so we're presenting the positive side and that's the house builders of done well this is a new report out and the chancellor philip hammond is lining up another ten billion pounds to extend the help to buy programs first launched by george osborne in two thousand and thirteen which has already sucked up ten billion pounds of taxpayers' cast yet a report from morgan stanley not usually the type to stick the knife into a flagship government policy lays bare how this colossal saw has been almost entirely wasted. yeah it's interesting because under margaret thatcher there was a transition away from public housing and government assisted government underwritten public housing and they sold off all the council estates as they're known people bought into these units across the country and they became the land owning the new land owning neoliberal gentrification under the current government in the u.k.

it's another socialist scheme of government underwriting property but not for the poor people they do it for the rich people so it's very strange the u.k. economy is it's socialism for the rich and they want it from margaret thatcher rejecting socialism for the poor and now they've in britain there was a transition period where it was market economics for about twenty years and now it's come full circle to socialism for the rich so this by to help but help to buy scheme is a government underwriting program for wealthy people the average home of course is skyrocketing out of reach for the average person in the middle they're all being relegated to the back to where they were pretty fat or a permanent underclass of poor people with the wrong accents and it's back to a kind of a medieval lords and serves yeah of course your talk about the right to buy margaret thatcher introduced the right to buy. so the british taxpayer had

collectively built all these public housing and then how you get the taxpayers to knife each other on the back of course what you do is you say you people living in that free public housing reduced price of public housing will give you that property you can buy that you have the right to buy it for seventy five percent discount sometimes of market price on the markets that value say would be five hundred thousand pounds we'll let you have it for one hundred thousand pounds i give you four hundred thousand pounds of the tax payer the national wealth will transfer it to you so of course those people like vote margaret thatcher yes yes they are all of taxpayer bill housing was given away by stature for votes and now we see the same thing happening in other sectors like transportation so the taxpayer built the rail system and transportation system in the u.k. and then the conservative fold in the service of no the private sector can do

a much better job running these things so they sold it to the private sector who in turn sold it to the social welfare states in europe germany and france so the pensioners are looked at getting the tolls on the in the money collected in u.k. transportation networks to pay their public pension schemes but british people so going back to this help to buy because remember now house prices are too expensive for anybody to afford. house builders were suffering for that because nobody could even afford to buy a house so they're in the business of building houses but nobody could afford it so interest incomes the government and the government basically was giving giving u.k. residence twenty percent of the deposit in an interest free loan i think they had to be able to come up with some of the money but the taxpayer is backing all of this those billion. have not helped by years the money has gone almost entirely

into the pockets of the giant house building firms which of raised the price of development by almost exactly the amount made available by the government all that has meant for first time buyers is more misery by pushing up house prices so morgan stanley went through this in order to get this free money from the taxpayer you have to buy a new build you can't buy an old house have to buy a new property so these new properties which always have a premium to old properties they have a slight one now there's a fifteen percent premium to new properties to an old property versus an old property this is the morgan stanley the through the data and they found that ten billion pounds exactly into that gap that will then close they say this is why they report from morgan stanley they're worried that because house builders in the united kingdom have seen their earnings triple since the introduction of this and

their profits boom and the share price has been that it could decline should this program ever and they were kind of concern trolling to make sure the government continues as polish just launch a scam. but you might well you might say that but philip hammond mother thinks it's a great project. we have to say that by law in the united kingdom so philip cam is mother thinks it's great his cabinet thinks it's great the house builders think it's great so and morgan stanley i think is right there tone is that we need to extend this does right in the interest of impartiality yeah a lot of people think gravity exists on planet earth but there are a few people that don't think gravity exists on planet earth that's to fulfill our requirements of the b.b.c. to fulfill the impartial some people think there's also showing those gravity well but also a life you might say bernie made off wife ruth thought his he was a genius and his his returns were fantastic and his his investing

methodology was great so like you can't just say bad things about bernie made off you got a good. don't need a lot of money he did a good thing he donated a lot of his ill gotten gains you know the thing is about the story about the game is that people assume that all the government is going to provide some money for me to go buy a house but they don't understand that the builders warehouse all the properties first and you're buying the house from the builder who's already scraped and scalped the fifteen percent rip off you're not going to get anyway well i'll show you how much it's helped this government program has helped not the ordinary person they might feel better because they have this loan to have a property and they feel like they're on the property ladder and that's part of how you have free wealth in the united kingdom but make no mistake about just how much help to buy has fuelled developers profits the new build market is increasingly

reliant on how to buy with a large builder's barrett taylor wimpey persimmon suggesting that about half of their volumes are helped to buy purchases and what a brilliant. making wee has been morgan stanley says help to buy a broader house price inflation among other things have helped house builders earnings triple since its launch so again that's good for them you can't deny it's not good for those c.e.o.'s and executives in that those house building firms so we're speaking positive about those people there's very well there's a socialist program for rich people and. is a socialist and the conservatives oppose this continuation of socialism for the rich not socialist on principle because it doesn't expand it doesn't extend to everybody it just extends to if you want a they create the environment in which the government is giving free money to

victimize class of people these are the rich and the britain who feel that they're being talked poorly about behind their back and words that their own comfortable with are being used against them like toff accent or ok so let's move on to another story and this is another government intervention in the markets in the social system in the anything that makes the society remember margaret thatcher began this wave of privatization and deregulation deregulation saying that there is no society so we have to destroy it we have to get rid of any of the institutions of society remember that propaganda and the. much of the media is that it's outsiders destroying faith in our institutions and yet look at another institution we have the property market the how do you how

a roof over your head that's being destroyed here education you send your little children to school to be educated to learn to become valuable members of society what used to be called society. collapse of the academy truss asset stripped schools of millions wakefield city academies trust now stands accused of asset stripping after it transferred millions of pounds of the school savings to its own accounts before collapsing on september eighth it released a statement announcing it why divest itself of its twenty one schools as it could not undertake the rapid improvement our cademy need is that the new sponsors will be found to take them over so remember tony blair introduced this program started out with if you found a corporate sponsor like you could rest control from local authority remember now a housing in the united kingdom all local authorities have no control over housing and their authority now they have no with control over education is being stripped

away by these academies if you could find a rich donor to or corporate sponsor to put up ten percent of the funds they would get twenty five million pounds to build a brand new sparkling new school and of course all the local residents would want to send their kid to the shiny new school rather than the old black but they did state school which doesn't look as good so anyway this school has been now collapsed another collapse but they transferred hundreds of thousands of pounds out to their own sort of pockets for equity swap so any time a financial as a sector in the u.k. in this case the education sector you're bringing in the privateers the charlatans who want to spend financial eyes and corporate ties to you then extract all the equity and replace it with debt we remember we've talked about for example with arcadia philip green's company of famously he did something similar with his wife

in monaco and then he couldn't pay the pensions so they just apply that profiteering scheme you see in the private sector to the newly private sector of education the newly private sector of transportation the newly private sector of health. and the n.h.s. being destroyed in the u.k. again too because the rich people feel that we sometimes use language there they're not comfortable with and they're victims so the department of education of course says that this trust class will not leave the schools out of pocket because of course there's always the taxpayer which like no house bill in a bank no no none of these guys will ever be out of pocket so the taxpayer will take care of it but i want to point out another truss that collapsed we love to we're out of time so we'll have it next time stay tuned for the second half a lot more coming your way.

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tight for many years so i know that. the ball isn't only about what happens on the pitch the formal school. it's about the passion from the fans it's the age of the super money kill the narrowness of spending two to twenty million. books it's an experience like nothing else on earth because i want to share what i think of what i know about the beautiful guy breaks a chance with. the beaks. the two thousand and eight economic crisis turn some countries into paid these are the countries with we korea colonies that needed austerity policies if you are in a situation of flow bloat even the recession austerity is

a very bad idea it doesn't work and it makes millions of people very unhappy those who are unemployed see their wages decline almost a decade how good are the results she saw all of these were pulled by the people gathered in greece to watch her old get people to see what i'd. been in full view she was having to for legal. challenge nothing more she did not was always think casey's family and not getting paid while the same mission is still in place to one of the consequences to weaken blue bird flu dismantles will first be one of those loosely truthy consider is the consequences are actually quite acceptable to the decision makers.

welcome back to the kaiser report imax keyser time now to continue weather a conversation with michael pence of pent up or dot com michael welcome back thanks for having me back on the next all right so your report lemmings in full gallop toward the cliff you talk about you know various reasons why the market might be overextended and due for a big picture and not might it would almost every metric be even the gap. which is twenty five point five it's crazy it's ridiculous you cannot justify these valuations we talked about the first segment almost one hundred forty percent of the economy it's just ridiculous it's a bubble it's a mania yeah now i want to end badly though i don't know the exact date but it's going to end badly it any report yet you say it all hinges on this anticipated tax cut yeah about that the tax plan. biggest tax cut in

the history of tax cuts and. history do you think well i mean there's no way to pay for so unless all these tea party republicans are more used to be i spoke at a tea party rally where them but we have you ever read where are the send tele started oh yes well i mean ron paul started it to be honest with you but essentially added to this you know you go into florida was saying we need to start a tea party revolt oh it was funny you know democrats love debt and deficit and republicans hate debt and deficits but then when republicans come in power you know the deficit who cares about reagan twenty point six trillion reagan triple the silent trillion yeah and you know military is a great thing they spend on no i mean cutting taxes is a good thing you want to do you want to wish you would you want to do is you want to limit the public sector and embolden and empower the private sector so i'm hear anybody say this let's cut taxes and let's cut spending to where is that was nothing we can cut in this country nothing so we're going. it was going to blow up

the deficit which was six six six six hundred sixty six billion dollars in fiscal two that was right down yeah well the fiscal late may or ends in october your name is spent oh that's like a pentagram and that's what the witches are worshippers you. know. praise jesus i say what i'll say is it's a very big number it's of rising as a percentage of g.d.p. but nobody seems to care about debt and deficits anymore it's ok to increase the deficit as long as we're going to get rapid growth but when you have twenty point six trillion in debt in the national debt and you're running your deficits at a very quickly approaching a trillion dollars per annum you know you're going to have a bond market catastrophe on your hand if you're not careful the bond pint of bond bubble pops and yields spike prices go down i question how much growth you're really going to get by giving corporations a little bit more of their money back well the bond pocalypse as it's called on par i love that you know we've been waiting for the bond apocalypse or somebody wrote

a book about that a couple of years ago yeah i want to have your book coming bond market collapse right now and then you know what i come out two thousand and twelve and that's why you're so wrong about this i'm wrong because central banks here's a guy who actually said i was wrong say i was wrong i thought the bond bubble would pop in two thousand and sixteen hasn't i read that has it really not c.v. and said the same thing now you made me look bad. i'll send you an apology so why is it not pop yet because central banks haven't stopped dominating and usurping the entire free market away from all asset price here's why pharaoh's they're buying everything that's not nailed down and they're buying every bond printed in bank of japan's buying everything why is it not called that monetization it is is that what happened why my republic is why is the dollar not crashing because if everybody does it concurrently there's nothing that the dollar can be represented dollars say why is the dollar crashing the dollar crashes against other currencies so if you measure it against things like bitcoin it is rationing if you are to stay. michael

you got it now you lenders will eventually what's going to happen is the next recession comes upon us and it's going to happen shortly all of the central banks are going to have to admit that hey you know we can't really raise the fed funds rate much above the fed can't raise the fed funds above one quarter percent and the e.c.b. can't really end its taper and the bank of japan can't even think about tapering its asset purchases it's seven hundred billion dollars a year in asset purchase and then all currencies crash concurrently against hard assets and maybe even i have to say i will say that i will say that we're just car like that happen a's central bank is going to go in the stock market as harvey weinstein. i mean that the central bank in japan has kept rates near zero point zero zero zero one percent ten years nothing here a ten year note the better the nation of japan is lending out money ten years

borrowing money for ten years and getting giving people zero percent and here's the problem you mention japan could be here's one of the things i'm one of the lancy i measure money for a living ok so it's not my son my idea to buy a bunch of gold and short the stock market and there's a loser you're beating them aren't going into. the model portfolio was up both years not signal huge dollars the market but it listen i have a hedge portfolio so if north korea bombs the united states tomorrow we're not going to down in the portfolio probably either maybe make it a little money i don't know but. everybody else to get wiped out so here's the point the bank of japan is going to be the possibly the only central bank on the planet a major one that's going to be in the money printing business in two thousand and eighteen and in that case you know abi just reported that the snap election for those three years. he might be witnessing the why more hyper inflation because that yen could really really start tanking as the wii's of the the euro the dollar and

that would bring that country to its knees ok so you measure the country only one way i'm sorry no i talk a lot of no no no i actually want to also talk to you in the right way first i don't want to you will leave the gate there's no stopping michael punt it'll be like the model of the like the you know the horse race the kentucky every other the colts neck they didn't like the doldrums. derby of michael pena so if you're a nation with zero natural resources and you have to import energy and everything else that you consume is that a good idea to have a currency absolutely collapse that it's going to happen in two thousand and eighteen that could be the catalyst for massive market chaos next year these are things i model this these are things i look at to start increasing the gold position to increase my short positions so i make money on the way up and i could make one hopefully god willing on the way down right does an important qualification to make for folks watching at home that might be interested in what

you do and the services that you provide you have a portfolio that is headed i guess you could say and then you can go short and market turbulence and you do have some exposure in gold yes right person settles in general precious metals and we can currency currencies and commodities plays to so we're not there i want to say i'm up fifteen percent this year and everything's going to be great i could do that but everybody's doing that ok but talk to me you know nine hundred twenty nine is coming nineteen eighty seven is coming nine hundred ninety nine is coming two thousand and eight is coming it's coming again and you don't want to be the one caught up in that mess right i mean passive investing has had a stay in the sonnets been working fabulously well against managed for folios for ten years twelve years but everything has you know it's season and we may be entering a time now where more active management is in favor. and the indexes that are not hedge their simply exposure to the s. and p. five hundred one and you could be the last place you want to be in so and that's

actually to stay on our toes as always but the getting back to japan for a second so my comment about it being the one of pouch overseas harvey weinstein and other words every single speculator in the world every has flown in the world to get the cheapest money in the world they first go to japan that's where they get the cheapest money in the world it's the cheapest hooker in america in the world is japan because that's where you can finance your speculation talking about a carry trade yeah if you're borrowing in yen and buying every other asset in the area the higher yielding asset in the car if you can find an asset even to the end treasury bond bank three percent looks great if you're borrowing at zero from japan and then you have maybe hedging that wrapping that with a hedge of you know i pay you know a bit of a fee on the head you're just carrying two percent for free and then you can just borrow that if you go to london they have what's called the indefinite. hypothecation yes to infinity yes you can you can borrow against that was no limits whatsoever you're just state you're just draining money from the system essentially

the ceiling money and here's a scenario that you just laid out i think is very a code a very cogent argument for why you need to be ahead strategy so let's just say i'm correct and the e.c.b. tapers by the end of october two thousand and eighteen were selling we being the federal reserve is selling fifty billion dollars per month so that's when i went to school six hundred billion per year of treasuries and mortgage backs per annum that's the annual pace. and the currency japan currency the yen simply collapses ok that causes economic or stock market chaos to erupt in japan what happens then is that people start selling their stocks in japan and they also causes global turmoil which means what i have to sell my euro positions i have to sell my day. all are based positions and i have to buy back again you're going to have the collapse and then talk about currency volatility could scream higher and just wreck

that nation to be just totally wiped out that nation that's what i'm worried about those are the things that you won't hear in other places but the kaiser report is that something that's very very very important to understand is something that could guarantee to happen next year no but it's very likely to occur and you have to be looking for and aware of it and hedge against ok because we're talking about contagion and we've seen examples of what happens in two thousand and eight the subprime market became contagious and we had the global financial crisis because the academics told us that real estate across the neighborhood and gold down simultaneously and that different regions all of those go down in different rates of depreciation that was wrong and we had the two thousand and eight meltdown and the subsequent bailout in one thousand nine hundred seventy we were told that no sovereign nation goes bankrupt and you had the russian ruble collapse and the collapse of a long term capital management in one thousand eighty seven i was working on wall street we said we heard that portfolio insurance will cover all losses you just had

your strategy and you're fine and then chicago new york went into a contentious eco technological meltdown and you had the crash of eighty seven so here it is today by the way we have before the insurance today in many forms you know has this all the time just selling vix or just right my right i mean where is the volatility there is no volatility in this market any longer and i know i sound like xander and some some cases i'm sure you do as well but. history on somebody a bit coy i sound like the most profitable money manager recommended strategy in the world not my portfolio of gold silver but going for the lessons two thousand and eleven as a perform or a buffett every hedge fund the world every market index in the world an apple computer maybe that apple computer while but before me i am the most profitable investment giver on the planet are ever in the history of what i really think it continues to exist thank you so much but continue on with what you were. talking about portfolio insurance was exists today just selling naked puts buying

volatility to the point where you know selling volatile times or selling volatility where you know you're selling puts you selling volatility where there's hasn't been a five percent correction and how long can you remember last time we actually had a legitimate bonafide correction in this market right selling naked puts is usually a recipe to end up in the graveyard it always has been the risk there is extraordinary i mean the people who are selling naked puts in eighty seven were carried out on a stretcher well what happens when the volatility goes to zero as we are today you have the naked put sell has to go closer and closer to the strike price yeah that's the problem but i we are the biggest options producer in the shearson lehman hutton says you know what over the years ro you know i've sold and bought more options probably than anyone watching this damn show. so you know the problem we got to go to god i wish we could go on but we must leave thanks for being on thank you thank you always going to do it for this edition of the kaiser report with a mask hazaras face there i would like to thank our guest michael of comic thought

to reach us on twitter at kaiser important. how does it feel to be a share of the greatest job in the world it's as close to being a king as any job there is what business model helps to run a prison now we do or don't like nobody over the case and i don't no one comes anymore we don't have to serve them anymore it's cost effective that's what they want to do that at the moment they don't give a damn if you do towards a man actually paying enough to put him back into the louisiana incarceration rate is twice as high as the u.s.n. breach what she quote is behind such success. may not only be tiste but also. deadly for elation ship between kids

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