top of the hour for the host abby martin that. welcome to the kaiser report imax kaiser puffery is a legal term that refers to promotional statements and claims that express subjective rather than object of views and so no reasonable person would take these statements literally and the united states the federal trade commission generally will not pursue such cases involving obviously exaggerated or puffing representations an example of such puffery the finest fried chicken in the world for example or from the world of politics i think i'm

a pretty straight up sort of guy from banking. your money is safe with us from an auditor we didn't see anything wrong here or finally from a rating agency this aaa to explain more on this we go to stacy herbert so you see well max one of these rating agencies of course is s. and p. standards and poor and the s. and p. reasons puffery defense against us ratings case the u.s. sued new york based s. and p. on february fourth alleging its credit ratings for residential mortgage backed securities and collateralized debt obligations that included those securities contrary to what company told investors were based on a desire to win business from issuers of the securities more than on credit risk of the investments so this is on four trillion dollars worth of c.d.o. is in residential mortgage backed securities that the government is suing s. and p. and they're saying well we just made vague statements about the quality of these

collateralized debt obligations and such and we didn't actually mean any of it to use as an investment advice well i think this is a fascinating development because it proves something i've been saying for a long time now and it has to do with the theatrical aspect of markets that it's all theater and when you talk about s. and p. or movies and their ratings it would be like a critic of the new york times or for slate magazine or some other critic to review a show and they say oh it's a bomb show in other words that's what the writer gave she's doing they're giving. a some kind of rating as a static that they like the paper that the document is printed on they thought the executives gave a good performance response saying you know acting responsibly but has nothing to do with the underlying security of these securities the rate against these have actually nothing to do with these securities in terms of their viability as an investment so it's not what they're in the business for they're in the business of

applying some kind of theatrical rating that people either applaud or they blew. do and has to do theater of markets to price is the is the theater of markets is price propaganda it's completely subjective anyone who thinks its object of that there's an ironclad price that means something isn't it is going to be sucked into them all of this this cuisinart are a fraud well that's an important point to make is that people want certainty and predictability the market participants bizarrely want predictability and this is how economics has become such a con job is that it's not a hard science they can't tell you exactly what's going to happen it's just solved and relies on puffery as whatever their ideology or hope or wishes are for the economy they say well perhaps it could all work and these look good to me that's all they ever know is that to them the residential mortgage backed securities look good because everything's going up well this isn't again was someone like paul

krugman is misunderstood he is merely like giving a review like you would on a broadway show of barack obama's economic policies in terms of its merits as a theatrical showcase but there's no economics to apocalypse talking about anyone who knows anything because nomics will say paul krugman is an economic illiterate and yes he is but this job is not to analyze the economics his job is to give it an either a thumbs up or thumbs down rating for the average american slob whose mind is so much that they only think in those terms of thumbs up thumbs down what's the latest of the movie they're going to be entertaining themselves with these are meant to be entertainment big goals not investment vehicles up to people to get their own skulls well speaking of entertainment many say that americans don't get irony but s. and p. is arguing in this case that it's quite ironic that in fact the u.s. government is suing them on behalf of bank of america and citi group who are they

actually the banks who asked s. and p. to rate this stuff remember we discussed this case a few months ago before. or they actually filed before this went before a judge and it was the government saying well citigroup and bank of america were duped by your you're giving them a thumbs up they really thought this was a good film right so it's again it's the economics of narcissism america hires are banks tirade against you to give a rating the rating is that they give a good rating that they paid for and then as a result they're being sued for fraud and duplicitous behavior however it's just self-fulfilling narcissistic loop of fraud and so they should be surprised by their own fraud because they committed the fraud why citigroup's i'm surprised the fraud that they committed when they committed the fraud why is the u.s. policymakers surprised at their economies falling apart when it's their prescriptions that put it into the falling apart to begin with wires georgiou for making all this fraud in the u.k. because they love to be entertained they love their show but it's not economics i

assure you there's nothing underlying any of these assumptions i make on the economic sense well part of the reason why they're being sued is because essentially bank of america citibank and all the banks in the u.s. of course are actually wards of the state they're federally insured deposit corporation so the federal government steps in on their behalf when it's s. and p. and moody's and fitch are not you know wards of the state but we're going to move on to the next headline regarding puffery and this is when you know so much puffery confuses the population that takes it as fact british public wrong about nearly everything survey shows a new survey for the royal statistical society in king's college london shows public opinion is repeatedly off the mark on issues including crime benefit fraud and immigration so regarding benefit fraud for example the public thinks that twenty four pounds of every hundred pounds of benefits is claimed official estimates are that just seventy pence in every hundred pounds is fraudulent so the

public conception is out by a factor of thirty four well again it makes sense. feed the public a good story has no underlying economic basis so the public is financially illiterate on purpose because they're just being fed a line to keep them amused while they're shopping bester role and it's all meant you know when they have the cows lined up at the are they go down that zigzag path and they have people petting them and showing them pictures and stuff that from the otherwise they might panic and overrun the slaughter house here same thing in the u.k. george osborne is petting it's a petting zoo for george osborne just keep shopping keep shopping don't mar the slaughterhouse yet and of course this is goes with the political puffery and privatization and the cumulation of debt is people actually are participants in the economy and yet they have no understanding of what the market

economy around them what the price signals are what the truth is so how are they able to you know you need full facts everybody needs to know the facts in order to participate in a market economy and the the politicians here want to force an economy up a market upon everything whether it's the health care system where the train systems everything but here people have no understanding of about the very facts in front of their face when i was working on wall street we had a saying if prostitutes carry prospectuses nobody would get laid. ok if you tell the public what's in the what they're getting into they are not going to get into it you have to lie so s. and p. lives all the major accounting agencies lie it's called puffery and all that manner accounting issues puff the. city of london puff puff george osborne the biggest puff or the magic dragon. george osborne the musical the magic of

borat he smokes his own belly button lint he lies all day and takes his check and left all the way to the bank fantastic musical on the west ham and you know speaking of puffery by the way they've just allowed the f.c.c. is allowing hedge funds to start advertising so wait until you think people are confused now and don't know anything about the world around them a hedge fund start advertising on daytime television is going to be like those drug manufacturers that advertisers say take this new drug for a disease we just invented and here are the risks then they run fifty pages of risks that do absolves our from i love bill it will be like here's john paulson the worst hedge fund manager in the world buy into his fun and here's thirty pages of disclaimers absolving anyone from any risk of buying into this ridiculously overpriced junk funk now speaking of the political puffery here in the u.k. so people are very confused they think the welfare bums are there you know normal neighbor next door joe sixpack next door whereas in fact it's the banking sector

they're the ones that suck out and lead to pon the economy of course now we're going to turn to this headline about bankers and what bankers think about the population confused by puffery europe's rich could face up rising similar to peasants revolt europe's rich baby boomers are behaving like the nobility in the peasants revolt and could face an uprising by the younger generation if the situation doesn't change h b c's chief economist has warned so here's a chief economist of h.s. . b c one of the more notorious global banks around the world well the chief economist there is saying that just like the thirteen eighty one peasants revolt you're going to see that here right now we haven't seen and he says about that i am intrigued at the moment that the youth are quite peaceful and i wonder whether that might change this very difficult to predict but youth movements might become more focused on their own rights rather than the economy at large right well you know on

this show we've been warning about social upheaval and we've talking about the loss of social cohesion and the the joining up of the uprisings in turkey and brazil in countries around the world once you get this global insurrection against banker occupation organized and he's h.s.b.c. analyst is quite right to know that they themselves are in the crosshairs now when i talk about this is not directed to the rabble rousers as such it's more directed to the people at h.s.b.c. i know quite well having been in the industry for many years i'm really talking to those people to make sure they're insulated against the risk of a social uprising people who would say that i am talking to the the rabble rousers i think missed the point here i'm talking to you that person was something to lose . this is not going to go away we screwed up well this is stephen king the chief economist for h.s.b.c. and he's saying that he's he recognizes he listens to the show watches the show so

but you know of course facing the peasants revolt are the fake monarchies across the gulf nations and this brings me to this story where saudi arabia writes off five point three billion dollars in loans the finance ministry said on saturday it had consumed loans worth four hundred ninety million dollars and been taken out of state owned financial institutions by twenty thousand seven hundred ninety two saudi nationals now of course that's about the size of the. prince class there are about twenty thousand princes so it could just be writing off those loans but they also wrote four billion dollars worth of mortgage payments for the next two years off as well well here's a get it in less than economics that goes back to two thousand and eight when barack obama took office as president united states yet two choices you could bail out the creditors that is the banks or could bail out the debtors the mortgage holders he chose to bail out the banks and in fact the escalated the crisis and

debt have never been higher in the gulf countries they made a wise choice to bail out the debtors because they know that you don't want an armed citizenry storming the palace gates and throwing them bombs out but the u.s. unfortunately made the wrong choice now they face insurrection risk and i say that not as to the people that would be organizing the insurrection i'm saying that to the people that have something to lose that you have a risk now that you need to take on board however you know the united states as you said last week is similar to saudi arabia in that they're really they don't need to write off as that's because they could print as much as they want they have the world's reserve currency in europe and i know you're going to talk to your yanis varoufakis in the second half we see genuine unrest as stephen king is warning people of the baby boomers are maintaining and retaining all of their rights you have fifty percent plus unemployed youth unemployment in greece and spain and portugal and you know everybody sitting there hoping nothing happens stephen king

is amazed that it hasn't happened and that stephen k. . could you know i mean we've got a cover up there thanks for explaining that stacey herbert thank you rags don't go away stay tuned for the second half a whole lot more. world . technology innovation all the developments from around russia we go to the future covered. you know how sometimes you see a story and it seems so for langley you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harvey welcome to the big picture. the worst you're going to face. the white house to give it to the radio guy in fort

lauderdale minestrone click. what you want. to do because you've never seen anything like this i'm told. welcome back to the kaiser report imax guys are time now to head over to athens and speak with economist yanis yarrow fact this yanis welcome back to the kaiser report . thank you max it's a pleasure all right yet as greece has just met with the troika seeking the next tranche of ballot funds what is the latest unfortunately we're going to get them

like we've been getting them out for you that have you. there is there is a charade being formed here as you know marks every month or every second month. comes here pretending to be harsh on the good government or the good government tending to be bargaining with the troika but in reality this is. just they're just playing out a script. which is to ensure. that public debt takes on but i think that to all of the crisis is abusive to go to the show's taxpayers. and then they may decide what to do about this but whatever they do it's not going to end well. let me ask you a question because what you're describing there is. an engineered wealth confiscation scheme and we've got two other examples of something going on similar in cyprus obviously you had

a situation where the government came in and stole money from people's banks like bank accounts and in ireland eve got a situation now where angle irish bank was caught on tape gaming the government colluding with the government to defraud the public at a billions of dollars is greece any different than these other two countries is there in another words is it just basically collusion amongst members of the i.m.f. including germany who are actively trying to defraud the greek people and essentially steal all of their hard assets i think a little more nuance that out next. i wish it was simply a case of well it's case not but here is a situation where. a fictitious capital fictitious wealth disappeared overnight after two thousand and eight and it was a question of who was going to pay for it all was going to cover for it how will the very cozy relationship there it lay should be between the political establishment he needs a lot of countries in the euro zone and their friend bankers are going to shift the

burden of the loss of this fictitious capital on docks paris and aim a different forms either through unemployment or through tax hikes or through ing be that in the case of cyprus. confiscating bank accounts so in greece of course they're using the austerity measures that they're imposing and it's kind of a carrot and what the other phrase carrying the hammer approach where they impose austerity measures but then they dip feed a little bit of a bell of money so the austerity front what's the what it would have been the measures so far and is there any any sign that the debt is being reduced and all at all of course not that is reaching only because according to the heights. but this is a whole point about the state where you have yes social economy which is imploding where there where private expenditure. is falling but simply too slowly and of the

same time the public is forced by the troika to squeeze itself almost out of existence the sum of private and public expenditure which is g.d.p. collapses and then the state kalac lapses so even if they have managed to use and they have managed to abuse public expenditure this is not shrinking and it gets beaten because the politicians are taking are pushing on to taxpayers shoulders weak shoulders huge the. on behalf of banks that are skyrocketing but we always knew that it was part of a very well conceived plan for on may two thousand and ten to shoot the good of the crisis from the books of going to bank and various national banks on to the. you know a lot of people would describe what happened in greece as

a leveraged buyout in other words greek greece before the collapse was roughly a four hundred billion dollar economy and you had a collision in cooperation amongst amongst others goldman sachs john paulson has fund manager pappa j.-o. the former head of grace to essentially borrow a lot of money to take the country over and now they're selling off the assets to pay back part of that loan and then most of the income producing assets will go into the hands of foreigners and overseas bankers now for that's a to make sense either interest rates to do what they've been doing for thirty years that is to say go down interest rates have been going down for thirty years as part of a secular bond market bull market in bonds so two questions number one is the secular bull market in bonds over because it appears as though interest rates are now starting to move up and maybe we're at the beginning of

a secular bear market in bonds and so the second question is will this rising interest rate environment complicate an already complicated situation in greece yanis. well you want your question is quite separate from your premise. and your question is much much more broad than snow doesn't just but again to greece i think that we are probably going to have to see a very low liquidity it out level interest rates for a long wired to go because these global crisis is creating a dearth of aggregate demand worldwide so i'm not particularly why it about the increase in interest rates i know that this is the talk of the united states with ben bernanke is sort of announcing that he is pulling the plug from to eat but they've got to be a premise max with regard to greece whether it was a levered buyout or not i wish it where i wish there was a conspiracy there was no conspiracy if it was just completely one thing use disorder was happening in your day it was on the floor and let it be fed up and

they're oh my no personally he came in in two thousand and nine after the whole these us that had already happened and he was criminally negligent in the way he handled it but he was not about a conspiracy to sell out because i don't believe that and i need to state that and i didn't think there was a conspiracy what was going on between two thousand in late ninety ninety's and two thousand and make as you know was just a free for all i mean finance and i find finance here lies ations had computer on amok and because of the lowing that it states that you mentioned they were just searching for heels and greece had hired you saw for that was all and the money was flowing into ireland to spain and to greece just stupidity looking for year end without any concern about the bubbles that would be created and the way that they themselves the finances would would suffer when the bubbles burst this is not conspiracy i think just sort of spontaneous stupidity. right well just for the

record of correspond day i was involved in a scandal involving credit default swaps and implicated in some behind the scenes graft and bribes so that's on the record so people can look at up on google and get all the details so you just talk about germany first second they are the senior partner in the troika and their exports have just plummeted so how are they going to be able to function in their role and being able to underwrite this whole european wide troika led re configuration of the economy in europe yanis. for the have years ago i wrote an article in which i compared the greek bailout deal that was imposed by germany and reason to pick up as a new website treaty and that data lives and has all to do with the fact that if you recall the site treaty was the first treaty imposed by victor some defeated

countries when i defeated country which ended up being a bomber and that hurt the victors that imposed it more than defeat it so the point i was making back in two thousand and ten was a germany is imposing upon the very sort of countries a kind of recite to you which is going to prove to be a boomerang for germany as if this be proved can only because a great part of the germany has that it really wants to be the year the protection of a divided got unsee but it doesn't want the federal democratic process simply because a federal government in europe would mean that the germans one controlled but i have a balanced way out is when you say that germany is not pursuing a federal democratic process it sounds as though germany is playing to type as they say in hollywood where they are in what some of described imposing kind of an imperium over the arrows on through the back door with their actions is that too

heavy handed to describe germany in this way or at how you see ungracious again i don't think that it was german isn't tension to create a fourth reich and in very i think it's falling into that situation as a result of lack of comprehension of what it takes to keep a monetary union together. they need to have a fiscal union if they're going to keep this your guy and sit together they understand that but there was a time the understand that if they do respect the rules of one person one vote then they want to be able to control the federal treasury that should be running it so they are caught like a. rabbit facing you know in the middle of the night and oncoming truck they're stuck in between you know jumping left or jumping right jumping to was afraid of that action or staying the course that got indoors which is going to do that the disintegration of the year now let's talk about italy for

a second they've just been downgraded. what's going on there are they on the road to a balance what do you hear what's happening in adelaide yanis italy's facing a gigantic credit crams two thousand and eight like the north part of italy which is highly industrialized and very modern and efficient and so on is experiencing a completely unnecessary recession recession which is imposed upon it effectively by german posts and that is that the way that it is being felt is rick complete collapse of the. credit system and this credit crunch is. of course it is now a new mutual enforcement relationship with the problems of their own government has in their financing its debt and yes no answer your question directly i can see how italy's going to avoid a bailout through various i mean the next six months all right gonna start out so

we have thanks so much for being on the kaiser in part. thank you and that's going to do it for this edition of the kaiser report with me max kaiser and stacy. i'd like to thank our guest yanis varoufakis if you'd like to touch tweet us at kaiser report and the next time ask the same bio. this journey is not about seeing the world. it's

a mission that i could to myself the project to succeed if i stay in the same place all the time. i've been traveling around the world for twenty days so far in all the time i haven't spent any money at all the main idea of the project because of the artist paints people's portraits in return for some goods. we have to get used to each other i think is a little disappointed about the bus because we're still spending a lot of money i mean if i spend it shouldn't worry about that right now i don't think so goes a great artist but i don't think it's a coma you know if you don't like the painting you just don't give anything.

i would rather as questions for people in positions of power instead of speaking on their behalf and that's why you can find my show larry king now right here on our key question more. is it possible to navigate the economy with all the details since mistakes and misinformation and media hype keep you up to date by decoding the mainstream status if in your right.

to live on one hundred thirty three bucks a month for food i should try it because you know how fabulous i'm glad i got so many i mean. i know you guys i'm sitting seems really really messed up. and we're all very so closely apologized and said. the worst year for those. white house of the day the radio guy in fort lauderdale minestrone. i want to quote for a politician because you've never seen anything like this i'm still. going on guys i'm abby martin and this is breaking the set so if there's one person.