welcome to the kaiser report max kaiser. once wrote. when one with honeyed words but evil mind persuades the mob great woes befall the state oh woe is me and you and us for with honeyed central banking words the mob has been persuaded to buy blah blah blah with borrowed money well great was before all the state of the economy. stacey math in the united states here's an article republished in usa today is the fed fueling a giant stock market bubble and they invite you to take a look at the s. and p. chart from one thousand nine hundred six to present and you'll see the internet bubble then the housing bubble and then today they have exclamation point question

mark and say that you'd be excused for concluding that we're in the midst of the greatest stock market bubble of all time because the prices today in the s. and p. five hundred a thirty percent higher than either of those other two well as a student of bubbles going back some i've just recently learned that my mentor on wall street geoffrey j. winters has passed away. who was a great wall street broker of his day we would chat often of the history of bubbles at the new york stock exchange luncheon club we used to go there and he would give me the history of wall street and each bubble has its own unique characteristics now the stock market bubble of one nine hundred eighty seven that i was a witness was driven by what was called portfolio insurance the dot com many of the one nine hundred ninety s. which i was also a witness and participating in in los angeles california this was driven by

i.p.o. laddering frank quattrone over at credit suisse and blodget henry blodget over there and wherever he was working and mary meeker. they created this extraordinary tech dot com bubble those riven by delusions that had a sub prime collapse which was driven by sucking in a lot of pension money and institutional money in to what was essentially a absolutely on sellable unconscionable garbage this bubble this epic twenty fourteen bubble you could call to sovereign bond bubble with spanish bonds trading at all time highs with british gilts or sovereigns trading at three hundred year highs with american sovereign debt trading near two hundred forty year highs this is a bubble driven by central banks a coordinated effort by central banks mario draghi of the time over there d.c.p.

is the guy who's buying those spanish bonds buying those european sovereign bonds increasing the balance sheet of the central bank in europe to equal the balance sheet of the federal reserve bank and the bank of england where they're taking on trillions of dollars euros yen of course bank of tokyo being the granddaddy of all this in toxic debt to the point where this too will reach its point of no return and they'll be a massive sovereign debt bubble the likes of which the world has never known before i think the e.c.b. asset purchases will bring us to the end of this bubble phase in the relatively short order well usa today on this article even though they present it with those charts in the with the misleading title of is the fed fueling a giant stock market bubble they say no no no while the fact that the fed's monetary policies have caused stock prices to soar it doesn't mean there's a bubble they say that in fact the reason for this is simple in order for there to be a bubble asset prices must be more than inflated they must be irrationally inflated

and the like i've discussed this isn't the case if anything in fact the increase in asset prices is entirely rational and what does he use as his argument to prove that. they are not irrational well he uses noah smith writing in bloomberg says that the zero percent rates justify the stock market valuations because the value of a financial asset is the discounted present value of its future payoffs and when the discount rate of which the fed interest rate is a component goes down the true fundamental value of risky assets goes up mechanically and automatically rational price appreciation not a bubble well before every crash there are journalists who famously go on record predicting that there won't be a crash in the one nine hundred twenty nine crash we had a lot of famous quotes from those calling about stock markets hitting a permanently high plateau the same thing in the one nine hundred eighty seven crash right before it crashed you had a lot of writers coming out and saying the markets were about ready to double or

triple in value the dot com crisis this alan greenspan himself thought that the economy had entered a new era of permanent prosperity with four percent g.d.p. or higher possible given this new technological invention the internet and of course then you had an eighty five percent drop in the nasdaq so here we are twenty fourteen we're getting ready for the twenty fourteen sovereign debt bubble which will be the biggest bubble collapse in history of course are going to be writers that will quote in a year's time or two years time who famously made the boneheaded comments that the last guy to make the stupidest comment possible before the lemmings all went off the cliff in fact he reminds me because he mentions i meant cattle and automatic minds many of these are robots that the south korean team the hand eagles have placed in there and their audience in the auditorium at their baseball games that there they've lost four hundred in a row ok now they have these robots and i'll show you in this image here this is

the robot sees the fans that are like. you matter how bad the team's doing there they're cheering just like this guy is like there's always a mechanical robot usually an academic. journalist there to tell you well it's markets can only go higher but let's continue with this metaphor because beneath the surface if you think of corporate america they're they're losing money hand over fist this is being discussed by the fact that they're borrowing money at the zero percent interest rates to buy back their own stock thus depleting the number of shares outstanding and artificially pumping up those earnings per share numbers on the p.e. ratio which says as you know sixteen seventeen eighteen times which is on the high end if you discount for all the stock that's been bought back it's probably trading closer to thirty or forty times p. which of course is off the charts very high accounting fraud is masked this bubble central bank participation of manipulation is mask this bubble the wholesale manipulation the precious metals markets has masked this bubble the collusion in

the central banking world around the world the bank of international settlements and so the one bank with the sharpest eye on what's going on around the world just came out last week and said these markets are not global so the fact of some yahoo down to nowhere is bill is speaking out of a shrink frank about what do you see some very narrow focus on data that was fed and by one of those waving that go to go bump at some stage where nothing now there is a former apple academic who became a money manager and that's john houseman and he's written this about these markets that some like the usa today article are saying are not overvalued he's saying yes this is an equity bubble and he does all these fancy math to prove that it is in fact overvalued but he calls it what investors are doing my sense is that investors have indeed abandoned basic arithmetic here and are instead engaging in a sort of loose thinking called hyperbolic discounting the willingness to

impatiently accept very small payoffs today in preference to larger rewards that could otherwise be obtained by being patient in effect zero interest rates have made investors willing to accept. any risk no matter how extreme in order to avoid the discomfort of getting nothing in the moment what would happen if the casino in las vegas suddenly charge zero for the chips that you went to the casino with ok what would happen with it would you see more or less gambling in the casino if chips were free ok so the central bank by making interest rates zero for a very select for those class of speculators in america and around the world that they've reduced the price of chips to zero and they pull on the america's dang dong . and they pull norco's dangdang all day long and it's not quite this action but they pull in the one armed bandit of american economy and occasionally they reap

a huge windfall if their own out of free chips the central bank gives them more free chips meanwhile everyone else has got a job sweeping up the vomit in the bathroom from all the speculators burping up and coughing up you know vomiting up all the free booze that's also included with all the free chips so you know that's not only can economy i can believe it does not just go economy of a janitor and vomiting speculators at the gulag casino chips and booze from the central banks of course is going to end in tears of course is going to end in one big vomitorium of risk suddenly discords like a bully make out a cotillion. well he john houseman then goes on to discuss further the central banks giving away the free chips essentially he's saying that all that said the simple fact is that the primary driver of the markets here is not valuation or even fundamentals but perception the perception is that somehow the federal reserve has

the power to keep the stock market suspended and even diagonally advancing animation and that zero interest rates offer no choice but to hold equity slices and fancy animations like a fricken donald duck cartoon it's good. they said like what only coyote running off the clip these still running to look good in the runners up there. you know the markets go up the staircase of hope and they crash down the elevator shaft of reality into the puddle of your own vomit and urine because some idiot on bloomberg decided to write some stupid mcgonagle puffed up nonsensical piece about why markets are cheap if they're cheap all right buddy you could carry on a stretcher see how that is so either continues on that theme of what the central banks have done and he says what's actually too is that the fed has now created four trillion dollars of idle currency and bank reserves that must be held by someone and because investors perceive risky assets as having no risk they have

been willing to hold them in search of any near term return greater than zero what is actually true is that even an additional year of zero interest rates beyond present expectations would only be worth a roughly four percent bump to market valuations and he says essentially not as in sort of fancy words as you but that we're going to fall down the elevator shaft because of this here's what i see happening these low interest rates this is this is what the top one percent of the top one percent are banking on they want to take the entire world private. they want to take every stock in the s. and pay and they want to privatized it all and central banks are giving him the ability to do so zero percent interest rates i.b.m. going to go private coca-cola is going to go private every dow jones component going to go private they're going to take it all private i think that's the master plan is to remove public ownership or stock market participation from the unwashed

masses who have the temerity to go out there and buy a share in some publicly listed company hoping that they too can emulate warren buffett all that's going to be wiped out by the koch brothers and the buffets of the world the private scale equity. am artists are going to take it all private and that's what these it's going to become we talk about oligarchies you know america's a clip talk oligarchies well finally he says here that if this price today is fairly price as a usa today article says interest rates would need to stay zero until twenty forty that is the only way they're fairly priced ok i'll go along vomit futures because it's a long way to fill the grand canyon with with pure unadulterated spirit to stay so you've got to go. states over the second half a whole lot more. do

we speak your language. programs and documentaries in arabic it's one you hear on all t.v. reporting from the world talks about six of p.r.p. interviews intriguing story for you. in troy arabic to find out more visit or a big t.v. show it's called. iran like syria has been george very harshly and it leads on to the constant battle for change so isn't it justified the game in if not pursuing him for a weapon and you know raising to spectrum of personal revenue would lead to one young who'll say move time you see where he's developing nuclear weapons in the home for me and very explicitly did they want to see these are people dumping being made in full makeup and form the story we would be stupid not to take it.

right from the scene. first street. and i think the church. honoring foreigners clinton. an instrument. to be in the know. what's in fish farms waters. from the me because. i size spread all over norway is the most toxic food you have in the whole world her profit drowns out an official inquiry furthermore tells restrictions.

on that. and. who really knows what's inside the killing of fish. welcome back to the kaiser report i'm max kaiser speaking of wall street next i'm here with misfires stein author of plan a ponzi mitch well how do you how do you mean you're still working on the city of london you're still mine manager after all this of course this is not a green screen real background. listen you got to tell us about your trip to italy so you found addict only that the economy because of course you're sailing around the mediterranean with other swished possibilities

there you know when you're not out i'll tell you that you can see that the economy is not doing as well as it's portrayed by the e.c.b. and mario drug x. goldman mario draggy. a lot of the restaurants in the bars that we frequented to have a couple cocktails were very empty and the people that own them were maybe they don't lie or complain and they're like there's much fire so i think after the car was parked was run out the back door there's the who are coming in the front door like oh god we thank god that guy has a is a serious buzz kill or it could be but when you're in the city center and you walk through these little. where you're seeing like everybody sitting outside and having a beer when it's sixty percent empty in the middle of the end of july that should tell you something ok let me stop you right there because if that's true why are the italian bond market the spanish bond market all these bond markets in europe a new all time highs people are closing their eyes and buying the highs i mean it's madness because they're chasing yield and it's like an injection injecting heroin

into their veins because these bonds and the debt from italy spain portugal can never be repaid it's a pipe dream so eventually they're going to default but they've been kicking the can down the road they've done a pretty good job at kicking the can down the road now they're just doing the asset quality review which is probably the most opaque test in the world we're not going to tell you how we're going to test the assets what's just a quality review this isn't a stress test you know this is basically. stress tests that the e.c.b. is going to do there is such about right the european central bankers are doing a stress test on their banks to say everything's fine everything's cool just like when they did the stress test on dexia a while back in two weeks later they went bankrupt so all of these assets because of the money printing are overpaid overpriced in terms of price for yield is at a historic low when there's no possibility that they can pay these paydays bond but that's just us are bogus they just do this for cosmetic reasons or is as you would say lipstick on a pig it's exactly right it's tons of lipstick on a pig to make people feel comfortable to buy them so the governments don't have them on their books but then when the stuff fails like argentina you're not seeing

mainstream media tell you the argentine is about to default in three days once again on one point five billion of their bonds which is going to cause a cascade in other parts the banking system what is it going to cut all let me ask you first what you think of this argentinean situation because you have a i think it's paul singer he's a vulture capitalist he buys a debt on the cheap during a state during the stressful times and then he sues the bank for one hundred percent on the dollar a lot of people like our friend greg palast who's an investigative journalist goes down there he finds paul singer and he you know challenge a semi or event vulture capitalists you're no good ok you're in the banking industry mitch you're on the other side of this debate possibly i don't know what do you weigh in on this the problem is there are really there are no rules anymore because the fed the e.c.b. the bank of england they've changed the game they've moved the goalposts after the game and said no no we're calling these plays back so there's a total misallocation of capital people are throwing money to chase yield and people are not assessing risk properly all the old risk managers such as myself are

gone if interest rates are zero is it harder or easier to assess risk it should always be the same to assess risk but people are putting money into stuff that should be trading at twenty percent but because interest rates have been manipulated to zero what is doing to people who far removed the discount dividend discount model the dividend discount my view or knew that interest rates as zero the yardstick from a. when risk is gone it's clear is no yardstick for measuring or as you say there are no rules the answer is harder as are all your answer you get it to america oh no. no no answer but speaking of charts minutes firestarter have mid-south some charts you know that's the thing that's going to sing epitaph it will be six feet under he had your theory that starts right now let's compare today's market with the great depression ok so we've got the first chart that we're going to see is the dow jones industrial average from one thousand nine hundred six to one nine hundred twenty nine you remember what happened party like it's one nine hundred twenty nine but song anyway the dow went up one hundred eighty one percent and then from one

thousand nine hundred ninety nine hundred thirty two our second chart you'll see what goes up must come down and what we can see from this one is it's up up the staircase and right down the elevator shaft down eighty nine percent now recently in one nine hundred ninety eight what we're replicating today one thousand nine hundred to two thousand we had the nasdaq dot com bomb and we'll have a chart of that we can see that the nasdaq went up two hundred for getting two hundred fifty five percent in two years and then on the downside from two thousand to two thousand and two it dropped seventy eight percent and destroyed five trillion dollars in market cap because of greenspan's irrational exuberance where fifty two percent of these companies no income companies disappeared and went bust in the dot com bomb now the next chart we have is the dow currently from two thousand and nine to two thousand and fourteen which is gone up one hundred sixty two percent so now we have to ask ourselves is this the new neutral or is this

a set up for a catastrophic financial disaster in collapse that we've seen in history before the last chart now is a company called c y n k. this is a fraudulent company i don't know if you know anything about it that because there's no more price discovery and hyper inflation and asset classes the markets now trade in a momentum based frenzy drove the price of the stock up to around as we can see on the chart around twenty one dollars a share and then the the regulators came in and said oh my god this company has no employees no income no revenue no nothing so they came in and stopped trading for ten days the interesting thing is being a fraudulent company in a rigged market that they when trading started again it started trading at around five dollars and people were still trading the stock when it didn't exist and it's clearly fraud right this is like in the old days when i was working on last year we had what were known as the pink sheets ok these are both on board traded stocks

that were trading for a penny twopenny five pennies and this is the kind of boiler room action you would say happened on these thinly traded no name no product companies and it was a bit of a farce it's amazing that now you're seeing the same tactic being is in multi-billion dollar companies they've turned the entire global stock market into a boiler room pink sheet speculative kind of shenanigans that has no basis in reality whatsoever well a billion is the new million just like green is the new black so i mean it doesn't really matter anymore people don't look at valuation and they don't look at value we get it have to get back to the metric i mean nobody's talking about it without an interest rate to a risk free rate so if you look at what's going on and everybody says the economy's great everything's doing well g.d.p. is rolling right along but if you look the ten year treasury treasury yield is below two and a half percent which tells you that the economy is not in a good state i mean you can make you know fake it till you make it with the numbers

which is what they've been doing yeah well i mean let's just you know move on here so. you know osborne talks about a recovery in the u.k. but as soon. to me that it's really a misuse of the language because after the crisis of two thousand and eight they just doubled the debt so they let the credit cards spin out of control by a six hundred billion pounds but how is that a recovery minutes well no i don't think we're seeing a recovery but when they when they tell you things i mean it's like they're changing the calculation in basis for g.d.p. calculations starting in september so for example greece when you look at them they had a four percent recession which is going to shrink down to point three percent a change of three point seven percent and this year two thousand and fourteen g.d.p. will go from point six percent plus to robust three point six they're adding they're adding things because they're changing it's a once as as owen s calls it. the office of national statistics in the u.k.

it's a once in a generation revision lifetime revision of the way they calculate these numbers now going back to george osborne's great recovery that he's heralding if you look at construction service is the biggest part of the g.d.p. component service sector construction was down finance finance was down so all the high paying good quality jobs in the economy didn't have an uptick so we are not back where we were if you look the debt has gone up the spending for government spending has gone up grossly in tax revenues have declined at the same time while real revenues in terms of what people are earning wages have come down between ten and fourteen percent in the past four to five years well isn't that true that you can prove that george osborne is lying in one simple statement and that is the fact that if there is a recovery georgie porgie why are you not raising interest rates interest rates would be rising along with the recovery that's what interest rates are therefore that's the bank of england is there to do that's

a marconi's job is so i agree one hundred percent he that that is a litmus test to say this man george osborne the chancellor of the exchequer is a liar he's it's not a recovery it's a bubble in asset prices in the lot of higher inflation it's hyperinflation asset classes but you know it is going on here yes i do it's going to arse it's a tragedy oh you can't taper a ponzi scheme that's what they're saying in headlines in neon lights it's bright right well what does that mean in other words what i asked for is that they want to do is they've got an economy that's where asset price bubbles for the equity extraction to go out in the shop based on the money you're borrowing guess or inflated house price that's the it's so called recovery it's not jobs it's not recover it's not it's not manufacturing it's not labor it's not wages it's just people taking money out of inflated assets to go shopping when those inflated assets revert to the mean just like night follows day. and everyone's got an underwater in their house again and shopping comes to

a complete halt you know george osborne to be on the lecture circuit with janet yellin for two hundred thousand you know for lunch dollars if you are talking about how they save the british economy when in fact he jammed it up his frank frank by looking through his teeth day and you say oh but here but if you look at the budget budget deficit and the public sector borrowing for june just take that number year on year ok that's up about forty percent so they had a it was eleven point four billion which is about right you know you know how does boring i want to move on to my next point listen to this arc and then you know our style your charts are all for get a base they get it out there were moving around i never got a minute left i'm going to this is the other this is the proof of osborne's law ok running for prime minister so it's you can ask the question ok income tax on revenue the treasury went up three percent still is up forty percent. i didn't that points out in no uncertain terms of black and white the law it's all

based on real estate speculation not on a real recovering economy well yeah there's rampant real estate speculation this is going to blow up like in an epic fashion i mean but those are the assets are talking about it being blown up by this ridiculous central bank pose what this is hyperinflation in selective asset classes a typer inflation it's not just inflation and the mark carney and george osborne are doing nothing to control the property bubble and people are going to get hurt in a bad way because people who are buying in london at these prices when they collapse it's going to be catastrophic just like what happened in japan from one thousand nine hundred seven to current day it's dropped about ninety percent from peak to trough and it's never come back it will never come back in our lifetime people are saying the property markets are cyclical newquay oh it might come down ten percent but it's going to go right back up to new highs it's not going to ever go back up to new highs this is a tulip bulb mania that will never be repeated and it will go down in history and

those guys will go in the history books as the ones that pushed it over the edge it's going to be humpty dumpty and all the king's horses and all the king's men will not be able to put the property market back together again well said first time we've got to go but i suggest reality as a report thanks for having me. all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy ever allowed to thank our guests much for our son author of plan of policy dot com if you listen to his tweet as a cause report is a bio. you surely know where you.

keep. it. clean and more zero casualties war this is the great fantasy of war mongering politicians. capturing people is this see what do you do if the innocent

killing them easy we were serve the right to kill any person anywhere any time. they couldn't do that in the city but they can draw them slowly makes these things certain politicians. a new kind of power via this technology savvy is very tempting. good leverage sure to mccurry was able to build a new most sophisticated robots which should leave doesn't give a darn about anything tunes mission to teach music creation why it should care about humans in the world this is why you should care only on the dog.

coming up on r t the palestinian death toll has skyrocketed as israel vows to destroy hamas as underground tunnel network with or without a ceasefire all the israeli military has asked for sixteen thousand more troops to carry out the ground fighting gaza an update on the conflict just ahead. and it's been one year since n.s.a. whistleblower edward snowden fled to russia his asylum expires today but will he be staying in moscow any longer more on that coming up. and there is blood tests for cancer and hepatitis but what if a blood test could test could tell.