live live. live . welcome to the kaiser report imax guys are time to reset this sucker the global financial system is couplets keep time to rebuild something better something less corrupt perhaps in fact this three architecting of the global financial system is

happening right now as i speak these words doesn't matter whether you like it or not it is happening why the reset well is former french prime minister dominique de villepin recently said the u.s. has used its three phenomenal privileges to put the financial stability of the whole world at risk quote like a truck full of dynamite heading right toward us end quote well hold the freaking kaboom batman if you want to protect ourselves from the u.s. economy which by the way dominic to fill panther not safer can come soon batman if you want to protect ourselves from the economy which has strapped on a collective suicide vest we'd better have solid blast barriers in place first up is the redistribution of risk at the moment the collapsing financial system is one in which risk was separated from rewards then bundled up and sold off to unsuspecting investors around the world and one of the main pillars of pricing risk

is the credit rating agency as i've said right here in kaiser report many times it's time to read architect this by starting our own true global credit rating agencies oh my god stacy herbert this is the beginning of the true insurrection it's the post period those couple may as don't exhibit then we said well dominic developed and of course was the prime minister france and he famously said no to that and then merican when we wanted to invade iraq with everybody behind us the french refused and he was hated freight created for. eyes were introduced let alone. well he's now in hong kong any the chairman of the universal credit rating group and this is formed by de gong credit rating agency in china it's also backed by egon jones you know the very first american credit rating agency did downgrade american debt and rusts rating of russia so these guys are

together and they're upset that the u.s. has wasted three extraordinary privileges as dominic to said he said these three privileges are the control of the currency we all know that they have the global reserve currency the control of the rules so they have the global department of justice essentially and they could change the rules midway through the game so they always win the third privilege control of the risk the u.s. decides what is risky and what is not that is where the money should go and where not he said it's a way to redirect money by under valuing risk in the west and overvaluing it in countries like china india brazil or pakistan and they could do this he said because of s. and p. fitch and moody's where they overvalue u.s. debt and undervalue the rest of the world and begin to understand the nature of this collective scam of this racket because it includes the accounting firms the fund managers the hedge funds government and of course the rating agencies which

we've said before are part of the corrupt part of this whole nightmare and in the case of moody's you give them money and they give you a rating and typically they downgrade foreign debt in france of u.s. debt and this is how during these periods of extreme financial terrorism the u.s. has had this extraordinary privilege of having money flowing to its aaa debt only later did we do we find out that it was not aaa was triple c. or worthless entirely and this is what we've been saying we've been advocating for this for years i beg to china to do this i beg russia to do this so not only is russia taken. my advice and bought lots of gold but now russia is taking my advice and they're participating in this new global credit rating agency head by none other than dominic do you view pan well the important thing here is that you mentioned it would read directing wealth which is misallocating capital of course what happened over the course of the past decade or so is that with this collusion

between the rating agencies the banks and the accounting firms the audit firms but they they were mis allocated all of our global capital so we have all these unsustainable bubbles backed by a dilapidating economy we don't have the economy because the capital is not flowing to places where it should be and instead is flowing to places like the u.s. where they're perhaps like one of the c.d.o. sold by goldman sachs they're going to be suddenly down create it will do sound overnight this is where the left wing gets it all wrong because they talk about redistributing wealth and in a post capitalist world that we live in where wealth is no longer generated through jobs through capital creation wealth is generated through rejecting finances and re financialization securitization therefore when you want to talk about redistribution you must talk about redistribution of risk because the only thing that's in the global economy are quotients of risk some things are less riskier than others and by reestablishing or establishing a new credit rating agency then you'll see the redistribution of capital flowing

along the channels of the security world in ways that correspond to a more cogent analysis of where the risk actually is in the global economy many people call it the socialization of risk and the privatization of reward they get to keep all the reward and we get to have all the risk doesn't develop and actually addresses this issue he says credit has become the key for the central nervous system of the economy those who control credit control the economy those who control risk control the credit and those who control information control the risk . that's why credit rating agencies and american monopoly have such enormous power those put this in perspective the global g.d.p. is roughly fifty trillion dollars a global derivatives market our debt market our risk market is seven hundred trillion dollars so to get back to my discussion of how the left wing politicians completely missed the boat on this is that they focus on that fifty trillion number and try to redirect that wealth and they completely ignore the seven hundred

trillion dollar number where the actual price discovery takes place where the actual changes in distribution that would happen that would cause an effect would occur and this is unfortunately i've tried to get this message through to activists to politicians to all the myriad constituents trying to explain to them how this works but they are completely resistant to this notion that somehow by really really defining a risk you would change the fortunes of the ninety nine percent the bottom ninety percent i just don't understand why they're so resistant well one hand we have this misallocation of capital which we've discussed and now on the other hand he points out that there's also been essentially outright theft using the credit rating agencies by mispricing the risk so he says cheap credit led to a bubble in private corporate and public debt the global debt disease as he called it that artificially created economic growth the buyout fever hollowed out entire

industries and left even the most efficient firms more fragile and when the bubble blew up the fed flooded the market with even more liquidity so the u.s. having access to this cheap credit because of these global credit rating agencies controlled by them they were able to use cheap money to steal essentially the wealth of the rest of the world in productive capacity i mean it's a question of collateral and to put this into a way that hopefully the left side of the political aisle will understand it is they assume that work and capital itself is worth collateral. that you can put up and borrow against but that's not true as steve keim who's been on the show many times has pointed out that credit is created spontaneously from nothing and that the spontaneous credit creation from nothing not even a fractional reserve but zero reserve then becomes the collateral for even more credit creation and you create this global daisy chain of credit that has no

collateral whatsoever but is nevertheless used by the top one percent to acquire assets who happen to be going up in value as long as they keep creating phony credit and again this is all tied to rating agencies being able to say look here's a steaming pile of dog poop and we're going to give this a aaa rating and then say using that as collateral to go to the bank and borrow twenty million dollars to buy a chateau or to borrow half a billion dollars to buy a company if they're willing to say that this steaming pile of dog poo is aaa rated security that i'm going to borrow against then so be it that's the new papacy in the post capitals world the vatican pope of goldman sachs j.p. morgan says all this crap to be triploid. cologne will give you security here we have done to develop and saying the same thing he said the system as it exists cannot go on we cannot wait for america to reform and so as we said at the top of the show we've got to reform it ourselves and the good thing is that the new

generation the generation x. and y. are ready for it y. money will soon be extinct research from the curb report finds that sixty five percent of generation xers in wires say they are ready for something new as opposed to sticking with the tried and true financial institutions and principles this shift in perception means that individuals are reinventing the financial services typically provided by banks venture capitalists hedge funds and angel investors thereby creating new options to which consumers can save spend borrow and manage their money they talk about peer to peer lending they talk about fact fractional ownership that you're seeing across the housing market. for example but the most radical they point out is bit coin right we covered bitcoin first of any international news organization going back several years with john mcdonogh a guest on the show big calling is really the new reserve currency of the world that will replace everything and be the building blocks upon which you can create a well risk distributed global economy that is

a meritocracy and has attributes like capitalism but not the top or c. coming in there in the kleptocracy in the congress theocracy undermining it with their central bank model of clip domania well in fact you don't need a credit rating agency a corrupt corruptible one to monitor and rate any bitcoin transactions because the community the global community does it with triple book entry accounting and they point out that one of the most radical examples of this shift in the young is the growing viability of the digital currency between the currencies is peer to peer technology to operate with no central authority or banks transaction management and the issuing of bitcoins is carried out collectively by the network because it is also entirely open source as design is public nobody owns or controls bitcoin and everyone can take part in so a decentralized world don't like silk road which was like an online version of wal-mart that used bitcoin the f.b.i.

is always looking to steal money and that's their primary function now and they the n.s.a. as well and they is invasive and spying technologies that's the primary purpose is to steal stuff thing to do security no one has any more secure in fact that we're less secure as a result of this but they saw the so-called one hundred million dollars of the bitcoin so they went in there and they tried to steal in the great thing is that the f.b.i. and the n.s.a. are incapable of cracking the protocol to steal that money that shows finally that bitcoin is bigger than any government any central government any n.s.a. and this is why people now the bitcoin price skyrocketed after the f.b.i. did a mia culpa and said we're too stupid to figure this thing. yes but in this post america world where you know dominant development is over there in hong kong getting ready for it by do which is the biggest internet company in china which is the google of china they're now accepting bitcoin so you see that this post u.s. dollar command and control top down central bank controlling. system is put through them extraction rate again soon as a given to coin

a aaa rating. you haven't read it so. oh my god. i love. would say dribbling over there all right thanks so much for being the guys report pink humax. so for the second half a whole lot more. i mean if we're looking at the situation right now where we have a crackdown almost on a daily basis where we have people getting arbitrarily arrested from their homes

during night raids where we have children being picked off the streets where we have people attacked with tear gas inside their homes where torture. is that is not in itself as a form of anarchy. loop

. welcome back to the kaiser report imax keyser time now to turn to leo johnson a green and investment consultant and author of this book a business and the city of the future makes an excellent christmas gift and stocking stuffer sleigh a lot they're saying mike thank you yet welcome guys report so this thing is not ok it's just flying off the shelf mainly bought by my mom this is my secret fear but nobody for some reason i mean there is a kind of. yes which is the least competitive kind of room i was in we were doing very well oh actually it is business ethics and business at we're we're rocking on

business ethics that's not a popular section here in the u.k. military intelligence is one of the great it's one of those great books but we're looking we're broke a moment kind of like a way to be let's get into the main thesis here of this fabulous book there's three possible futures johnson the proper list the site. and the distributed city so i mean it's a whole book is about this but if you can kind of encapsulate that a minute or so they'll be great. so you ask me to sum up my yeah in a minute two hundred fifty pages there's a period of the little star with the propolis what is the propolis for patroclus is the city that henry ford built on iraq it was great it was the city of mass production that raised this out of autism to poverty lifted welfare across the globe. but over time there's this quote from will rogers terry forward which says it'll take one hundred years to tell whether you helped or hurt us but you

certainly didn't leave us in the same place what we've seen is this same general purpose technology of the combustion engine which changed people's lives changed the cities we lived in has started to come up with some problems ok before we go on let me just explain that one of the themes here is that what we're finding in the twenty first century is that all these models economic models are hitting against something called what's called capacity constraints of planet earth planet earth as a vironment as a certain ability to sustain growth as defined and it has different definitions and so some economies are aware of this some are not you're trying to offer some way through the thicket of this. move all for sitting in a movable object or unstoppable force or this was actually worse than that but it's better that there's a triple set of problems not just the carrying capacity of a ok because as mass production has reached full deployment what's happened is the returns on capital to investors have gone down from

a six point three percent in the sixty's to about one point two percent now there's a decline in what the real sector is giving that's the first real problem but then the three side effects the come off about the first of course is of course the carrying capacity of the planet because there's a high carbon burden that spits out its fossil fuel group the second pathology is social because its profits go down what is business trying to do it tries to push profits back into this is the by squeezing wages so in work poverty out of work poverty is there as contra offshoring to china the third pathologies of course what governments do is pull the lever they've got to try to bring back consumption bring back the month stimulate the economy with cheap money flooding into the system and credit fueled debt high levels of personal the high levels of national debt and then into this imbalanced unstable mix. you then have capital that says well i'm getting one point two one point three percent chance this isn't work capital and looks for whatever new routes it can find to reboost its returns so you have the

sub prime so you have the misselling of p.p.i. insurance you have a series of bubbles which then of course collapse these are the ones you're characterizing the low returns of capital leading to mal investment as the inevitable consequence of a certain endgame for capital in return on capital given these restraints and you're not applying any kind of contribution of some outright malfeasance now there are some would argue that one of the reasons you have this problem and in this current capitals world is that the main antagonist have militants in their heart and they're acting as bad characters there's the acting not acting well here you know people have taken great joy in beating up the bankers yes i do. have capital is to find a time that's it's magic it's to find returns the real issue is not the financial sector it's the real sector it's about whether we've go what she refers to as the general purpose technology in play that's going to usher in the next wave of growth

or not so bitter also correlate you know creative destruction was one of his great themes and yet in the banking sector in the u.k. i don't see any of these banks being destroyed that have to fall into hard times because they made bad investments and the big four banks that partially nationalize or are bought out are involved all kinds of skullduggery why didn't the some period concept of trade destruction play out and you have new banks come along and let the bad actors the who do whose names we know well why weren't they allowed under the capital system to die where this is to a room where you have a system that's both deals with the money and you know we can the still very much in place but at the same time what you're seeing is bubbling up bubbling up and by the way that you always depends on the things you with the old you start getting will. the old banking systems are going to be chaos it's always about the synergy between these old systems and the new that's bubbling up with the capacity to usher

in a great wave of growth and let me say this we started this book in i don't quite despair but seriously daunting with a compromise could deliver on the economic social environmental challenge if we go where we ended up seeing that there is such a wealth to refer stuff that's bubbling up ok only going for a second because all right so would it be fair to characterize your work to some degree as a financial architect and that yearly you have you're looking at the finances in terms of their design in a kind of macro sense and seeing the inputs in the outputs and does it does it does it is it fit for purpose and so that getting back to this book which is an excellent book i say i did actually read this book so we talked about the troubles i want to talk about the main themes or the way your kind of from a financial architect characterizing these different clusters of activity economic activity there's cyber yes which i would take it from the description is the plugged in world but please explain this a bit ok you can see this if you want to really concrete example of these three

different cities in action look at nairobi today do you want three different types of city that are all springing up you've got the older road which is essentially off to westgate the risk is the strategy for businesses exodus let's leave this and what's happening instead to this old city that's getting inbound is a new city is being built up as replacement you've got these new smart cities in theory with digital digital if they don't right with giant plasma screen we have to hope that you'll know what allergy is it goes down as a some part of curve toward a price point called zero in other words storage processing and and c.p.u. is always going cheaper cheaper cheaper so area of african country where they start at a place of baseline nowhere but they're meeting the base and part of curve of zero cost account way of my head with some twenty codes that will let me. put this in concrete terms ok for you what i did learn a lot is you know you're not going to chase a bad one all you want hard you are the educated british people you got these i pad

cities ok you've got the cities which are built for obsolescence yet which i've got quite small technology which is really this mission of interconnected highly vulnerable systems which are not going to be resilient and a lot of capital is going into these new cities and the gated compounds which on can be delivering jobs for the two hundred thousand people a day who are going in a part of distress migration from the countryside to the city what we need is a different ok so you're right where you can you feel constructive about this suburbia model when i know i feel that it's the next super prime it's not surprising it's the super project so you need a normal resilient city ok it's the technology equivalent of mom right ok if you told me i might waste of toast marks yeah and put your money for vegemite for the australian viewers if you put it in a giant bowl up in the middle does it taste good know what she's distribute this tech ok to get to this this mom might even lead across the slice finally the distributed setting so this is kind of getting to the conclusion of the book i believe this is what you foresee as

a model to work toward we were talking about distribution of the first after show in terms of risk and capital and that the problem capitalism today is not wealth redistribution but risk free just to be assured that all the risk is being borne by the masses and the rewards are being accumulated by the very few it has more to do about risk management how do you see the distributed city though actually for me the distributed cities the city that puts power back in the hands and uses technology horizontally to put power back in mounds of people and it doesn't that sense both manage risk for them and create rewards so the nairobi example is very clear on this because you've got no robey crumbling you've got the new cities the fiber because of comes a teacup etc but you've also got these innovation spaces bubbling up in nairobi sixteen of them. organizing groups who are doing things in this the i hope. what they're doing is using technology to solve the real problems so an

example of this might be. with taking the deal on so long to mobile phone light which is great because there's one point four billion people in the world without power but a lot of people can't afford the two hundred bucks a piece of kit costs but if you put a sim card in it and people can lease it for fifty cents a day and they can make mobile money transfers and they get access to insurance and then buy fertilizers and then make mobile payments for the footy for dollar kickstarter agricultural pump which means they can get access to the underground water table point three times more crops incomes go up from one hundred sixty to sixty hundred dollars a head suddenly what you're doing is you're reducing the root causes of the problems that are making people flee the countryside to the city and this is a market that's a billion dollars in kenya alone the postman of kerosene thirty eight billion global ok i mean right here in london you have the silicon around about you which is the home of the startup culture in london is this the kind of thing that's going to take london in to the twenty first century the next fifty years what do you

think about the silicon roundabout culture i believe it's great i believe it's a vital part of the future ok let me jump in and ask you this why would that george osborne try to stimulate the economy not by boosting silicon roundabout or by giving broadband all over the country but by creating a housing bubble by offering this help to buy scheme which is clearly an effort to create growth through a pumping up of an asset class housing to in a way that we just saw in america the subprime crisis and the fannie mae crisis utterly fail what what is it about this government that they don't get about your vision because i believe you're right why is are so blind about the why is he pursuing such a dead end policy such as help bot. on the british government all of the policies one of the great joys in my life is i'm not in the british book aside to say but what i do what i think is the reason why i may go down this dead end why don't they see the obvious why don't they just look at this book and say lou johnson is

a smart guy we want growth we don't want dead end bubbles popping in people's faces what's wrong with them and if you look at what's not me places like buffalo and austin texas the extraordinary stuff going on around the next wave of growth if you look at the last hundred fifty do you think of possibly i am i mean are they going to you know they're going a bar and are going to go in it like there is i'm not big there is a wave of growth which is always a cose when you have a new image you have all this good that's going to new energy sources that get those who want to get growth growth of the debt that's all they want they said that yes they have by helped by scheme by giving mark already the guidance to create quantitative easing in interest rates down to zero zero interest rates creates mounds and mounds of debt and that's that's why not so this train line up north create for good trains trains from two hundred years ago went out to broadband shortage could work and there is government support going for that but it's bubbling up so it's going to be driven by the people we've got to go. thanks so much for being the guys who report back in march all right that's all the time we

have for this edition of the kaiser report with me max geyser and stacy herbert i'd like to thank our guests leo johnson author of this book which is truly a good book i read this frickin book there is a good book you should buy this book it's called turnaround challenge if you like to get in touch tweet us a kaiser report if you want to order yes miss to leo jay mr jay it sounds very uptown downtown. i stand corrected and so next time this is nice guys are saying bye. sylar a song called. little. it's. the . pain for the young girls.

for the future harder. between two and three hundred million guns united states so you can act like they're not here and keep kids away from them. the causes are you know i mean this teaches them a lot of for a responsibility i'm simply going to pay through the eyes of children if we can't do it for our children for our future what the country will solve. may disagree. but i believe america is exceptional. this weekend.

and to. this. season. it's a quick fix for a long time to increasing the levy intoxicating addiction the u.s. may have avoided but it keeps dragging the world into an ever deeper. is it still possible to break this vicious cycle. mission. free. free. free. free. free.

free. free. but a global attack on rallies around the world unite against shale drilling and. dangerous technology. in the cold. in the syrian village of. the rebel flight is. never heard of. any. wrong. involved in the country's day to day needs. question failure and for.