank to ensure that these things happen so that is a calls seventy seven billion seven thousand suitcases i saw just a quick math there that would be about a million per suitcase across from your case which was a hundred dollar bills hundred dollar bills they needed ten thousand hundred dollar bills. something like that yeah a lot of seven thousand guys i line and some thousand guys you would think that there was a soup kitchen that to be nor can i think is b.c.

question the whole breakdown of swiss banking secrecy that seemed to really stand out of u.b.s. is purchase of paine webber because when they bought paine webber you know they then the u.s. regulatory agency therefore kind of had entree into switzerland and they kind of breached that that wall that better place is that true yeah i think it's true i think the most terrible mistake the swiss banking community has made overall is they haven't stuck to their knitting the only thing was to be a safe haven with holding money for global customers investing it in conservative investments with very few exceptions and providing a place where people could go and know that whatever happened in the world the money was there during that time swiss banking secrecy was very effective even today it's very effective because you can go to prison if you violate swiss banking secrecy unless of course you do it by electronic means and get get help by the

french government or the german government to try and protect you but you know for me as an ordinary. citizen i could go to prison so you had a very good tight environment and pulled unfortunately happened i think because switzerland a small country and people who go you know big guys you know they look over the border and they think oh well wouldn't we like to be like the big boys and the trouble is they started investing in things which were increasingly defined as casino banking which is exactly what it is and when all these people in switzerland went over there and found all these juicy american accounts they said i can get these assets under management i can get more fees i can get more bonus we're in switzerland were untouchable this is a terrible thing about this. this banking community is this side of. which is which is usually the downfall of people but it's particularly true of the greedy or

swiss bankers and eventually what happened of course was the disaster of u.b.s. where they ended up having to get billed for sixty billion and then of course the change the management and we've seen the same thing recently with another few billion losses were the subsequent chairman of the bank after saying he would stay around to save the world like jamie diamond does was cordiality asked to resign under his left all right now finally i want to talk about gold and silver because it's what you and media reports suggest that the swiss banks are increasing their capacity for gold storage talk about that young number of friends have been asked to leave their offices because it should be filled up with gold vaults. switzerland's a pretty good storage place for gold you know obviously it's a safe haven argument again there are storage facilities in swiss german part which are actually dug into mountains. so the should be reasonably physically safe there

are traditionally places that they are put u.t. free storage at the airport and the banks are doing the same thing they're increasing the storage capacity but they don't necessarily have a huge amount of it i saw far have not seen a massive swing of people investing in gold or silver in the physical sense it's something that interests me very much because my own personal belief is that when the currency crisis finally comes to a real head that they're going to be an awful lot of people who are going to see the money value disappear gold and silver go up and they're going to be desperate to get the whole hold at that point of physical gold and silver and store it somewhere safely away from the vaults of j.p. morgan for example a lot of people are talking about this they're saying gold stored at a bank like j.p. morgan is really not as safe as having it stored as an independent. malta let's say in switzerland because we've seen banks like j.p. morgan for example to go into customer accounts and just take money there's been now more and more examples of this the bankers are put themselves ahead of their

depositors in line when banks crash and they're loaded up with derivatives so they're going to crash is one hundred percent certainty so then they have the where with all that is just a customer money our folks in switzerland you're on the front line this is the most sophisticated banking mark in the world are folks that come to the same conclusion that the banks completely cannot be trusted in terms of being custodians for their funds and they're taking maneuvers to exit that whole structure i think within switzerland a lot of the money that is there is actually passive money it's money just lies there and investment portfolios there isn't hasn't been a huge shift into gold and silver and i think the situations like m.f. global although you and i both totally familiar with that and all its implications it's only to a very small range of people who are actually directly involved who are aware of that kind of thing i would personally not trust a large number of banks j.p.

morgan's obvious case because of a complete lack of demonstrate the lack of integrity and the demonstration that they get away with the management can get away with absolutely anything so i would never ever contemplate or advise any clients of mine to leave any assets with j.p. morgan for example but the other banks in the same situation if you try to look at the they the overall situation we're with you do banks that stress test on the basis that you don't mark the assets the bank holds to market you can come up with the answer that everyone sold them i mean even my children are sold them to on that basis right so j.p. morgan is the leper with the least number of fingers yes i think that's right all right dave smith amount of time thanks so much for being on the kaiser report it's been a great pleasure thanks a lot going to do it for this edition of the kaiser report with me max kaiser and stacy herbert are they my guest david smith is going to send me an e-mail please do so kaiser reported r t t v are you until next time x. guys are saying.