stories not exactly half past the hour in the russian capital militants take the forefront of islamic protests sweeping the world killing ten more foreigners in afghanistan as revenge for it and us made film is now. and the film fury sweeps further afield where the emotional protests erupting in thailand and india is exactly a week off to the american anger started sweeping the muslim community. also the territorial row between tokyo and beijing escalate self the chinese patrol ship

briefly into waters around disputed islands which japan considers its own. and the u.s. and britain lead the largest ever naval exercises off the iranian coast of israel steps up its tough talk on tel. aviv that with a news team with more news stories for in half an hour from now in the meantime let's join me to discuss bad news for those who prefer to save their money instead of borrowing it because a report is next. welcome to the cause a report on america's cause or are you a saver not a speculator feeling a bit depressed low rates go up today because. stacy yes max apparently they method is to save us by depressing the savers as low rates depressed savers governments reap benefits so you know we have negative returns

after inflation is accounted for across europe us asia and though bad for people trying to live off their savings low interest rates happen to be quite good for anyone borrowing money like governments themselves over time interest rates below the inflation rate allow governments to refinance a road or liquidate their debt making it easier to live within their budgets without having to resort to more unpalatable spending cuts or tax increases governments are able to borrow from themselves by imposing policies like quantitative easing but simultaneously choking off credit to mortgages for small businesses they're choking the real economy to save the banks there's i mean that the way that this is being positioned is that although the lending window is open a bit is not open it's being architected in a way to perpetuate those two tier economy of

a permanent class they get access to cash for relatively free and everyone else is paying users rates of pay day lending fifty sixty seventy percent . yes and now the new york times is presenting this as if it's some sort of new thing and an accidental thing whereas we made a film saviors for speculators five years ago where we said this was the intention and sure enough they they note that the federal reserve bank of america since two thousand and seven has saved itself trillions trillions of dollars since interest rates are now zero and that if they had the same interest rates now as they did in two thousand and seven there were monthly you know their interest rate payments would be twice what it is now what it is to complete fraudulent reporting errors by whoever is making those commas because they haven't saved themselves trillions of

dollars and expanded their balance sheet by trillions of dollars it's financial double speak they government has the government has saved itself trillions that's so they've been allowed basically they financed some of the war if they're engaged and as they point out all along as interest rates are cheap which they themselves are engineering they have expanded their debt loads and they're saying they're saving money by expanding the debt load is pure doublespeak is pure fraudulent doublespeak meanwhile the people who are suffering because of the austerity which is paying the ultimate collateral paying for this are there storming to death and the government can't see it because they have a vested interest in being blinded to the reality of their balls you'll experience a guy right here and i bring this love to share about these as david myles who's a member of the bank of england monetary policy committee writing here and he's talking about quantitative easing and he says well you know too there is a restrained demand to restrain demand in the economy there is no restrain demand in the economy people want to borrow money from mortgages people want to borrow money for small businesses but there is no incentive for banks to loan that money

if interest rates are so low so there is no credit flow to those elements of the economy there's no nuts doing good miles who's obviously appraising the terrorists he knows fuel. well there if you raise interest rates of the bank of england you wouldn't settle for loons that stir boozers then of course you already have a demand people want to grow people want to have mortgages people want them small businesses total global so big right here the business version of this rag the evening standard total dog will speak only showed total double speak well the article is called why drop piles of cash out of helicopters when q.e. is delivering the goods is delivering the goods to the government is not delivering the goods to the capital that is required to develop capitalism it's not helping entrepreneurs or retire or anybody else like that black hole of debt is growing

ever wider if you're in the business of creating black holes of debt then you are succeeding however obstructing every element of the economy into a black hole becoming completely out of mars and then fractionalized and then zero four five into absolute the cops are combing you to near them do you try little street through looking for mervyn king so you've got a hook to scar you and you know i think that's murdering kings private security force after you he doesn't want you to tell the people he's on his way to st john's for lunch using the taxpayer money to give a free ride so whether it's the allegedly communist nation like or the allegedly capitalist country like america they're forcing savers and sit and retirees to finance the government meal sauced chief economist at credit suisse says this if you ask a central banker is that what you're doing and why you're doing it they'll say no

we're just trying to get the economy going by making it easier for the private sector to borrow but i have a syllogism for you he says the government makes the rules the government needs the money so why should it surprise if the rules. encourage you to lend the government money but it's not encouraging lending in the economy as we've been talking about now for a couple of years now and it's amazing that people at credit suisse or the government can make these proclamations that are patently fraudulent if there was any validity to their statements you would have seen some kind of change in the economy that has not been forthcoming due to the paucity of intellectual firepower supporting these sham ideas that are completely discredited you have a situation where engineering rates lower is a transference of wealth from savers from retirees and then of course when you

place a value of money of zero you are saying that those who are earning wages are working for nothing you're taking that wealth and you're putting it in the pockets of the people of barclays you know jenkins the new head of barclays does he speak about this well transference and his his quest to clean up of the city of london no because he doesn't want to point the finger at what is an obvious now that he's a part of jenkins' jenkins i mean that's a perfect name for you know a maitre d. at a second rate restaurant somewhere you know in the back waters of east london once you get that job instead of you know abusing us with your platitudes and nonsensical statements from your c.e.o. slot jenkins and so here i was pointing out that you know the governments are the ones benefiting from these low interest rates in the u.s. it's the federal reserve bank buying u.s. treasuries that is keeping rates down to zero percent but you know many people ask

why are these financial terrorists these banks are is these guys who destroyed the economy still running around free why a why has there been no prosecutions and this is part of the reason why because they're both protecting each other's backs they the government covers up the fraud . for all the big banks and the big banks allow this sharod to continue where they're pretending that all these rates are really low and there's great demand for u.s. treasury bonds and great demand for u.k. gilts the f.s.a. ok here's a top regulator in the u.k. they were solicited by the government of italy for being complicit in a major missed selling scheme fraudulent scheme from city of london banks that loaded up the country's credit for swaps they got a letter from the us to say to the defense attorneys in italy saying don't send us any more letters we don't want to know how badly our banks in london are ripping

your people off we don't want to know if your people are being starved to death because of the city of london banks says the f.s.a. they don't even want to know now that's not a regulator is it that somebody was complicit in the corner those people should be wiped away. yes and now the new york times here in this piece this is how they conclude they present all this evidence that somehow all the savers and retirees are losing wealth is being transferred from them to the government to cover up the fraudulent schemes of the banking system so here's what the new york times concludes of course any economic policy will produce winners and losers and it seems unlikely that policymakers are deliberately sacrificing retirees either to stimulate the economy or to grind down government debt more likely older americans and other savers are just unintended casualties like the new

york times they would volunteer to be a guard at a concentration camp that's the mentality we're talking about they would be like well who saw paul and covering the expansion of the nazi empire we know who you know there's winners and losers poland was a loser you know the blitzkrieg oh you know it happens you know it we could do a thing about it you know there are times as a shameless a shill for financial terrorism and. who's over there in the new york times talking paul krugman the keynesian who's justifying more central bank oppression it's disgusting well so here we have presented this story here that savers have lost their telling you the interest rate setters david miles at the bank of england that well it could get worse we might throw money on to the economy we might actually do a legitimate true genuine helicopter drop so they're basically taunting people to stay quiet you know it could get worse for you that you couldn't get worse if they

did the actual look back going back to the us in two thousand and eight if barack obama simply paid ninety percent of every outstanding mortgage and have to credit card debt that would have cost alone us then the up to twenty trillion dollars he's given. who in turn did not make the loans that they say there is no multiplicity of money berrick your economics didn't work did it but of course you're going to suggest doing more of this thing digging barracked digging up a. well you're going to find the solution there's no more. so you know a lot of this the currency system it's all based on faith you just need the population to at least have faith that they're going to their money will be worth something now in that article you do see that they mention a lot they interview a lot of people in their sixty's and seventy's who have just withdrawn their cash from the banks because they said they weren't getting any cash anyway they weren't

having any interest on their savings so they might as well take it home so we have all these old people across america with cash and home so now this final headline here max more people identify as lower class according to pew fully a third of americans now admit they are either of lower middle class or flat out lower class economic status that's an increase of twenty five percent since two thousand and eight now the reason why this is important is because americans have always been mostly lower class or lower middle class but they always thought they were higher in cost status and that their they were aspiring and thought the american dream would deliver them the wealth and the riches of a mitt romney not the differentiation between poverty and being middle class america is very slight you've got more than one hundred fifty million people in america of a population of three hundred thirty million who are either below or maybe slightly with a point of poverty line this is a third world country pretending to be

a first world country the bond market is going to be downgraded i'll make a prediction to you before the next six months is over the u.s. treasury government bond will be downgraded two notches two notches my friend. you're going to have more of this more and more of people identifying themselves as lower class because without capital without encouraging they accumulation of capital in the system you won't have capitalism through enough good points to ever thank so much for being on the guy's record thanking rock all right stay tuned for the second half the show i'll be talking to chris cook.

right. from phones to. stunts on t.v. don't. welcome back to the kaiser report imax kaiser time now to go to chris cook former energy market regulator chris cook welcome back to the kaiser report always a pleasure all right chris cook i noticed you got a letter and today's financial times you speak of the next regulatory catastrophe that's just about to happen explain. well i've been saying for some time to the

very small caps equities commodities. correlated bubbles so they move in unison together and this is being inflated this bubble has been inflated by the new breed of instrument which banks have been busily selling to so-called inflation the edges. risk averse invest this mentioned this before all of this money this tidal wave of money has been going into the various markets. all good things come to an end you know bubbles will always be flight and what i was pointing out in the in the after the f.t. today was the this is these instruments are good for the banks and the reason that they're good for the banks is that banks own to putting their capital at risk the investor is the taking the market risk ok chris let me jump in here you're talking of course about e.t.f. or exchange traded funds this is a relatively new instrument in the marketplace it's simply

a derivative it the value of the price moves derived based on a basket of underlying stocks that are repackaged so in other words of stead of buying a stock or in a company that is doing stuff you're buying a proxy of that stock as part of a traded to read but in this case an exchange traded fund and as you point out your letter there are mostly long only so there's a very very. unequal weight of longs or by over the shorting activity or the selling of the shorts stocks so you have this disproportionate move on the upside you think this is contributing to the rally that we see in equity markets around the world the presence of these e.t.f. the fact that they're primarily long only and the fact that they're derivatives and they don't really support any underlying economic true economic activity whatsoever and of course your specialty is oil and oil markets and there are these e.t.f.

that trade other one in particular is a real catastrophe from what i understand because people are buying it i believe the symbol might even be o.-i l. oil they believe they're owning oil but the underlying machinations of the derivative are such where they are. edging within the derivative and the folks that are owning this are actually taking losses and up markets do you cover that particular story chris i don't know how to cover that one but i'm very familiar with the way in which the the different types of oil e.t.f. operates and you and your point earlier about. e.t.s. with different degrees of leverage well taken but the basic pleasure model of e.t.f. is not leveraged i'm just making that point but yes it does and i agree with you it does destroy the distort the underlying pricing mechanism now the oil the problem with oil e.t.s. or any t.f. which basically holds its position in the markets using derivatives i mean the

people who own the product don't know what's going on under the bonnet this was the one point of my letter to the f t that you know their customers do not know what is being done in their name and you have the guy the u.b.s. guy who's currently just before the judge i think today his trial begins and he was running something called the delta woman desk of u.b.s. and what they were doing was essentially hedging the risk which these investment banks have by selling these e.t.f. opens them and to invest this but they make money while they're doing it because they have what they euphemistically call asymmetric information ok let me let me just stop there for saying chris because you know you talk about this transference mechanism transference of risk and we see this all the time you're saying in the a.t.f. market day trading desks of these banks the proprietary desks they packaged their risk and they packed it up as an e.t.f. or some other product and they dump it into the investment university environment

you could call this like they are poisoning or polluting the environment because they're dumping all of their risk into the public domain you see the same thing on wall street time during the cycle of credit default swaps collateralized debt obligations you know famously ok. goldman sachs package knowingly products that were toxic and they sold it to customers in a way that most regulators around the world claim would say is illegal but this is the way they get rid of their risk so part of this process of becoming. clerk to crowd to becoming oligarchical us is a process not of aggregating great wealth per se but by gaming the system to transfer the risk of the system into the public domain so that the public eats the risk and the bankers keep the games right well in this specific

case of e.t.s. it's a bit more subtle because the customers want to take the market risk but they do not understand the level of market risk which they are getting because the banks haven't told them the in trying to hedge inflation by buying oil paper oil let's call it that and what they don't realize is that if the oil prices in a bubble in my case is that it is when that bubble collapses they're going to be holding big big losses which they really didn't realize that they were exposed to and what the but what the banks get to this particular day max is a bit like the casino they are running a roulette wheel not with one zero but maybe six zeros because you know basically the customer does not know the risks which he's running on this in this casino so in this particular model what the banks are doing is really running a rigged game that's the best way i can call ok well let me let me make the point then that you know there there i'd be there is there is no market there is no

security that doesn't derive its valuation on an asymmetric game between the bankers and the public they're all that all these products are set up to screw the public there's very few products that are not set up in this way what you're saying is that the e.t.f. the exchange traded fund market. currently it's mushroom over the past few years it's a huge now it's yeah everybody's into this game you're saying this could be one of the triggers that we see another huge collapse because it's effectively built on sand and these products are extremely fragile and ready to blow but we only have a few minutes left i want to get into something else you've been talking about ok you're a recent piece is titled if i don't know if i'm pronouncing that correctly but. in iran what is it and what does it have to do with iran's right in the chess game is when the player has no good moves whatever movie makes he loses the game that my case is that is the position finds itself in now if they do cave in to

the on the nuclear negotiations then whoever caves in has got a political problem at the election next year. but also what are they going to do they're going to see the iran risk premium come off the all price who knows that's twenty dollars maybe it's a lot more and what that means is that if iran stop the noise and stop being intransigent and cave in then they're going to be losing a huge amount of the revenues which held their economy up that's what losing the other losing move is while you know the current sanctions that we've got all literally destroying their economy and leading to potentially hyperinflation we seen in the last few days the rail is gone so i think twenty five thousand to the dollar when it was the official rate is twelve thousands of the dollar and the deterioration has been something like fifteen percent in the weekend very chris

clark and there's a piece in the paper today that says insiders in iran they are thankful for the sanctions because they're forcing the country to change their business model to be less reliant on energy they have a new theory. a new economic theory it's called the economics of resistance they're going to diversify and so they're happy about the current situation they're being forced to adapt and to diversify our are they smoking has no i think there's an element of bravado but when i was there myself and i talked to some decision makers earlier this year i said to them that being cut off from the dollar banking system which is what the americans essentially forced or persuaded the belgians and swift to do i said that's the best thing that could possibly happen to them and when they asked why i said that i said that is because you can do something else. that is my

view whether they have in mind some of them do what i'm proposing i don't know but they have a both an opportunity and a threat for the mines all right so one thing is clear they've got a bad case of inflation the currency is collapsing prices are doubling tripling and you know that's generally a recipe for social unrest but we don't hear any stories right now anyway of social unrest are the people bracing themselves for what's to come and are they prepared for it or is just going to suddenly wake up one day find that my god you know price of bread and everything is now fifty sixty percent of my income it's time to revolt your thoughts well the benchmark over there is chicken ok. and yes the price of chicken has become a major issue over there to the extent that i think the broadcasting channels of how to stop talking about it or broadcasting about it. so it is

a very sensitive subject. i think if it gets worse and the problem and the people start to think there's no end to it and it's going to get even further even worse well i think things could get quite sticky but i think the regime at least two thirds of the regime are probably well aware of this. finally here in the u.k. petrol prices are at all time highs so what's the feeling here on the ground in the policy committee meetings in westminster the trends behind this move is it sustainable all your thoughts. you know my views mark so i think the price is going to go down but then i've been saying that for some time and people say well when's it going to happen i think what watch this space i think the price is going to come off we do have a cushion in this country because eighty five percent of the price of petrol is tax so we're not affected by moves in the crude price the same way that they are in the us but they have the u.k. government is now bent on doubling down on their austerity budgets george osborne

still in the cabinet wasn't let go during the recent reshuffle and they're going to bring in some more of the euphoria of the over or heading into some nasty comparatives on the economy so that ability to work within the tax spread on the petrol price seems limited at best the u.k. economy going forward a lot of people are speculating given the total debt load in this country that war entering a protracted period of difficulty in the u.k. your thought yeah i couldn't agree more i could use a rude word but i want the economy is not going to get better any time soon austerity is the equivalent of applying leaches to a man who's bleeding to death from internal whims i think that was george cameron's first choice or is it a david cameron george osborne that's correct anyway chris cook thanks so much for being on the kaiser of time it's always

a pleasure and that's going to do it for this edition of the kaiser report with me marius kaiser and stacey herbert everything i guess chris cook is going to say we need now please do so kaiser reported our t.v. that are you until next time ask.