gas through fracking peak credit. the central bank system peak everything now the remarkable thing that you and i have we have said this for years since the first episode i could find was back in two thousand and nine or ten that we covered fracking and how that that cost more than they extracted in value and we got reported by the d.n.i. reports in front of congress as this is somehow anti-american that this the fact that we've pointed this out but now this is the new york times is ben reed tweeted and pushed also by paul krugman so we're going to go into some of the details that they're now coming around to in twenty eighteen that you and i were saying you know seven years ago eight years ago as well warning people about this but some of fracking is biggest skeptics are actually on wall street bethany mclean points out the sixty biggest exploration and production firms are not generating enough cash

from their operations to cover their operating capital expenses in aggregate from mid two thousand and twelve to mid two thousand and seventeen they had negative free cash flow of nine billion dollars per quarter a key reason for the terrible financial results is that fact oil wells show a steep decline rate this is something that you and i have pointed out the red queen syndrome there's a huge steep decline rate and you have to keep on track in fact in fracking many people in the comments would say oh you know this is just propaganda and i report did also say that as well but here i'm going to read you some actual data from the kansas city federal reserve as part of the u.s. federal reserve system and they say the amount of oil they produce in the second year of a fact well is drastically smaller than the amount produced in the first. reading

to an economist at the kansas city federal reserve production in the average well on the back and a key area for fracking shell in north dakota declined sixty nine percent in its first year and more than eighty five percent in its first three years a conventional well might decline by ten percent a year for fracking operations to keep growing they need huge investments each and every year to offset the decline from the previous years well well this is going to require a massive bailout so in other words in two thousand and eight the banks over lend it and they get bailed out the creditors got bailed out here they're fractures over tracked it with too much borrowed money and they're going to need a massive bailout bill because there are systemic lee important they'll be considered an industry that we can't let go under especially when our in bitter lock competition with the other gas producers of the world and they will get a massive bailout it will be probably the excuse for a quantity for a q.e.

for will be ushered in with this bailout this will be the reason for that for that bethany mclean now in the new york times seven years after you and i pointed this out is now saying that the federal reserve is responsible for the fracking boom this is her exact quote because the industry has such a voracious need for capital and capital cost money fracking could not have taken off so dramatically were it not for record low interest rates after the two thousand and eight financial crisis and other words the federal reserve is responsible for the fracking boom so they drove interest rates down to zero percent to bail out the creditors of the whole subprime financial system and all the fraud to cover up all that fraud that went global and was in pension funds and municipal funds all over the world so they drove rates to zero to drive to bail out the creditors and now what that did. zero percent interest rates we have

a baby boomer population that was also beginning to retire soon after the two thousand and eight financial crisis and their pensions were being paid out and pension funds needed to look for yield wherever they could find it and it was their investments in private equity and hedge funds which mostly has funded this cheap easy money to the factors because they're paying a yield which is much higher than zero percent a mere ozzy or a fellow at the columbia university center on global energy policy calculated that the industry's net debt and twenty fifteen was two hundred billion dollars a three hundred percent increase from two thousand and five but interest expense increase at half the rate that did because interest rates kept falling dr azhar recently called the post two thousand and eight era of super low interest rates the real catalyst of the shale revolution and you know by the way there has been an amazing you know development in the efficiency they are able to extract.

oil and gas tracked oil and gas at a much cheaper price than they used to be able to but the fact is that interest rates are now starting to rise so you know. they're in a race against time well you know what's the difference between a conspiracy and a conspiracy theory ok so what's being described by the new york times the role of the central bank in the fracking industry is clearly a conspiracy you have a conspiracy going on between wall street and the energy companies to create a fake energy boom an unsustainable debt that's a conspiracy now when we reported this five six years ago and gave the exact same raisings that the new york times is giving today it was called conspiracy theory all conspiracies begin as a theory it's called investigative journalism investigative journalism is a theory about a conspiracy and if it proves to be correct as we were in this case it's just

a conspiracy the new york times will get a pulitzer prize for reporting on this piggybacking on our work for the past five or six years as they normally do now what we did always look at what wall street was saying and wall street was noting that the absence of profits on the actual you know wealth so they however continued to make money from the pension funds who kept on lending giving them the money to give to these factors so that it's been you know everybody's been happy because of the whole red queen centrum that the debt had a natural need to keep on recycling recycling and spinning and spinning and spinning so if companies however were forced to live within the cash flow they produce these are the words of the new york times american oil would not be a factor and the rest of the world and investor told me this is what we said. you know many nations have government spending policies they send a man to the moon as

a matter of national security or national interest the fact that they're pretending that this is somehow like not some sort of policy that benefits the nation. in terms of oil sort of wars. that's another thing and you know but here in investors telling the new york times american oil would not be a factor in the rest of the world if it were not for a zero percent interest rates well they're fighting the geo political battles with debt and they're slowing money these problems and the other countries are they're fighting against russia china iran are taking the f.e.m.a. being thrown at them they're buying gold eventually when they the fan hits the the problem you know the gold will win out as it as it always does the other thing is. the new york times and this piece believes that it will cause the next financial crisis. i don't think directly that debt well because it's only two hundred three

hundred billion dollars compared to the trillions of dollars that was a subprime mortgage debt and that have been packaged up and sold to people all over the world these are debts that won't be able to really repaid clearly but they're held in pension funds and pensioners and america not getting their money anyway everybody knows it's all a sham but i think the knock on effect if these companies do go bust then that oil production that i showed you in the first chart because remember this is how much oil the u.s. produced from the eighty's all the way up to two thousand and eight when it took off when factoring was possible but when oil prices do rise if those debts full you know are unable to roll over then then of course you could have a financial going to have a contagion number lehman brothers was only seventy or eighty billion dollars but it caused a multi hundred trillion dollar collapse so i also want to turn to these tweets from paul krugman because paul krugman is one of these russia gaiters and sort of

conspiracy theorists that's pushing all these conspiracy theories and here he is here's a tweet stream from the reporter who uncovered the truth about enron why the fracking boom is a death sustained bubble headed for grief although not as the headline suggest the likely cause of the financial crisis two it's worth pointing out that fracking has received an incredible amount of hype especially from people who explicitly elevate its importance as compared with renewables hello watch years of kai's report where we said exactly that that it was actually cheaper for solar wind and. hydroelectric power than even fracking and without causing all the ecological devastation we're not even talked about that all the carcinogens and water uses this stuff and now fracking is in trouble while the new bills just keep getting stronger but i guess so. people have a hard time taking hippie dippie energy sources seriously we're not hippie dippie energy sources but we've been looking at wall street was saying and what the actual

date on numbers showed and the return on investment return on energy and the fracking sector well paul krugman or tom friedman another columnist over there at the times they have great grammar and good punctuation but their content is worthless i might also point out that paul krugman in two thousand and eight was calling for an alien invasion in order to get people to work at least this is the equivalent of an alien invasion doesn't make any sense but you're throwing money into a pit and that's a way of saying we love it why doesn't know this is caves in india you should be loving this oh that's right you're completely inconsistent you just go with the flow like a dead fish in the river a lot of the newspaper you work for the new york times baseball fricken ridiculous struggling well we got to take a break here and contemplate all this genius content you've been spoon fed from max the stacy for years making you the smartest person any cocktail party you've ever been to so don't go away because there's going to be

a lot more genius coming your way right after the break. my body told me that i belong with the born but my thoughts my mind was tiny and that along with the girls. i was rather sobering thoughts to be of any particular. football person. dr. i was born a male had a sex change when i was thirty years old. i've now been living as

a woman for twenty eight years and i fully regret this. problem should have gone away from it by now but they hadn't so these surgeries are nothing more than plastic surgery i've had several female to male friends and you look at it and you just go oh god you paid for that it's horrible nobody can change genders is impossible. is delusional it's a mental illness. this is now where one of my bones and flesh of my flesh she shall be called woman because she was taken out from a. you know world of big parts of the lot and conspiracy it's time to wake up to dig deeper to hit the stories that made history media refuses to tell more than ever we need to be smarter we need to stop slamming the door on the shouting past

each other it's time for critical thinking it's time to fight for the middle for the truth the time is now for watching closely watching the hawks. prosecution will need to become almost. a false bill designed to take over you who pushes this thread you'll find it's almost up by the number one place you do i mean yeah i mean i mean political pressure on the only main conclusion of security to mr nose would pull your fund out of business models used by american corporations. of one thing called police sold them could matilda's you to use if you choose c.m. i know was macomo see. you said if. this is.

just somebody closer to the team. an investigative documentary. ghost war. welcome back to the castle report i'm asked as are time now to turn to wall factor of wall street dot com wolf welcome back thanks for having me back mark max all right let's talk about argentina they issued a one hundred year bond recently promptly started selling off it looks like it's a absolute junk what's the update. well like many emerging markets argentina has trouble borrowing in its own currency cheaply because it

continues to destroy its own currency and so it bars in a foreign currency and a year ago well he ago it was able to sell all kinds of bonds denominated in u.s. dollars and some other currencies and one of those bond issues was a century bond as hundred year bond you mentioned you know argentina defaulted on its foreign currency dead about six times in the last six decades or so so on average you know you'll get a default on its foreign currency debt about once every ten years and a hundred year bond you know he can figure out how many of you false that will be before the bond matures so people bought that bond because at that time interest rates were really low in europe they were it was just zero and that bond offered a pretty good yield and so people in this toure's institutional investors particularly this i don't say we're going to chase this yield referring to by this

bond and this yield you know surely the i.m.f. will step in to guarantee the bond and which the i.m.f. as i had a history of doing and that bonds out there that argentina's currency has plunged by in two days last week twenty five percent you now and about fifty percent so far this year it becomes very difficult for argentina to service its foreign currency debt and that foreign currency debt has been sort of guaranteed by the i.m.f. with a fifty billion dollars bailout package. central bank of argentina is following this money selling dollars and buying pesos to support its currency so this doesn't bode well for those bonds. well you know wolf argentina is never coming back for some basic mathematical reasons you know back in their

early one nine hundred eighty s. under george h.w. bush and the players on wall street like citibank argentina was loaded up with a lot of debt that they couldn't possibly pay back men them who was late in the country at that time turned out to be completely corrupted in the pocket of wall street the central banker of that time come by had all of his washington consensus led theories about how to run an economy they sold off over two hundred state assets the utilities the airports they've got no income producing assets was so are at ever in argentina is dead there's no economy there ever to support a one hundred year bond is like saying we were a zombie were dead were never coming back but is beautiful wealth because this is the original greece the original brags that the original country committing financial suicide and is back it is beautiful and it's argentina and it's corrupting the global economy again along with turkey and all these other basket

cases well this is fantastic praise me right back to the early one nine hundred eighty s. and the beginning of my career this beautiful wall. yeah i mean it's funny how these things repeat themselves you have to remember who. now says the stakes repeat themselves in those of foreign investors those investors that are buying these argentina bonds in argentina now has one hundred twenty billion dollars in dollar denominated and out there you know there are two sides to this trade other side is the bias of these bonds in my old rule is you don't ever lend money in a foreign currency to the government or argentina you just don't and argentina's don't trust their own currency it's getting crushed you know for ever it was picked up the dollar with the peso equals one dollar back in. two thousand and one then the case though as. well and so now the pesos worth about two point five

cents eighteen years later this is hard to do you know does it you know it constantly falls in its own currency through that way at the same time you know you can't do that with foreign currency but there are constantly new investors out there that say said he'll buy these argentine bonds and they make this possible to the neighbors in this and you know they're not listening to me they're not. realizing that you know the sponsor going to get defaulted on yeah ok but argentina is an occupied country it's occupied by corrupt wall street bankers has been for almost forty years and the us media likes to say oh it's socialism that's because killing argentina and but they because they need a cover story to cover the facts that argentina is one of those countries that is part of the american empire building that by passing bad debt and getting countries into bad debt situations this is how america rules these countries argentina is

a vassal state america has been for close to forty years and they screwed up the fucking war you know now there's no coming back for these folks basically i don't think now the i.m.f. is lending them fifty billion dollars their largest bailout ever you know the i'm. half is basically. you know the why. of international finance their payday lender they should have been put out of business long ago is this a good thing that the longa of international finance the international monetary fund is helping argentina wealth well it's not really helping argentina it's helping the bondholders you know the us entry bond said that you mention it first there's a lot of the fact that the i.m.f. is stepping in to help support that foreign currency debt that's you know that i'm if it's the lender of last resort for countries that bar in dollars or in euro's and and can't and can't print away the debts so yeah the i.m.f.

is the guarantor of sovereign bonds to bondholders you know that argentina is going to have to make some sacrifices argentina people you know they're going to pay for this obviously you know and the. purpose is to make bondholders whole so you have i met responded on the government of argentina was asking dime if to for this bailout and so the i.m.f. or spawn it but it's really a bondholder bailout it's not really about a lot of argentina itself but of those bondholders and many of them are in other countries some of the margin times themselves that buy these dollar denominated bonds to get the money out of pesos but it's spread all over in a lot of his you to show funds have this pension funds and so forth that need some yield and those are the us again to benefit from that i'm if bailout i agree with you you know that i have should should not exist sovereign country should default on the debt and bondholders should figure out how to how to take the losses and go

on and but that's not happening we're not we're trying to create a world where sovereign bond holders and it was money. right but you know the i.m.f. lent the money to begin with now they're buying it back just like the federal reserve lends the money to begin with then it buys it back to quantitative easing these are all accounting tricks by central bankers and argentina has had a track record of the most corrupt worst most evil central bankers ever in cahoots with wall street banks and the i.m.f. and the world bank and all these other central banks and the problem is always the same yes the argentinean people like the venezuelan people like they iranian people like the cuban people like all south american people latin american people are getting absolutely shellacked by the machinations of an extraordinarily corrupt central bank system but the argentinean people i don't think they have much of a recourse i know that according to oxford economics only about eight million of them paid taxes last year twenty one million were drawing caste

transfers and subsidies. can you comment on that the argentina central bank is part of the ministry of finance and has been since the one nine hundred thirty s. when the government nationalized it so it has been used for ever to pay for political promises so these handouts you know argentina doesn't have the money it doesn't collect enough taxes so there are generated by the central bank that is part of the ministry of finance and that is what crushed the currency you know so this is a political system that is essentially funded by the central bank and has been for decades and it doesn't matter what shade of the government is that's how the country has been set up for the last many decades and they're continuing to do this to this day you know that hearts to currency that hurts interest rates and john in argentina now sixty percent six zero point zero you know that is just huge he can

essentially lend money in pesos easy just as it were. so you have to ease another currency that you can't control and that's what the central bank has accomplished and you know the central bank is the minister of finance which is the government which changes shape from time to time but the myth remains the same you make promises you can't pay for with real money to so to speak and then you create the money to fund those projects and then you know yeah i'm surprised that even eight million argentinians pay taxes i don't know why that number should be anywhere above zero because all you're doing is making the problem worse by feeding the kleptocracy you've got to stop feeding the crocodile if you want to it's not get eaten by the crocodile i know in venezuela you know they're they're turning to crypto currency to try to extricate themselves from this type of nightmare possibly argentinians i know our friends over at dash are down there on the ground teaching

people about crypto maybe they can stop forty years of such a bank corruption fairly well let me ask you something many connect the emerging market currency crisis to the fed beginning to unwind quantitative easing and raise rates so you know the fed is doing a little little dance that the latest episode of their. dance avails where they pretend to be doing something worthwhile your thought you know there is a broader emerging market that is being felt. dollar barring us become more expensive so people say there's a shortage of dollars that's really really not the case where day is a more expensive dollar so emerging markets and we have to pay more. to invest into the markets and that creates this impression of it or not enough dollars and then rich markets are plenty of dollars which is more expensive and this makes

a lot of these equations a little bit difficult for the broader emerging markets but argentina and tricky those are you. problems are far exceed any dollar issue these are when the pace of plunges twenty five percent in two days that is unrelated to the dollar the same with the turkish lira or when the when these currencies drop in the teens you know from from a few days earlier that's an internal issue and on the other hand when it went fairly. it how well the emerging markets have. ever an issue with with their own currency. that could be based on the dollar but in terms of argentina and turkey those issues are purely country specific and you mentioned a lot of the issues in argentina you know that is unrelated to the dollar. how i guess mission complaints and lies that the argentinean tomfoolery is makes

americans rich so thank you argentina and venezuela we benefit from your political mess up anyway well thanks so much for being on the kaiser report thank you max ok that's going to do it for this edition of the kaiser part with me max kaiser and stacey herbert want to thank our guest well for rector of wolf street dot com until next time i yell. pranking gave americans a lot of new job opportunities i needed to come up here to make some money i could make twenty five thousand dollars as a teacher or i could make fifty thousand dollars a year truck so i chose to drive truck people rush to

a small town in north dakota was an unemployment rate of zero percent like gold rush is very very similar to a gold rush but this beautiful story ended with pollution and devastation a lot of people have left here i don't know too many people here and just slow down so much they lost their jobs got laid off and the american dream is changing that's not what it used to be. and it's a tough reality to deal. with politicians to do something to. put themselves on the line to get accepted or rejected. so when you want to be president. or somehow want to be. the two going to be cross the saliva before three in the morning can't be good. i'm

interested always in the waters about how. this should. forman or sitting in a car when the fifth gets shot in the head. all four different versions of what happened one of them is on the death row there's no way he could have done it there's no possible way because the list did not share around a corner. i was up. i. was i at least.

was i. was asleep at the time i. brush warns that terrorists are preparing a chemical attack in the province that is after crisis talks with turkey and iran and a tense debate at the u.n. security council. germany security chief questioned reports and videos of anti migrant mobs in the city of cabinets. and a new political party in ireland pledges to follow britain's example and leave the e.u. . are broadcasting live direct from our studios moscow this is r.t.

international and john thomas certainly glad to have you.