welcome to the kaiser report i'm max kaiser last week in london a sixteen and a half ton confluence of wet wipes and lard was found lurking in the sewer system no it wasn't j.p. morgan's london whale nor was it j.p. morgan's derivatives book its manipulation of the energy markets or its bogus mortgage backed securities this was a whole different ball of wet wipes and lard this was. burke more stacey yes max this is fat bergen it was lurking in the sewage system here we're going to use this as a metaphor for the global fat burger fraud going on around the world so first let's look at this thing that was in the sewage system here blimey it's slimy meat fat bird london sixteen point five ton confluence of wet wipes in lard the thirty three

thousand pound berg came from modest beginnings flush wet wipes of food waste created from brits pouring grease and fatty foods dema drene fat bird creation is a vicious cycle thames water media relations manager simon evidence told henry gibraltar city's fact clings to wipes wipes cling to the fat oh right it's big as two of these huge london buses and they noticed it because the water in the toilet started backing up so this is analogous to the debt concentration or confluence of debt in the global economy it's backing up in terms of you see certain things happening like prices of certain items keep popping up as a result of this massive debt debt berg at the center of the financial system or in this case the lard and wet wipes. confluence come. at the

center of the of the london toilet system the sewer system. a lot of the similar influences well the london sewer system is one of the oldest in the world and it's and it's still is the same exact victorian sewage system that worked beautifully for one hundred years and then modern technology of wet wipes and lard. everybody eating out fast food convenience is advancement of society has created these confluence of lard and these giant birds in there and the same thing with the global financial system which worked fine until we had this creation of derivatives which allowed for not only debt to build up but also fraud to build up because you could hide it all behind you know the wet wipes that made it look like it was you know it cleaned it up made it look clean but it was creating disasters elsewhere and we didn't see it by the way that burger fraud only when the it started backing up the global financial system ok so the wet wipes and the derivatives market are

meant to clean up balance sheets of banks like j.p. morgan goldman sachs are they is why upstair their spewing out or they're in this case deficit ing a risk that they're not keeping on their own books that's why banks like j.p. morgan are h.s.b.c. or barclay are reporting profits because they've been able to exude or def a cape their risk into the general sewer of the global population using the financial enhanced man or financial engineer advancement of a way white which could be a credit default swap could be mortgage backed securities could be all can all matter even lord sugar by the way is suing for being missed sold part of the fault swaps one of the big banks here so he's he's being wet wipes so you should see lord sugar will probably be flushed down the derivatives sure at some point we'll see his head bobbing around in there adding benefic to my eyes by the white derivative market here low. well we did see in senate testimony actually regarding goldman

sachs collateralized debt obligations their c.d.o. is of mortgage backed securities were actually they themselves use the term who and so did bear stearns now all of those stories are in the headlines now when we look at the fabric of fraud going on and this fat bird in london's sewage system by the way they got rid of it this blob couldn't just be killed with fire extinguishers it took a team of eight to blast the monstrosity part with high pressure water hoses and repairs are expected to take six weeks it's a big job to clean it up we're going to look at that for the financial system j.p. morgan we're being investigated by d.o.j. over mortgages now this isn't the bear stearns mortgages they've talked about that they said were the only problems in their mortgage backed security department bear stearns which they bought in two thousand and eight no no no these are two thousand and five to two thousand and seven pools of mortgages conveniently of course beyond

the statute of limitations so in fact nobody will actually do jail time for this but the interesting part about this story here that i want to point to in terms of fat birds of fraud efforts to settle the d.o.j. lawsuit may be complicated by a two thousand and three settlement the bank reached with federal securities regulators and july of that year j.p. morgan settle claims by the f.c.c. that it violated securities laws in connection with his dealings with an iran the failed energy company as part of that settlement court filings show the bank pledged to refrain from violating federal securities laws it's unclear how the bank could be affected by a federal lawsuit alleging violation of federal securities laws that had pledged not to break in the years immediately following a previous statement right so here we had enron which was the poster child for securities fraud off balance sheet accounting if this aeration of equity you know where the stock got blown up went to zero in a matter of a few weeks so. j.p.

morgan and others of course they were involved in that fraud and they part of the settlement they as said we wouldn't be involved in any more similar frauds i mean we're not going to pay a penalty of any meaningful size nobody's going to go to jail and in fact we've defrauded lots of people but you know the one thing we definitely won't do is repeat that fraud again of course they lied they did repeat that fraud immediately as you're talking about here in the mortgage market they went ahead and participated in the massive fat berg like con the nation of wet wipes derivative jamie diamonds and a few other little special ingredients like the beginning of macbeth when you have these witches and their you know over this cauldron of all kinds of nasty bits performing incantations and attempting to raise the ghost of some dead king here you have jamie diamond lloyd blankfein and all the u.k. banks of london over a cauldron of derivatives trying to raise the spirit of some animal spirits to try

to justify how they've been defrauding the public on a minute by minute basis well in france we were there were riots a few years ago and what sarkozy said recently to get the record high of the blast away those the bad guys from the system the troublemakers well here we see this thing that has happened over and over every time they commit fraud every time some of their white white wet wipes you know wrapped in wrapping the turds of their financial derivatives get found out they get deferred prosecution agreements they don't get blasted away and instead we get this giant stabber builds up because they're wet wipes of these derivatives that surround the excrement. they attract all the fraud to it and it tracks everything it tracks the good money and the good savings actually in the world economy too and it builds up into a giant fat berg a fraud recidivist yet jamie diamon is

a repeat offender if they call moral hazard and economics like if we don't punish criminals they're going to do it again and worse and we've seen that that very is true if you don't punish jamie dimon and others for and ron and for other fraudulent activity they're going to do it and do it more do more of it we see that over and over again so they've also increased their loss reserves i eight hundred million dollars in their latest numbers and that is up to six point eight billion as you know terry buell who we've interviewed several times she's already warned of this but also here in the you mentioned the london well in the opening this is in the news right now as of this morning they're saying authorities plan to arrest two former j.p. morgan employees in the london whale case the employees javier martin are tato a manager who oversaw the trading strategy from london and julian group a low level trader responsible for recording the value of the soured bets could ultimately be extradited under an agreement with british authorities. so but the

spanish guy. who is was the head of this department he was actually bruno axels boss he i doubt will actually see any time because he is very clear in all the e-mails that have emerged that he was just saying whatever you do as you try to own wind all these bets because you know at one point i do i g index was basically j.p. morgan owned fifty percent of the one side of the contracts so he said whatever you do don't lose money and they would suggest ways of unwinding the trade no you can't lose money you can't lose money so they took it upon themselves i think these junior people to break the law right so the toilets are backing up and so they try to go after a low hanging a minor guy which is like a plunger. trying to solve this problem but at the core of the problem is this multi hundred ton fat burger of nonsensical derivatives concentration that's at the core destroying the global financial system and as bob prechter mentioned it

recently in an interview it's causing this implosion and balan's like cyprus which are which are spreading now yet and also reminds me of the military industrial complex how they do it how they get away with it we don't tell them in any email or in exact words to torture those people we just said whatever it takes to get the information and that's how they got the bad out bulls but also speaking of bad apples in the fabric of fraud in the u.k. here more trouble in store for u.k. banks a list of all the potential legal problems investigations forcing our big financial names makes daunting reading so you have h.s.b.c. barclays world bank of scotland there they're putting on their they're having to pay huge fines and they list live where is the fix and goal fix money laundering defrauding fannie mae and freddie mac. so it keeps on building up and including lloyd's paid one hundred million pound fine to the production regulation authority for undisclosed matters like a big fat burger in the center of their financial system but yet all four of the

big banks in the u.k. are going to be bailed out again because of all the. current criminality that they've been participating in and at the same time interest rates are rising so they won't be able to roll over their financing their to keep themselves as solvent there's going to be an insolvency problem again and they're going to be not there it won't be the money printing that we saw in two thousand and two thousand on there will be balance people's bank accounts here in the u.k. i'll bet you that within twenty four months you will see bank accounts in the u.k. being seized by the government as a that attempt to keep these banks that are insolvent to keep them safe. holland and you know relating it to these other stories is you've got a thirty three thousand pound you know fat burger fraud here and there keep on putting out with a little bit fire extinguishers when it is a giant six were eight man team of lights blasting away this fat burger

a fraud that needs to be sent down the river out into the ocean dispersed across the ocean kind of like fukushima and then you know finally you mentioned greece which was also a victim of fat burger fraud this is in this final headline here bundesbank report greece raises pressure on merkel to spiegel quoted an internal doctor we prepared by the german central bank as saying that europe will certainly agree a new aid program for greece by early next year at the latest so they've already received two hundred forty billion euros the german elections are september twenty second it looks like maybe merkel is not quite being forthcoming about the fact burgher fraud in the global in the european financial system that is a never ending bailout which could be a new cyprus but and the german people have to experience bail in their bank accounts will be seized by the german government and i'm sure they'll love that all right thanks much being on the house report thank you max stay tuned for the second half of a whole lot more. we'll

talk about language as well but all over react to situations i have read the reports but. no i will leave the state department a comment on your letter. carrier a car is on the job. well done. you know more weasel. when you paid a direct question be prepared for a change when you punch be ready for a. pretty speech. and the freedom to. the clinician free the couldn't take shouldn't three months for charges three.

months three risk free studio time free. download free blog cloning video for your media projects and free media. dot com in. the media leave us so we leave that maybe. the seemed to suit your. play your party has a goal the question is that no one is asking with the guests that you deserve answers from. politicking only on our team. to 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 everything you thought. i'm tom harpur welcome to the big picture.

welcome back to the kaiser report i'm max keyser time now to go to toronto speak with rob kirby of kirby analytics dot com firth rob welcome to the kaiser report nice to talk with you max ok rob kirby let me ask you about mark carney as he embarks on destroying the u.k. economy what kind of mess as he left behind there in canada where you are you know he's left he's left a legacy of central bank intervention i'm going to say for the most part it's all stealth intervention that we get from the from the central banks he's he's infected our economy in the same way that the federal reserve has has infected the american economy with basically permanent rates at zero rob read kirby i want to jump ahead

to get into some stuff you've been writing about lately on her site it's the derivatives price control grid what is it how the fed can possibly prevent markets from from overwhelming these price controls the something been writing about a lot else about a rob well the way interest rates were taken from their levels pre two thousand and seven at the short end from roughly four or five percent in america down to zero has been through a very very very hideous application of o.t.c. swaps which is which is a form of derivatives and specifically o.t.c. swaps are composed almost one hundred percent of forward future rate agreements are which are dubbed f r a's and interest rates wops the effort reserve the. instrument of choice for the short end of the curve and the i.r.s. or the interest rate swaps or the instrument they used to control long the longer manipulate the long end of the interest rate curve. ok so all of the global

derivatives market and by some estimates are talking about one quadrillion worth of derivatives within the derivatives market are approximately four hundred trillion tied to these interest rates swaps and for the most part they are tied to a scenario where interest rates are kept at these low low near zero percent interest rates and one of the reasons why mark carney will say well my forward guidance is that interest rates are going to remain low near zero percent the reason he says that is that if interest rates were to tick up at all that's four hundred trillion dollars worth of these derivatives a credit default swaps that would blow up the entire global banking system so it's not really choosing to just leave interest rates low he's being held hostage by a derivatives market that's spun completely out of control rob he think i think that that's a very fair way to characterize it max mr bernanke you know it is also on record

saying that if he were to resign at all that the basically the economy would blow out. let me just jump in there for a second that those are exact words he just said this recently if rates were to go up at all that means that the global banks the global economy would blow up which also means rob kirby that anyone who's got money in a savings account or a pension account who would normally get four or five percent rate of interest on those savings is getting near zero percent interest as a way to enable bankers like carney and others to finance the global derivative and speculative market because they get paid on the total aggregate supply of derivatives they create if they create a quadrillion in the residence they get paid on a quadrillion they have no incentive to manage an economy that's well within its bounds or carrying capacity in terms of growth and taxation no they get paid on creating these enormous bubbles and when they pull up then it's for somebody else to worry about right straight the des moines. order it is they create the more fee

income they generate they're in it for the fees well i mean look at this hollywood comparison johnny depp was in a movie about the lone ranger the studio took a hundred ninety million dollars right off it was a huge loss but all the executives tired of that movie got paid on a budget of the two hundred thirty or two hundred forty million of the budget and originally they've all made their money they're all sitting in their beverly hills shadows and they're laughing all the way the bank but that loss is now in the balance of the corporation and in the case of the banks all those losses become so great as a threat in the viability an ongoing operations the bank they then go crying to the government who then bills them out so they said they went tails we lose right rob that's exactly the we were smacks it's a rigged game and to think this think that we sit here and have mr bernanke keep telling us that he doesn't understand a response is a little girl crazy and he doesn't understand why the bond markets doing what the

bond market is let me these are the two things that central banks do interest rates in gold that's not they don't really do much else and for mr bernanke you to make these claims it's like a police officer saying he doesn't understand the law and he doesn't know how to read a ticket right rob kirby i want to take another pass at some of the detailed technical information that you get into on your website and i want to go into some detail explain a forward rate agreement and interest rate swaps that we've been talking about are tied to these interest rates and derivatives how they actually are use how do you actually use them to control interest rates i mean don't we just preface this by saying that if you've got four hundred trillion in derivatives in or trying to manage the interest rates and a let's say the u.k. economy which is one point five trillion pounds that right there you have some asymmetry right there you can see where it could work right because you've got hundreds of times more on the on the derivatives side but go ahead let me put it to

you very. simply when when a bank bison f.r.a. or buys an interest rates that is synthetic. when you doro money you have to reinvest it or buy something that is going to hedge your risk for the money that you're going to pay out for the like the interest rate risk on the loan. so j.p. morgan and i'll be very specific in q three of two thousand and seven at the front end of this financial crisis q three zero seven j.p. morgan put on eight trillion dollars worth of less than one year o.t.c. swaps and their derivatives book that by definition was f. or a traits they were the payers of fixed they had to buy something to hedge themselves or or risk being liquidated as a bank the only you see and when they put this on you got to understand that there never really requires to a credit risk but there was in the height of the of

a credit crisis where banks were extending credit to each other not even on an overnight basis the notion that j.p. morgan could put a trillion dollars with lee's instruments on which required two way credit is impossible unless they were doing the tree with the treasury the treasury is the and specifically within the treasury the exchange stabilization fund is the only institution on the planet that has the resources and the motive to do this kind of trade ok so doesn't that do a lot to stoke to stop with that a little bit and not to give a direct analogy but for example the ten year bond has moved down recently interest rates moved up from months a one point four percent to two point six two point seven percent so in the case the federal reserve bank they're sitting on a lot of paper that they inherited by the processes that you just described in other words during the crisis instead of letting the market take care of the losers they simply step in on the government and they absorb this. norma's liability but

here you have a case where interest rates are moving up so right now just in the last two weeks the federal reserve bank suddenly has almost two hundred billion i believe and a lot of unrealized losses because you have the right but max my contention is and history will or the future will tell us if i'm correct but my my contention is that rig a long term rates are not headed higher in a material sense from here i think a long term rates ten year rates will be significantly lower next year one year from today than they are right now and this will this will only be another example of the federal reserve backing it boots with the u.s. treasury to show us the power they have over interest rates that this back up that we've seen recently in long term rates in my view is nothing but a ruse and it's nothing but the fed trying to instill in a bunch of people who've been hoodwinked for a long long time that we still have markets the reality is we don't have markets

and you got to remember the words coined by chris powell the treasury secretary of ghana back about six years ago at a conference in washington when he stated we no longer have markets we only have interventions this is true in the interest rate market this is true in the gold market this is true in the equity market these things are all played like they're like instruments like a herd and the control that these people have the central banking community acting in goods with the u.s. treasury it's absolutely phenomenal and it's incredible you know i have a backgrounding in the instruments because i traded the mesa to surely early even years the f. are a zoo and the interest rate swaps i understand the need these instruments were pioneered in toronto i was in the market when they were pioneered and i was also in in the in the market because you see the original pioneers of these instruments were american banks in toronto and i and i watched in the late eighty's and. early

ninety's as these instruments in the books that were in tron odama sile with american banks in tron oh how they all got migrated back to new york the reason they got migrated back to new york is the people in new york realize the power that they could have over the interest rate curve if they had these things at their disposal you know me might my background history tells me that this is exactly what's going on i watched it happen from an institutional perspective when i was a broker of these these products so i mean i know exactly what they're doing but let me jump in here for a second so sure just to be clear i mean on our show on my show what i've said is that the ten year rate is heading higher and that the bond market as an it is thirty year bull market so just to be clear rob kirby you are saying that that's not true you're saying that the ability for the banks and the and the players on wall street to collude along with foreign banks to take complete control of the

interest rate curve is his say and issue an unlimited amount of derivatives is such that you believe that that ten year rate could see new lows so below the one forty bull impossible. you know max i'm not going to necessarily say new lows but if i'm saying is you know so i mean i stated it recently to jim jim will your compatriot of mine i think the next big really zero in the interest rate market is going to see the ten year. u.s. government bond yields or a rally back down below two percent i don't know that resuming our i will respect i am doesn't saying i mean you've got a great case for what you're saying and i encourage everyone to read your stuff and you know i don't pretend to have a monopoly on the truth here i mean you've got what's why we have you on today because you've got this really it's upsetting to hear because it confirms

so much of what we loathe about. central banks like mark carney and his cohorts in the city of london is that they're just scheming manipulating stealing whores we hate that but and it's sorry to hear that there won't be any penalty there won't be any rationalization there won't be any free markets it's just going to be more horrid intention from mark carney and jamie diamond and lloyd blankfein intil until there's a war until there are social unrest until somebody decides to burn this whole place down that's what they're angling for anyway right of time and i'm rambling rob thanks so much for being on the kaiser report great to be with you max all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacey herbert of kirby analytics dot com if you'd like to get in touch with us . tweet us a kaiser report until next time ask others on bio. am

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coming up on our t.v. bradley manning could face a maximum of ninety years in prison after leaking classified documents to wiki leaks now his defense team is trying to whittle down that sentence we'll have a report on today's proceedings next. and an encrypted e-mail service used by n.s.a. whistleblower edward snowden has been shut down the owner of the site says that he's legally barred from even saying why and a second web site has also closed its encrypted e-mail service is this a case of the u.s. government trying to stop the messenger more on this ahead. and in georgia a fifteen year old boy is denied a heart transplant because of a history of noncompliance with the child's family claims it's because of his history of low grades and trouble with the law more on this story in today's show.