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they got the bankers in the room here we are a little bit behind i'm here we're on the ground they're running. there i think they're what i stand down the city they jump into the pub and try to trick their souls way below i max kaiser well because a report what is different prosecution and i'm going to get some wise john to use actually from mortgage fraud banks tears in our first headline today i just read that nine most terrifying words in the english language i'm from j.p. morgan and i'm here to help yes jamie diamond is said to have fellows of letters to americans telling them he's forgiving their debts they only catch the debt most of already been fricken discharged by a court stacey. that's right max the headline for this story reads how to erase the debt that isn't there so as he said thousands of americans have received letters from j.p. morgan chase and bank of america from j.p.

morgan they read we are canceling the remaining amount you owe chase bank of america letter reads you are proof for a full principal forgiveness of your home equity loan the catch well most of these debts have already been discharged in bankruptcy court oh that's right it is it's a legal arbitrage now we know that we have the financial arbitrage or they're trying to buy and sell simultaneously and capture the spread for their pockets and then when it goes bust they hit us with those dirty and then they still pocket the bonus money and legal arbitrage take the law reverse it makes it put in a blender constitute it it's like a bad pasty it's kind of sticks in your craw like this like something out of cornwall that washed up on the beach i just want to spit it out that's what jamie diamond all about. so a lawyer for five of these clients who have received these letters neal crane he's a lawyer in hamden connecticut he said i never thought in my wildest dreams that the banks would do this properly i think it's really wrong to be foreclosing on

mortgages you don't own and relinquishing debt you don't own so the new york times ask max what is going on so they say cast your mind back to february of this year remember barack obama met with all the state's attorneys general and agreed to a mortgage fraud deal for twenty five billion dollars the five top banks would basically absolve themselves of any guilt so the five of the nation's big banks including chase and bank of america greed to pay twenty five billion dollars to settle state and federal claims over questionable mortgage practices and promise to work harder to help borrowers who are in trouble to prod the banks the government said it would give them credits against amounts they agree to pay so these debts have already been discharged. sometimes years ago and now j.p. morgan chase in order to get credits to rig the game for their benefit are sending the letter saying oh that debt you discharge well we're going to forgive you for

that debt right well this is all the problem with virtual securities over the mortgages of virtual securities to begin with they were based on. performing loans that were handed down to anybody with a pulse they made a mark and that then they stole the loans off to repackage loans security then they sold those off on to the governments around the world including europe and they've all gone bust and j.p. morgan of course made a fee on selling the improper loans to begin with they made a fee on packaging loans and i just made another big chunk of money by making bets against the very things that just sold knowing that the people who just bought of the go bankrupt now they're going to government say no we want to credit against a thing we never sold against a thing we made a fee on and by the way we're going to zap the homeowner once again by charging them for the thing that we never had to begin with and by the way you know with some more money this is a constant theme throughout the last few years is they conjure up debts out of thin air and they conjure up assets out of thin air so all of it is a holy ground when every day we die we decide something is an asset you decide he makes it and i was just going to you know the regulators are like blows those. you

know so you're getting a billion dollars i mean to buy stock in school are all you know it's the same thing these mortgages are no value more than jamie don it's not i mean jamie diamond stud at least you could you know maybe use it to lubricate your you know chassis if it goes bust on the freeway or something now here's where it gets really awful however so not only are they just essentially defrauding the government getting these credits back for debts that weren't even there but because they're sending these letters at the bottom of the letters j.p. morgan chase letter saying hey we're wiping out your debts we'll also be sending this notice to the i.r.s. because the problem is in most cases the i arrest considers debt that is forgiven to be taxable income. one exception occurs in bankruptcy when a debt is just charged it is not taxable so here these guys have had their debts discharged by a bankruptcy court. and they've walked away from this debt years ago and now

they're suddenly liable for taxes because of some of the same banks like bank of america that needed massive bailouts that's right it's a loan to get the mel that is telling you that congratulations not only did we stream last year but we're going to stray again by giving a tax liability on a phantom piece of paper the never just to begin with and your home is worth less than i was last year but also and give us more money now part of this problem as we've said many times here is that. we keep on just giving money and trying to tweak the system with the same criminals in place now the likes of the financial times are lying oh wall street humbled. right. but the problem is these banks are still banks there is at the end of the day lanny breuer admits that economists have convinced him not to indict corporations who is lanny breuer max well he's the head of the department of justice criminal division

and he spoke recently at the new york city bar association on the benefits of deferred prosecution agreements now these are the things that the likes of j.p. morgan and bank of america i think bank of america's number one perhaps citibank is with these deferred prosecution agreements that they're constantly basically they commit a crime the department of justice says well you won't have to we won't prosecute you if you promise to be good so to his to the new york city bar association lenny bruce said companies also realize that if they want to avoid pleading guilty or to convince us to forego bringing a case all together they must prove to us they are serious about compliance our prosecutors are sophisticated they know the difference between a real compliance program and of make believe here's an idea let's take jamie diamond up in an airplane. open the door and throw him out and say look it's our new program of deferred gravity so all the banksias out of airplanes at forty five

thousand feet and try the deferred gravity program there ok oh by the way if you got rid of all the bankers the economy would grow their theory that you need to defer prosecution to preserve the bank stirrers and their role is somehow helping the economy is the argument that cancer makes to the host that's the cancer argument regarding the deferred gravity situation milton friedman already tried that until a it didn't work so we already know that doesn't work lanny breuer says that he has seen in his office he's had meetings during these deferred prosecution cases from c.e.o.'s general counsels and economists have been brought in to plead the case for these corporations and he said i have heard sober predictions that a company or bank might fail if we indict the innocent employees could lose their jobs that entire industries may be affected and even that markets will feel the effect sometimes though let me stress not always these presentations are compelling

two points number one there is no such thing as an innocent employee if you're an employee at one of these banks you're as guilty as sin and you deserve everything that's coming to you because you willfully engaged in financial terrorism that's point number one point number two that they took all the principals and they packaged into a collateralized principal obligation note and they sold it forward those things don't exist in the present they're happening in the future and they might arrive some day except that every time the principals come they refer them again as four of the deferred justice programs you say the future never arrives the prosecution never is here they are never given their proper punishment for their action of terrorism that's never happening that's why it's up to the individuals that's why it's up to the pit that's what they're doing that's why they're wrong. being in the streets all over the world and we're i believe waiting because these banks for the most part are beginning to understand that their days are numbered

that's a major success and this brings me to another story we have covered here do friends of actor john q sack want to steal money from grandma's pension now he's peddling a plan that takes money from pension funds and gives it to his millionaire buddies according to m f i hyphen miami dot com so in episode three twenty want to report we enter view terry buell and about mortgage resolution partners their plan was to convince san bernadino to use their eminent domain authority to not seize properties that were in foreclosure or abandoned but to seize contracts i.e. the actual mortgages in this case the packages of collateralized debt obligations that have been sold on to pension funds and use those to transfer seize those contracts and give them to this guy's partners now lo and behold the first day of huffington post t.v. they were pushing this they have this guy on the show and john q sec say this is

a great fantastic program to save blighted cities but he and area ana were speaking as if. eminent domain was going to be used to seize the properties they clearly were not told or informed by this private equity firm what was the true story right i think we're going to actually go to a clip from the turbulance show yes well you were asking her you were saying it's quite prescient actually what you said to her you start this clip off by asking why do people california fall for the same scam over and over despite the financial collapse we've seen happen right here why do people keep falling for the same self bits from the same criminals in the same town in the same country always what are people to dope that they smoke and golf or even make some so stupid terry feel well i mean this is a case of one wealthy set of investors just taking money from another wealthy set

of investors they actually don't even need a twenty percent return i would imagine in this market they'd be thrilled with the tim percent return except that they need that extra twenty percent because they're going to get sued the mortgage investors already said they'll take this all the way to the supreme court he hears he has a problem though max they are buying underwater homes they are paying they want to buy loans that aren't already in default they want to do that because those are loans that they know that they can sell to the government right the f.h.a. . and. they make more money for themselves so instead of actually helping the housing market maybe by buying defaulting loans right and reselling them i mean they're not even doing that well yeah i mean the shocking thing is that area hopping is you know bought out or sold out she's hugely wealthy now so she's now siding with the financial terrorist john cusack somehow i got roped into this now he's a financial terrorist what they're peddling here is pure fraud as we exposed on our

show and the question always is why do people fall for the same scam over and over and over again and this goes back to our top headline here how to erase a debt that isn't here so they conjure up problems that they themselves create of too much debt to its fraud in the system and then concoct a system of what debt or more fraud to solve their problem of debt and fraud well yes of course it's the classic case of a sociopath running the system we now have to include john cusack and that who muzzle describe the state of the ball peen hammer and smash the skulls of various grannies walking down the street for a quick buck already stays ever thanks for not being on the kaiser report thank you all right that's it for the first half the show but stay tuned for the second half i'll be talking to jeremy l. about alternative currencies and financial system integrity.

you know how sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know. i'm tom harkin welcomes a big. welcome

back to the kaiser report imax kaiser time not to go to amsterdam and speak with jeremy l. artist theorist and programmer with his research he seeks to overcome restrictions and borders whether economic social or scientific journal welcome to the kaiser report thank you max all right jon well western civilization you write is characterized by three foremost sex death and money so let's talk about money we met you at the big going conference or let's talk bitcoin first is bit a rube goldberg machine for buying electricity. well marx you see that was one of

the first arguments that actually i started thinking of why do we mind using all that can lick the city and i quickly understood when i thought where that energy exactly goes you see that big corn uses all that energy to make good and stronger to make it hard to counter fate and it pulls it out of an amount of fears that want to participate in the mining on the other side if we look at state currencies how they do offend ticket themself and how they can keep it hard to counter fate they use very thick walls and a large building and armed guards on the perry meter so i would say that it's way better tradeoff what bitcoins dulls pooling all that energy to network appears right so it's more cost efficient to maintain its integrity versus the state controlled field money now and i see the economist magazine as covering bitcoin course we talked about it we're the first broadcaster in the world to talk about

bitcoin last year now it's getting more mainstream except as people in the economist are talking about it and talk about how the system's integrity is maintained in bitcoin compared you know expand on the theme a little bit we already know that electricity is used as you pointed out more efficiently how else is the and secret integrity maintained part of the cryptology . how do these the solving of the crypto currency create the value through crypto currency mining cetera. well behind the demining is fairly simple what to minors do look for numbers that hash into one hash which she said transformative function that starts with six zeros this is a limited amount of numbers that can be predicted we do know that there is a limit to it and so it creates an asset. we quoted research on the fact that beat corn as an os it. be compared to all their feet mean and resources for instance to

the being taken so far as limited os it's i wouldn't say that. surely by the very car they stick so it is quantity of numbers that we know exceeds the western mathematical tradition if not nature i would call it just in our you know what no magic thirty sion and then those numbers are used as an exchange value . right well you know looking at frederick hyatt step the national currencies then bitcoin would qualify as a currency and i think it's not that people excited around the world is that talked about competing currencies and this that was considered radical and probably never happened but now we have a situation due to the frictionless digital economy of a newborn currency like bitcoin emerging from cyberspace alongside other

inventive currencies now in the u.k. we have the bristol pound and others but i want to return for for a second to this hashing they talked about in terms of the mining you say that there are numbers out there that begin six zeros and that the mining commences based on locating these numbers just i don't want to spend a huge amount of time on this but just a little bit more in terms of how that works there is a fair amount of cold around and uses a lot of beach shifting and actually tricks to elaborate the genesis code which is d.r. reaching of off the chain off the block chain into. a chain of transactions so after things get to mind after mani morning or it going to get found after days components of the os it's these parts get found then users can actually exchange them so trade them through contracts these contracts are signed so basically every

transaction him because he's a contract and the books change so what people downloads at the beginning when they start for the first time to program actually contains all the he story or front sections in the he story of the docks chain in bitcoin so basically it's an asset that gets found at the beginning and then on top of that all the transactions debt movie around are recorded they are recorded against the pseudo nico numbers actually i would argue that to claim to be course. anonymous it's not true because i can be annoying with this anything else that can be actually passed through a d c p a p. s on the internet but then you have to use start and you have to use a lot of measures to actually ensure that your connection is anonymous and is not tracked to a certain location in the ward where your a.t.m. or access point is so basically it's a. section against certain numbers of accounts that that

actually well exchange is a contract about who gets who minds who mind that that value who gets to always we straighten it just sounds a bit like an enormous virtual charmbracelet. actually it's a fascinating. thing. going it's called triple signed accounting and i believe what becoming really is in front of the ward at large and not just as hackers that created it it's a revolution in accounting science you know there's a notion here called triple accounting we know it double accounting is you know double accounting double entry bookkeeping center was the beginning of modern economics to a large extent five years ago and in early this began now we've got a concept called triple accounting talk about it well i am not really an expert on

actually that our boots to be read and i am trying i mean gauging dam and i hope to make sense out of feet of that at least a year of study that i'm in gauging in might be but basically i would like just to mention that the double accounting system to double book which was created in fourteen ninety six by a fly at least he described it and poses the basis for a four hundred mock at how it was running at that time in venice look up what charlie was his name then dead too. holding on as the main way we used to make sure that there are no duplicate in what we pay what we get paid and it's running since five or six hundred years like that and as you often remind us this system is hacked all over actually people are sticking advantages of all kinds of hacks that have been done already in that accounting system and so we have an

economy in which people don't trust so much anymore so to say and i think creating a new accounting. system in which people actually can can can trust can compose can can can trust a bad day and it can make things better for the community said around when we talk about accounting we talk about labor we talk about people time is not any more just clicking around or being able to send morning from one computer to the other piece probably much more what we're looking at right that notion of accounting is very important is only for the big four accounting firms left there were double that number not too long ago but every few years one of them gets embroiled in a major accounting scandal where there was arthur andersen and enron that blows up those firms and then they become too big to fail they become a monopolist in iran right and there's a huge outcry that maybe at the center of this global financial crisis is not the

fund managers it's not the banks it could be the accountants who are submitting these reports on a quarterly basis giving their blessing to the balance sheets of these banks and corporations when they knowingly fraudulently cooking the books we've talked about that many times on the latest edition of the economist as i just mentioned they talk about bitcoin and here's a quote it turns out that a currency can thrive even when no one is making laws for it so what are your thoughts on this is it better for a currency to remain completely outside of the currently. system journal it's something that we have to negotiate and something that we have to find out and discover for sure to have a smaller economy it makes that economy weaker in a way but also more integral i think the clash is on values right now we are standing at a point in a he's studying which we don't. the market doesn't reflects anymore the values that

participants would like to see in it so people drop out and invent their own tools i think would be made to be good thing to have is an alternative and alternative because at least it sends a signal to these monopolies and to it is fraudulent too big to fail but out that if they continue doing like that if they don't lease then then people will go another way whether the people we need to do that or not that's i think an articulated negotiation that we have to unfold in he story right there is a bit of contention now in the big going community whether to stay completely outside of the current legal framework or to risk being subsumed by the speaker up to buy it as now we see wide scale corruption throughout the entire global economy now our current financial muntari systems are filled with all sorts of laws and yet as the financial system is proven a lack any integrity into the void becomes big going but what other disruptive

technologies in concert do you see challenging old economic and monetary orthodoxy jaramillo bitcoin is the most is the most notable example and any other instance today north is not emphasizing on currency i think that the movements of transition down for instance have started to from the very roots food and food production and all what's behind the twitchy stance support and all. you so you see i think the movements did actually pointed out the first instance of if we want to call it like that from toward the white economy in a moment in which she didn't want it to respect the way they felt like producing food and eating it so we have communities like. many of them in england that to have constituted also did little money without using high technology for it you

were. hitting the net in many other places of the war. and of course like currencies and for the hackers i think the turning point for beat cohen was in a moment in week should we had to cut your funding sources there by actually receive donations that was a time in which network neutrality was actually. everyone violated and the hackers are not feeling anymore that that is the network reliable for their operations that's all the time we have thanks so much for being on the kaiser report thank you. for this edition of the kaiser report with me. at times reporting r t t v are you until next

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