talked about general electric g.e. and all the share buybacks which did not save that company from well right now it looks like bankruptcy but of course the democrats in the house could rescue it but here is a tweet that shows big u.s. companies spent more money on buying back shares than they did on capital expenditures in the first half of twenty eighteen the last time that happened for two straight quarters was just before the crisis according to this chart from deutsche bank's thorsten stock there you go these are the share buybacks and that's the stock price and we look like we could be in for another crash crash yeah exactly well. a few points there number one share buybacks used to be illegal why for this very reason just hollows the company out it's like debt monetization by government was the u.s. is also engaged but is kind of like that mt is ation for a corporation which follows a corporation in a corporation collapses number two this is obviously why there's only for structure

because companies that are in the infrastructure business are buying back their own stock instead of building infrastructure number three were they get all this cheap money to buy back their own stock oh they're going to from the federal reserve bank oh wow even if their reserve bank enables a contactor c yes is it at the center of america's descent into financial armageddon yes can you blame the fed for such things as the infrastructure collapse across america the ecological collapse having california wildfires and hurricanes across the nation and the busted pipes in detroit leading arsenic poisoning in lead yes yes you can because they give money to the bad people because the bad people have leverage in a club dark or c. there is that but importantly all of that started in the last episode we pointed out that general electric shares had an all time high in two thousand. just as bill

clinton exited and left behind the destruction of glass steagall and the introduction of the commodities futures modernization act so all those that hyper financialization and the extraction of all the wealth and the looting of the nation and the wealthy had been created over the previous generations was possible only once you know clinton gave that as a gift for all of his you know exiting treasury secretaries and other officials who then went on to work for the same firms that engaged anomalous financial engineering so from two thousand we've seen that you know the total destruction of the wealth creation machine in this country and you also see the decline in average wages really start to drop off then from then on the wealth and income gap really take off as are the wealth extraction you you know the stock markets have become a tool for wealth extraction not wealth creation that it used to be so they extract

all the wealth and who owns all the shares but the top ten percent but especially the top one percent of the population and they extract all the wealth and all those people who are working at these companies have to work for a wage if you don't hold these assets that have now become like a carcass to be picked then you're going to be a sucker like one of these useless class as they're now being called a lawyer bring up an interesting point there on a subtle distinction can be made between money printing and financial engineering which for the most part means. exaggerating or expanding the ability to borrow so clinton did with the commodity futures modernization act and they were ducks and glass steagall allowed corporations to put up ten cents for every dollar they are own or even one penny for every dollar they borrow but one one hundredth of a penny for every dollar they borrowed so that means that the asset base that girds

this upside down pyramid called the american economy is getting smaller and smaller and smaller more as the debt gets bigger and bigger and bigger that's an unstable structure that means at some point it topples over and some point if you will leverage when it becomes to the point where it is now where the interest on the debt is a line item on the budget that exceeds some incredible spend like military i believe. you know you are talking about a hyper inflationary collapse of course there are some nations and companies who are investing in the future because they're the rising power and that's china china's leading by far the way just google this you know china capital expenditure china cap ex and there are leading the way by far in semiconductor capital expenditure so investing in innovation or investing in you know creating new

products for the markets whereas our corporations are tending to. not invest in any new innovation but instead just handing it out to some oligarchs who are like ok this game is over for our economy let's just take as much as we can and live in a happy like retirement for us as china takes off they're also leading the way train is leading the way in oil refinery x. investment and also our telecoms where of course we have you know basically the telecoms have divided up this nation down to individual states or territories so you know it's usually just one telecom company that provides the internet internet infrastructure to an area that's your only option. what do you going to do if they if they have bad service you have to use them anyway. so i want to look at one story as well that ties with both of these in that trump's tariffs on china and his sanctions on them it's like half the world including russia has led to this

interesting tweet with some information about trade between china and russia fresh statistics on china russia trade is out trade volume for ten months is eighty seven point two four billion which is up twenty eight point two percent on twenty seventeen russia exports to china are up forty four percent to forty seven point nine seven billion and russia imports from china are up thirteen percent to thirty nine point two seven billion beijing and moscow are on their way to landmark one hundred billion dollars with russia running a surplus oh and the cats away the mice will plea. take america out of the picture and china and russia are going to do deals they can do a lot of deals they're going to continue to do deals to going to create a parallel currency to the u.s. dollar going to create a parallel system to swift they're going to get out of our corrupt forex trading in library manipulation and interest rate manipulation and they're buying hundreds and

hundreds and hundreds of tons of gold so they're preparing for a post u.s. dollar in germany and a new world and it's all happening before of area as well again like we kind of our all the guards made a trade with china which is like here you take all the jobs from our shmucks the bottom ninety nine percent you take those jobs which helps us in our own country because it makes them weaker and they can't have any impact on us we can we have more and more wealth relative to them and we can own the political system you take. our jobs but in exchange that they became very powerful so here china not only has one point three billion and of course they notice that the u.s. is still in afghanistan we didn't even have a military they're still in iraq which was only a population of twenty five million people in

a desert and they couldn't contain them so what hope do they have for a huge wide diverse china. you know environment and national you know that boundaries and massive natural you know protection and one point three billion people to call up to the army but you know when you see that you know the iran sanctions have now been put back on an even harsher than previous sanctions and china is the only one still buying oil from iran because they can. everybody else has had to stop but you know the fact is around has a lot of sovereignty that most other nations don't in a unit polar world almost fights are very good and the point about the loss of jobs not only benefiting the oligarchs financially but making the population soft and weak and easily susceptible to political manipulation as well financial

manipulation is a strong one you know it's amazing how population of over three hundred million people america can collectively suffer from p.t.s.d. you know i can trigger p.t.s.d. right now on americans by just saying one word. you know in the comment section will be. fifty comments here the word climate change gun. so i just say that one work without any context and the entire population will be sidetracked from everything we just said and being triggered there p.t.s.d. triggered in their need to flame a little bit in the router no you needn't fear it will only get them going but that's because that's the only thing that can be taken from them right now in the second amendment it's quite sacrosanct their jobs have been taken their dignity has been taken and everything else has been taken so what you know their future has been taken so at least they have the ability to hold a gun but i do want to point out another final headline here from china which might

it's hard to get reliable information out of china what's actually going on because you know much of in the west is it's in too many of our analysts and what's actually going on there but fifty million empty homes in china third home purchases soar soon to be published research will show that roughly twenty two percent of china's urban housing stock is unoccupied according to professor ganley who runs a main nationwide study that has up to more than fifty million homes that are empty and here's a shop to the job of the blue line is third home purchases going back to two thousand and six up to two thousand and eighteen as you see as house prices become more and more expensive. those with one home or two homes already are able to extract equity and invest in other homes whereas first time buyers are ever declining because they can't afford to find any equity which to put a deposit and then you know so it looks like a classic ponzi scheme there and you have fifty million empty homes they don't have

a very advanced financial system so that also adds a little bit of an explanation to why they they see homes as basically a safe deposit box because they don't actually have a sound banking system but this looks on paper at least precarious yeah it is precariously there's a housing game and the thing about housing is that it gets a wasting asset it falls apart unless. sure there these fifty million homes are simply not being maintained they're just rotting they create the i've seen the cities in our cities and you know within five years they're going to be have to tear them all down so paul krugman of the new york times to be happy because you know he loves to create work make work you know for people to create g.d.p. and well the chinese government does think like that actually they do think putting workers to work is their citizens to work there one point three billion is is worth it in terms of social stability but i know you're talking to mr more about talk to mr about that because he'll have the lowdown and that's coming right after this

break we have to take a break now but when we come back i know we're having so much fun we've got to come back and after this break don't go away. seems wrong. but i. just don't. get to see. this day become active. engagement equals betrayal. when something find themselves worlds apart we choose to look for common ground. nobody could see coming that false confessions would profile in this book wish the phone. books had any interrogations out there what you'll see is threat promise

threat promise threat why a lie a lie the process of interrogation is designed to put people in just that frame of mind make the most comfortable makes them want to get out and don't take no for an answer don't accept or deny. she said therefore would. say i stayed there i would be home by the next day there's a culture and accountability and police officer. first know that they can engage in misconduct that has nothing to do with fall the cry. of. not me. any of it i don't want to go and i'm going to get it. done.

welcome back to the kaiser report imax keyser time i got to chicago to talk with mr shad lock of mish talk dot com miss old buddy welcome back his of pleasure max i'm government do here now let's talk about a bloomberg case recently published an opinion piece entitled capitalism is not working noting that most wiles of the past decade has gone to the top one percent while the wages for the bottom ninety nine percent are either flat or falling ok this is a big piece of mesh it big thoughts on capitalism what do you think you know the answer is well as i do there's one max known whom a year is smart about this is i am. they're not they're blaming

a symptom here the symptom here is wage inequality is a that's just the symptom that's not the problem ines not cap it's not a failure of capitalism if you want to look at the problem here why we have this symptom it's the central bank bailouts of banks it's all the free money to banks it's the bed keeping interest rates too low too long fueling asset bubbles they did in two thousand then it again in two thousand and seven with ousting bubble they did it again now with the everything bubble here and you know they were going to loan us was look at how much money these c.e.o.'s are making well you know what if you don't make money so cheap for them to borrow money to buy back their own shares and speculate you know maybe they were happy ok let me give you my take on this and get your thoughts i've said often on this show that you can't have

capitalism without capital and yet have capital without offering a savings rate that encourages people to accumulate capital and without that kind of an sent. to capital and and encourage savers to save money it don't have capitalism your thoughts you don't have capitalism when you've got all of these regulations and then that's another thing you know those say well you know they deregulated the banks and want to do that oh the problem is we've got fractional reserve lending that lets banks fraudulent legal and money and then when they do stupid things like lend money to argentina or south america or wherever or where or or the dot com companies in two thousand you know then when those things blow up we bail out the banks because what too big to fail that that that's crazy so. and you know right now you know we look at the there's like eleven or twelve

unicorns are signed these huge billion dollar tech companies that have no profits haven't had any profits for years they're kept alive by these you know zombie financing look at all of the fracking you know the this is going on in these companies are struggling to pay bills if interest rates rise high enough so the zombie corporations are going to go under you know you know they're like the claim is that we have this job shortage racks and we have us shortage of skilled labor it's ridiculous it's the same thing happened in two thousand and seven where they claim we had a shortage of out ok and the proof of that at the time was people were lining up outside the street all the way around the block waiting to enter a lottery for the right to blow up by a florida condit so it certainly looked like we did not have enough condos in

florida in two thousand and seven. you know it's we had an amazing glut of them and no one could get rid of the things and now zing bus the same thing is going on right now max in the jobs market here it looks like we've got a shortage of labor but in reality it's a couple of things but to actually i think corporations are just ever tasing for jobs that don't exist at all so they can get these h one b. visas in from overseas the second component of that is that financing is is so cheap you've got a bunch of zombie corporations they can afford to pay anybody so wages are down but they're actually looks like we've got a shortage of workers who are describing the the lines around the block to get a florida condo and how this was positioned as a shortage of condos in reality it was financial manipulation it reminds me

of images from the soviet union of people lining up to buy bread there's no bread because that economy fell that economy didn't work because it was a poll of p.r. oh it was centrally planned and it did not allow for the market to clear prices what you're saying and what i've observed is similarly in the united states you have a market that's failing to clear prices using a price discovery mechanism matching buyers and sellers in a free market everything is now paula piero everything is centrally planned as you pointed out starting with the federal reserve bank it's a polak bureau of money manipulators who set the price of money in an economy that's supposed to discover the price of money in a free market so as the fed has gotten bigger and it's now i think ten twelve trillion dollars the balance sheet as ballooned as a way to bail out all these failed banks it's grown in power it's grown and it's an

influence and so. adding the prices and to speak and now it's much closer and ironically it's closer to the second in and it's in its performance and what's happening to the economy then america let's say circa one thousand eight hundred fifty five or one nine hundred sixty mesh you said the key words max there is no price discovery now it's coming. and if is not going to like it when it gets here they all of a sudden you know oh these franchisees all these people to borrow to put a new mcdonald's in a new piece or a new nail salon and all of this kind of activity all of these companies that are surviving in the fracking business looking like them a shortage of. skilled workers this all comes tumbling down once the psychology of the stock market changes in corporations no longer stop

start buying back their shares of stock which is one of the things that's been proposing the market this is all going to come into our head whether this is the catalyst here today i don't know the curious saying is trump is blaming democrats we had a profit scare today and you know one of the suppliers to apple to the i phone is reporting a slowdown well this is another thing how many more phones do we need who needs a phone that doesn't have one so the same thing i said in two thousand and seven. who needs ows the didn't already buy one so. we're going to have another technology bust. and then we'll see where the alleged shorty of workers really has to repay

a point there they the price discovery day of reckoning is is not far off and part and parcel of this discussion would be according to e.b.'s the wealth of billionaires rose by nineteen percent last year the bottom stayed flat or fell and i would say that is part of why air saying there this whole rise of the insta billionaire mesh e.-s. and if you look at real median wages are flat since something like nine hundred ninety five there abouts i looked at it the other day i don't remember the exact year the real median wages men are actually on the decline max and what's keeping our households up is a relative rise of women keeping things more or less study so but the median report had a laugh at this there were there was an article that came out actually

a couple of last week that said. houses are as they. are cheaper now to buy than they were in one nine hundred ninety five so what you know they they did not look. at. how much home prices have gone up. they're just looking at the average rent person that someone has to make well maybe the person it's had a house for ten years is paying last and last but to me affordability is about the marginal buyer being able to go out and buy outs there are more absurdly price now than ever and that's part of the housing decline we're seeing right now people just have stopped chasing houses here. resales on houses down six or seven months in a row this is another nail in the coffin and so many recessions have started with

aus and bus max we might see another one right here and that's allegedly where there's been another shortage of labor by the way we don't have enough people to build houses well we'll see about that want to mix let's change gears for a second and talk about china let me give you the bullet points there. are a lot of wealth increase in china. china leads away and patents especially feature technology like artificial intelligence concurrently you recently published a piece mesh talking about fifty million empty homes in china killing a billion in mostly fraudulent peer to peer lending schemes in china. so can you give mr view on china now we've got two themes going here one is that their economy is growing they're leading technology that got artificial intelligence and the same time they've got a bust and a huge ponzi scheme peer to peer lending and there seems to be a lot of

a lot of things happening at the same time as take to walk us through how you say this one playing out the capital controls that china put on to stop the outflow of warren has slowed housing in the us west coast and also in australia australia is going through a big housing bust right. now simply because the buyers in china have given out and went with five hundred five hundred million empty homes fifty million empty homes in china and most of the recent demand has been from people second home third buying counts for i think the number was like close to seventy percent call it sixty five percent of all new homes are are from second and third buyers china is on the furch of a huge bust with these empty homes sitting there once the credit market in china

starts to turn down certain other stock market over there is is giving that signal right now that something is wrong and either we're going to see some follow up there we've got state owned enterprises over there that are insolvent that china just keeps bailing out and keeping alive at zombie corporations over there fifteen percent of the companies in the s. and p. five hundred here zombie corporations all the zombie corporations are keeping workers employed. and then to keep happening as long as they can get financing so it all ties back to that we're on the verge here i think of a huge global slowdown it's going to hit the equity markets hard in wrapping messala you are one of the early champions of professor steve case who called the crash in the australian property market a few years ago looks like he was a bit early but absolutely right all right michelle like thanks ray on the kaiser

report pleasure beyond max look forward to it next time and that's going to do it for this edition of the kaiser report with may max kaiser as they say i would like to thank our guests they always excellent miche shad lock of missed talk dot com if you want to catch us on twitter it's kaiser report until next time by. suitable to sleep for. i built for sunday and this is a our. role is going to say employ a business with a must do so it will. this is.

not a slow slow slow slow slow motion i am. on . the case is that i'm going back to the bios to look at the money but it's diplo it's not so good for the show such as the flute solos that. you were doing you must. move. i don't think the democrats are much more didn't go shape with the republicans or president so i think people are going to have to acknowledge that the united states over the next couple years is going to be consumed even more so by our internal our

turtle bickering in affairs and. blushes on the. morning the beach. for a team you'll be set it's. not only shooting against. the utility bills you know i said. you needed. a user that i was going to want to have. to show. the truth. given to us not to the south korean users tell them not to be some cool when you come to.

the mummy of what you call british mr bush i am oh sure because. saturday top stories here on r t the pentagon fails its first ever audit with hundreds of millions of dollars knowledge needed to fix the problem is revealed. he hated the new d.j.'s. crowds and cabinets them on the german chancellor's resignation as i'm going to medical visits to the city months after a deadly stopping of a local by migrants prompted riots. public outrage in ireland after a man is cleared of the rape because of the underwear those.