collateral dress today oh well max that's right everybody the last dregs of wealth left in the global economy has been chased into the bond market everybody sitting in bonds everybody's waiting to collect on their debts that these bonds allegedly represent their equity the assets and now they're shootouts going on everywhere you look so they don't have to shoot out yeah we'd like to see us flash un court in germany orders gonna to release argentine naval ship detained on bond holders behalf tribunals in hamburg order that gonna should forthwith and unconditionally release the frigate they are a liberty and ensure the ship and its crew can leave and water is what was the context for this this goes back to paul saying if you made a claim on a paul singer remember a few months ago he was able to get the gun and government to seize an arch in time sovereign ship it's

a military frigate which was in the poor. and they seized it on behalf of paul singer who owns three hundred seventy million dollars worth of arjen time debt and he once paid back at one hundred cents on the dollar not the thirty cents on the dollar that all the other creditors had agreed to paul saying as you know one of these vulture capitalists and he just the games the system trying to squeeze out a few bucks here and there and finally a government is standing up to him finally somebody standing up to this guy and saying no we don't need a vulture capitalism and you know he doesn't deserve to get what he claims oh but it does point to the fact that the collateral deaths but they're saying this global economy is highly suspect because they have such things their ships in and naval yards used as collateral to buttress serves a hold of some multi hundred billion dollars collateralized debt phantasmagorical e non financed trash but now we learn that it has no clue. well you know so the

court set a deadline of the twenty second of december for the sauna to release the ship to allow it to leave port but remember at the time when this first happened we said that it was it was an interesting precedents and i think this is what the u.n. court of course looked at because of course the u.n. is mostly the united states so here was a hedge fund a private equity guy essentially allowed to seize the assets of a sovereign nation the military hardware and we know america has military bases in a hundred and something countries around the world and is the biggest debtor nation on earth so imagine the precedent set is they have all these billions and billions and billions and billions of dollars worth of assets overseas military hardware that the courts in this case paul singer would have established a precedence that those could be seized for some of the assets could be seized and using that logic china could marchin to washington and take the pentagon as collateral against the bombs that were frogs only sold to china from the

counterfeiters over there at the treasury and the federal reserve bank china could march and take control of the entire u.s. military under the same logic and what would america do then oh my god maybe the economy would grow no we can't have that here we had a shootout in the ok bond corral between paul singer a vulture fund capitalist versus argentina which is kind of a weak economy in the global matrix of economy why because citigroup in the eighty's loaded up with debt that they claimed was owed to them from the people of argentina remember walter wriston and citigroup one of the first one of the pioneers in financial terrorism you know if you look at you know financial terrorism ok pedia the water preston who famously said no country ever goes broke so he loaned him of billions of dollars in the government under the corruption in argentina said no that government that debts now hold by the people this is the same trick now used all over europe all over the world it's really the template

that the financial terrorist of use to disenfranchise people around the world now we move on to domestic bond. dramatic increase domestic domestic where u.s. diplomats own america oh yeah that little little school you know country school crammed in between mexico and canada you know what about it so pension fund slams san bernadino for sham bankruptcy a high stakes legal battle intensified as the largest us pension fund filed court papers denouncing the financially troubled california city of san bernardino for what it called a sham bankruptcy and accuse the city of criminal behavior it withholding payments to the pension fund so send bernadino the city went bankrupt and it's the first city to ever deliberately fail to pay calipers a california public employees retirement system calipers as you point out throughout the theme here is that the bond market is coming unglued whether it's

the collateral that's being questioned holding up private equity shysters like paul singer or whether it's a municipality with a pension scheme that apparently has no ability to pay out its pensioners without growth to generate coupon payments to bond market which is as you say the last you know the ok corral you know this thing is to blow and this is what this is what these people don't understand who constantly say well there's no inflation there's no inflation no but there is a curse you collapse baked into the cake and you're about to get a vista right a fellow helpers manages two hundred forty one billion dollars in assets and these are you know two hundred forty one billion dollars that state employees think they're going to collect soon and i remember this is the big battle going on between you know ninety nine percent ninety percent of the population of america has no hope of any pension other than whatever social security might give them and then you have the state bonds the state pensions that are allegedly guaranteed by

the taxpayer you cannot allegedly default on them so we're about to see whether or not that happens send bernadino. it's a city of two hundred ten thousand people about sixty miles east of los angeles and its broken can barely make payroll city officials have said it is not meet its one point two million dollars by weekly payments to cal pers since the bankruptcy filing and now it was at least eight million dollars in addition to a long term debt to the fund that the city pegs at one hundred forty three million dollars so cal pers however argues that under california law it has primacy as a creditor and they are sensually the state and you cannot default on an arm of the state right like you can't do argentina can never defaults and if they did california know it'll never to fall into all it does you know what's shocking is that of course there's going to be no growth so overcome the bond apocalypse which was covered by the way by the mayans you know hundreds of years ago and the

rise of those living in america on two dollars a day is now over it's close to one point five million people living on two dollars a day and that was up sixty percent in the last two years so how are you going to pay on these bond interest and any of these schemes often know a whole population is basically surviving by you know picking grains out of you know sickle matter so here's cowper's which by the way lost a lot of money in these infinitely re hypothecated collateralized debt obligations that were fraudulent only sold to pension funds around the world they were big buyer of bear stearns bad collateralized debt obligations where about the time they held it in two thousand and eight right before the collapse that we were gong big time into we've gone long on these bear stearns clowder allies debt obligations and now everybody's going broke and in the case of california san bernardino has

decided they're not going to take help or scalpers to saying look we have primacy as a creditor we are an arm of the state wall street bondholders and insurers however the. emily disagree arguing that federal bankruptcy law trumps state authority and should allow them to fight with cal pers in court as an equal creditor so again this is the ok bond corral we have the insurers we have the bondholders we have wall street we have cowper's we have send bernadino a corrupt city where you know all sorts of managers of this this tiny city were paying themselves exorbitant salaries and looks like all the violence in america is leading up to a new civil war between savers versus speculators so san bernardino it's going to be divided between savers versus speculators pension guaranteed holders versus private equity you know you'll have mitt romney on one side versus the pension holders of of helpers and this will be the new civil war in america i just it must

have been looking at the case of paul saying you're being granted the authority to seize this argentinean frigate this owned by the argentinian navy he must have it while she must've been looking at that and saying wow we've got this precedence in our battle against calipers but now that the u.n. court citing the fact that this could cause. disputes between nation these because become a hot war zone we allow this this precedence to would be established by paul singer so this could be a case with california but remember also in california stockton is one of the biggest ever bankruptcy's by city they first went bankrupt and we were there really broke and speaking of civil wars they've got all sorts of violence there but in a closely related action bond insurers who are responsible for the death of stockton california filed papers in that city's bankruptcy case denouncing calibers efforts to be treated differently from other creditors because stockton has

continued to make payments to calipers while halting payments to some bondholders it on member or after the cold war russia had a fire sale in those. jets and i mean those supersonic jets why doesn't the paul singer some of these private equity guys you know arm themselves with jets like the stingers and go after those pensioners come on paul up your game vulture capitalists just can't use the courts anymore commit mass slaughter paul where you know we know you're good for it i'll be back i don't know what do i buy slaughter in america to make back twenty cents on the fifteen cents he invested that's the bedouin to make and finally know all the bond and finally know all the guarantee was more egregious in this goal in the last few decades than the anglo irish bondholders who were on secured creditors of anglo-irish tens of billions of euros of debt were transferred to the irish citizen even though there was no

obligation whatsoever for them this is worse than the argentine citibank case ireland world record attempt most expensive bank bailout ever hash tag not our debt after years of hard knocks ireland is seeking to enter the guinness. bloating the scheme economic storm clouds to center what you are one lucky little country on the edge of their block to have a reason to start to talk. about the economy may be sinking but help start writing i. should write in an attempt to break the record for the world's most expensive bank bailouts yeah well meanwhile iceland is going down the path of prosecuting bankers to the fullest extent of the law and going to put them in jail so ireland can i say but grow a pair buddy good luck getting into the guinness book of world records.

thanks so much for being on the kaiser report thank you stay tuned for the second ad i'll be talking to mr fire stein author of the seminal groundbreaking must own book for christmas pull out of ponzi. on the of human capabilities. struggling with a tree. laid out to become lawyers. for. science technology innovation all these developments from around rush hour we've

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back to the kaiser report i'm max kaiser time now to turn to misfires stein author of planet ponzi hey you're there in the airport yeah you're going to miss your flight but pick up a copy of this book it's being printed in many languages now it's a fantastic welcome to the kaiser report thanks for having me here today now i should tell folks that europe on the front line of all this year has for the manager so you're got all the screens every single day you're checking all this and your gas by what's going on at the same time so you're you're you're you're a you know you had fun in the in the bunker of what's going on now and i ask you some specifics the financial stability board recently announced they had discovered six trillion more in the shadow banking system than they had previously understood to be there what should we know about the sixty seven trillion shadow and how it

relates to play a ponzi i think one of the one of the big issues that you need to discuss is the lack of transparency and accountability throughout the political system and throughout the government in terms of governance being lacking i mean the fed for example gave thirteen it was estimated thirteen point nine trillion dollars in secret loans to financial institutions and different institutions during the height of the crisis that came out to form bloomberg. freedom of information act request and that's correct and i think you know it should have been transparent and upfront and we should be able see what the fed has on their balance sheet i know the fed is coming out and saying one thing but they're doing another thing which is a little bit. dangerous when you have massive amounts of money flying around the recent interview with a congressman asking the chief inspector of the fed what about this nine trillion dollars where it has this money gone and the inspector said we're investigating this on a high level but we don't know who that money was lent to right now and we'll get back to you then if you place a lot of us roll back for

a second because ok i understand that they need more transparency the fed is being disingenuous they're doing things under the under the the shadow of banking system but the size of the shadow banking system itself though it is so huge that it's bigger than the global g.d.p. and so that having this like having a parallel planet orbiting earth a death star you know almost it to not get too dramatic here but it's an enormous chunk of change floating out there unregulated right now tied to interest rates that are near zero but if interest rates just tick up fifty basis points you're talking about how would that affect the global autonomy in the bond markets or would that have kind of a ripple effect you're exactly right and that's the point that i'm trying to make that people need to wake up and there are sixty seven trillion dollar number global sixty seven sixty eight point nine trillion that's goods and services produced by everybody on the planet if nothing spent so you know the problem that's created are

people are looking at what the derivative exposures are because going back to my example with the fed none of these derivative products existed back in the day so i mean they haven't come up with a way to manage all this risk affectively bond yields you're right to point out are ridiculously low and they've been manipulated by the central banking institutions around the world printing money and buying their own bonds but that in effect is a ponzi scheme and it won't last because if you think about it in two thousand and eleven the united states paid four hundred i think fifty five billion dollars in interest on their debt. interest rates being a two hundred year low so what does that mean you're right if it goes up fifty basis points or one hundred basis points it's catastrophic and i don't know anybody who would buy a longer brand at the current yield that they're trading at because it just doesn't make it in the u.k. to turning into a three hundred year high that's correct and that's a bubble isn't absolutely ok but this is something that you're on the front line you're hands on manager your job obviously is a preserve well make wealth and even though you know the risks involved here you

have a seduced area responsibility to your clients you still have to buy into this quantitative easing by either front running the fed or the central banks or you know pretending that you don't see the dangers because it because everyone else in your business does the same thing so you have to maintain your performance relative to your peer group you can't be the the one guy to stand up and say i don't believe it because if everyone else believes that then the perception is reality i agree with the point that you're making that you can jump on board the train i always like to be a rider on the train rather than a smashed bug on the windshield so you're not going to stand in front of a truck trend like that so you've got to recognize the trend and hopefully you're going to get out in front of a trend see a trend and follow the trend but you've got to know when to be nimble and get in and out and i think like the equities markets with all this quantitative easing what's happened is you've got unintended consequences so you've got asset bubbles that have been blown up one in real estate a prime example that equities markets

a prime example you've got people you've had for the past twelve. to thirteen years is global g.d.p. increasing at between three and four percent and you've had debt increasing between eleven and fourteen percent so basically the world has been living off of debt you can't spend three times more than you make it's just not a sustainable formula now there's some nomenclature involved here that seems to be mis years to inflation deflation two words that are remarkably misuse because you just described a situation of low interest rates jacking up asset prices in a way that people feel when they go and buy gas or they see it when they're buying food and they would normally equate that to being inflation however the central banks are saying they're fighting deflation so either those words are meaningless or the theory behind them is corrupt or we're living in an upside down world. where

there is no basis an area that makes any sense at all i think that it's an interesting concept inflation and deflation and when you come up with terms and you change your definitions and you use a basket that makes it look like there's no inflation because you exclude food and energy it's not really telling the truth to the public because when people go out and purchase items you'll see that beef prices in five years are up ninety percent there but missed most when the central banks when they lower interest rates saying they're fighting deflation are they in not in fact creating deflation i would argue that they are ok i want to make this point because this is a very interesting point they were making here is that they're creating the very thing that they say that they're fighting explain how well here's what happened in japan if we use japan as a model back in the one nine hundred ninety s. late eighty's and ninety's the japanese the nikkei stock market went up to as high as forty thousand and.

so now what it is it's a race to debase currencies now currencies if you look at japanese judge jeebies the bonds. the main holders their debt is over two hundred percent of g.d.p. in japan but the main holders of the pension funds are the pension funds and the people their pensions are evaporating will probably never be paid the money that they expect to retire ok but the currency has appreciated drastically against the us dollar it's gone from way over three digits like one hundred ten or one hundred fifteen down to seventy seven dollars so people have made money on that and. the trade actually worked but now you're getting in on winding and you've got a new prime minister who's got a real big job on his hands there who's just walked into the job it's the second

time around hopefully he'll be able to make some significant changes but the changes he wants to make are the keynesian changes were the keynesian model is just to print more money now that works in surpluses and i think that this is where we get to the point you wanted me to make is in a surplus environment that works fine but when you have large deficits it doesn't help you can't deficit you can't spend your way out of debt with borrowed money ok japan interesting because of course for many years post world war two they were an export powerhouse their balance of trade was in their favor that has now recently reversed so they're now net importers so they don't have that cash to rely on to float their bond market and they've had of course their domestic savings pool of savings to finance their bond market but now there's a limit to how much their savings rate has actually been declining from the famous years when it was higher it's down down down to almost you know first world levels like the united states so given the global game of chicken that's going on in

currency debasement going on and you look at this as a big poker game who's holding what hand it seems like japan is really we talk a lot about the u.s. and the eurozone but it seems like your pen is holding the weakest hand of any of the g seven countries in terms of heading into the bond ok corral you know i think the bond market i mean you can't get in front of it because it hasn't started to decline yet but i think when they start printing money in japan it's going to be a big problem in the new leader said that's his mandate right absolutely but so we'll see the currency decline you'll probably see it go over one hundred again versus the us dollar and that would be an indication that you wouldn't want to be involved in japanese bonds or jade u.b.s. because you know you can lose on the currency on that trade so you know i think you also have to look at what the other central banks around the world are doing it won't be long before the e.c.b. starts printing money two dollars and thirteen drugs the super mario brothers will be back and probably money a lot of money. printing in the car part of the fiscal union in the eurozone would require a massive money printing to make all those things work out and didn't mesh together

now another trade another trade that's been a long time coming that hasn't yet kicked in yet would be the london real estate trade now in twenty thirteen year suggesting you're predicting that we're going to see a big fall in london property prices again being in the wrong side of this trade for a number of years has been wrong but you say now is the time to go short possibly london real estate well unfortunately there's no avenue that you can short when the real estate but i would advise not being involved in london real estate i think there's going to be problems with the currency so you can lose several ways on the trade. if sterling goes down against everything else then your investment value is going to go down of the property that you purchase there's a fundamental disconnect here between income levels and property prices which to to go back to the beginning of history you'll see that there's always been a correlation between income and property values in the last twelve years there's a disconnect in london in prices have gone up over five hundred percent now if i

slept through an industrial revolution or something you know i don't know but i think the banks have been lending irresponsibly again and if they were to have to mark to market a lot of the loans it would be problematic for them commercial real estate is going to have its woes as well i mean look at the shard yeah nice project but i think it's empty i don't think they have any commercial tendencies that started way back back of us somewhere you think over here you can see it bad arriving at a shot back there is a full panoramic view there are no lights no lights because nobody's there you know but it's all that money printing now that goes by central banks it is goes to. folks that are gaming the system. for want of a better term and then they need to park their profit somewhere and they end up parking it in london real estate so it's a beneficiary central bank a large yes well you know i think that if you have the same advisors all the time which is. part of the problem i think the governments need to step out and get ahead of the curve and bring different people and i think we've had the discussion

before that larry summers keeps coming back and advise and advising and he was the one that created the beginning of the end with the repeal of glass steagall in america the apocalypse exactly and gordon brown forgot that he was the one that sold all of the u.k.'s gold at three hundred seventy seven four hundred times six percent what's that everybody's forgotten about what gordon brown did and he made not the queen's use down in the vaults as you were going around like did we have more gold at some point what happened to all this gold that's were out of time ok to say goodbye great to have you on again soon the book is right here this is it this is i gotta recommend this book wholeheartedly i'm going to read it myself it's called planet ponzi mitch fireside is the author thanks so much for being on the kaiser report thanks for having me i know it's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i want to thank my guest misfires stein if you like to send me an e-mail please do so at kaiser reported r t

t v dot are you and the next time i stutter saying you know. divine power in action activate the sacraments. i am just so we need these we are under the control of those governing us before we are at the service of a space mafia i found on that date the magnetic field of the sun will be for us and they will create the super got the stuff. after the second coming it will be

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