it's time for critical thinking it's time to fight for the middle for the troops the time is now watching closely watching the hawks. after almost seven years confined to the ecuadorian embassy in london police drag. and place him under arrest. no hero while the british prime minister and officials praise acquittal for ending the song just. community brands it's a dog day journalism. has preceded me any journalists can be extradited for prosecutions of the journalists in a song in our faces extradition to the us where the justice department has revealed

he's wanted for allegedly conspiring to government computer. karen's here for the top of next hour with another news updates in the meantime stick around for the cause a report you're watching. a everybody this is the kaiser report kaiser you know a lot of people are questioning capitalism these days you've got radio famous hedge fund manager in connecticut he wrote a long piece about capitalism failing how to cure it what should we should do and all this other stuff and it's become a big topic. ok you know ray deleo we're going to get into that actually i think the next episode all will cover that his whole insight into the u.s.

economy but he did say capitalism is failing a huge percentage of the population but is that you know when you say that a lot of libertarians an austrian economist source will say well it's not actually capitalism we have you know just like those marxist will say well that's not really socialism that's why that's failed now we have people say oh it's not really capitalism it's crony capitalism or it's the central banks intervening well we have a few stories here about central banks and how they have caused the mis allocation of capital because of course capitalism is all about allocating capital and creating the strongest economy well here we're going to look at the misallocation of capital the e.c. be proved essential bankers are bad capitalists the corporate securities purchase program has distorted the costs of money allowing companies to make questionable decisions so that is a c. s. p. p.

and that is a program in from the european central bank and i didn't realize that this program was actually going on in such a bizarre way the european central bank has read recently suggested that they might start buying corporate bonds again this is a they're going to revive this program this see s.p.p. the author of this article on bloomberg says well consider germany's eiji bear which agreed to buy month in may of two thousand and sixteen for sixty six billion dollars in what was then the largest all cash merger ever announced the deal was controversial from the start as bear was going to need to raise billions of dollars traditionally this means a company must go on a road show explain its plan in great detail. without evidence of a credible plan capitalists will not part with their money but the e.c.b. is not a catholic they just gave bear billions of dollars we don't know how much they

haven't revealed to by monsanto so become a central banks right they're supposed to be the lender of last resort right they're supposed to be in the background supposed to be there in case the banks get in trouble so that deposits are safer it's a backstop measure of the central banks that's what that's why they were created but now over the past twenty five thirty years they have become essentially hedge funds so they're looking for investments and they're the first place that people go with a dodgy deal like this one. and as a result they crowd out competition without competition and you don't have. capitalism relies on competition so competition means if you have winning ideas or winning companies you survive if you don't you don't survive just survival of the fittest is competition but if you have

a corrupt central bank who is willing to finance dodgy deals and it crowds out the good companies in the end up with a lot of bad companies in a crowd of competition and you end up with a with a with a crony capitalism or cronyism of course it yet crowds out competition because competitors to now behrman sound because they were already like all of us now they've become monopolists these huge conglomerates that control the seed supply around the world and never the less you know a bear bought this at the wrong time because months and has been hit with all these round up carcinogenic sort of. lawsuits and they're losing unfortunately for europe the european taxpayer who is underwritten the centrally these e.c.b. dodgy deals with the well connected bear of course is a very well connected european company they're very powerful and they have access

to the guys at the top and when bear went on this road show well they normally would have gone on a road show if they needed to raise sixty six billion dollars they would have had to go to you know private equity guys and hedge funds and pension funds and try to convince them that this is a great deal of this is how they're going to make money they didn't have to do that in fact the european central bank this corporate securities purchase program all they require is that you're a european company that your non financial company and that you have a aaa rating or a investment grade rating from the ratings agencies remember those rating agencies that blessed all those dodgy. derivatives that took down the economy last time so that's all that u.c.b. required and they gave them money and we don't know how much they gave right so it's a huge deal the sixty bill diligence or any form of documentation to justify that valuation they simply did it and shake deal with the european central bank of the european central bank prints its own money so you know that they should not be

allowed in the marketplace to do deals if they can just print their money to do these deals and every time they make a mistake they just print more money and they've already been seeing them do that on a geo political global basis where they do mistake with bailout or some kind of i.m.f. mistake they just print money now it's being that that methodology is working its way down to the corporate level and of course you know month santo you know when you talk about the absence of competition they've been more responsible for wiping out small farmers around the world whether it's in india or the united states that company is destroyed. millions of. you know lifes lives you know their lifestyles their totally destroyed financially these sort of small farmers in terms of this a corporate sector purchase program this is what the e.c.b. from two thousand and sixteen to present the two hundred billion dollars worth of

these corporate bonds they've taken and in terms of how they finance this deal the e.c.b. should have known better because in september two thousand and fifteen before this e s p p began the e.c.b. was buying car loans asset backed debt and securitized loans this included the benchmark issue or a volkswagen which became embroiled in rigged emission tests in the u.s. for its diesel cars how important was the e.c.b. to volkswagen when that scandal hit the e.c.b. announced that it would suspend purchases of volkswagen debt securities the move her company's ability to raise money so again remember we're living in america talk or see if they say you know everybody's free to compete you just have to be better than the competition well they're propping up dodgy competition who should fail and you know maybe that's why we have this ongoing crisis is that these huge corporate be humerus have just run out of ideas other than buying back their own shares and

taking free money from central banks well if you don't have to compete you know you're not going to compete because competition is work right i mean nobody wants to work people would rather go to the central bank and just hand over a lot of money they just printed by a company like monsanto that has. time and established itself in the agricultural sector of the economy in a ugly way and read the many times they've reduced the ability for seeds even reproduce right i mean that was one of the products that they had and then they rolled it back but that's their intention and if you can back that up with free money i mean if you don't have to compete you don't want to compete but in the capitalist system. it's competition is what makes her work so it's not capitalism if you're just going to finance these be companies also the central banks not only help finance these zombie companies but they cause investors

to miss allocate their capital especially the likes of pension funds by fixing the price of money artificially cheap and or to help all the zombie banks that are financing and helping underwrite these bad debts to the companies and we've talked about this in the us and you know it is a geo political issue so it's it gets very intertwined with that here's another story about fracking that you know we've said over and over that the economics don't make sense value of us oil deals plunges ninety three percent and first quarter as investors demand higher returns the value of us oil and gas mergers and acquisitions fell to a ten year low in the first quarter according to data released on thursday as investors pushed producers that have driven a recent merger boom to focus on lifting shareholder returns rather than production

so one point six billion in the first quarter because they're looking at the numbers and. the headline numbers keep on saying we've increased production us has never produced more oil than the one nine hundred seventy s. early one nine hundred seventy s. and here we're producing all this oil for africa where we're more more barrels but investors are starting to say. yeah but where is the. profit we're not seeing any profit so they're saying enough not even though it's high yielding that nothing is enough so they're just backing out of these deals was sort of covered on the show for a few years now the acting industry cannot. by any mathematical equation you use produce profits that can only it can only attract more funds in terms of bond buyers the banks who sell them the bonds they make money ok but the actual fracking regs the stuff you drill in. the gas that you pull out it the energy required is greater so you get that bt used to be to use that

represented in the energy you're pulling out of the ground or less than the bt use that you need to get the end the energy out of the ground number one the amount of money it takes to drill the holes is greater than the amount of money you pull out in the business right so this is this is a ponzi scheme clearly it's a ponzi scheme and so investors that after ten fifteen twenty years are waking up to the fact that it's a ponzi scheme but they're not in some advise to understand that it's a ponzi scheme as long as they're getting a coupon as long as they're clipping coupons as long as they're getting an interest payment on their money they're like they're blind to the fact of it being a ponzi scheme and it is a ponzi scheme but has been apologies game but again it's not capitalism well we've talked about this for about eight years now and what we noted from the very beginning was the fact that fracking oil in particular let's look at oil fracking

rather than gas fracking when you you know drill a well it only lasts for a year before it starts rapidly declining by seventy percent now look at gower field in saudi arabia that's been pumping for years so that's the difference between today. fracking so you do have this red queen syndrome where to keep to maintain just to stay even in the number of barrels you're producing from your acreage you've got to keep on drilling more and more more more every single year so it's kind of hitting that limit and they've been able to mask the absence of actual profit at the individual barrels by producing more and more and now investors are like ok we've been waiting for ten years now we're making money but it's a non-sustainable ponzi scheme but just before we exit i want to say that just seven of the twenty nine independent shell producers last year generated more cash from operations than they spent on drilling and dividends according to reuters so

just seven are making any profits right now those profits i'm sure if you took a close look there would be no profits either for any of them and they're going to take a break when we come back much more. wrong . just don't. get to shape out. and in. the trail. find themselves worlds apart. to look for common ground.

welcome back to the kaiser report i-max kaiser it's i'm out of turn to professor steve keen author of the buggy economics it was he's got his own patriotic town over there patriotic reagan get his witty economic inside almost daily well worth it i highly recommend it steve welcome back thank you max o'reilly now steve king you're just in australia the property market has finally turned it would appear after decades of never ending price rises is this the big crash you've been talking about a few other people have been talking about that disappearing for a few years what's going on yeah i think it is the big crush. is being pumped as

far as it can go when you finally get in the dump off at the pump because a strike is should have had a crash back in two thousand ita long with the rest of the world we had a high level of profit in america had we had a big credit bubble we had a bigger housing bubble it was prevented by the government and i've got to take some of the blame here because one we got frozen if you don't these stories leading current affairs program the day the day after that the prime minister was grilled with respect to my views and one week later he came up with a rescue package and that rescue package was opposed giving a thousand dollars to anybody with a pulse in the country and message government spending on schools cash for clunkers stops game as well and also doubling and tripling him out of money they gave the time boss which restarted the housing bubble so all that stuff plus china came in the mess of buying at the strange results is again to fuel its property bubble that went on for several years and kept the get the thing floating then and if you're at

a forty percent higher than america's take level it was flat lining and then the banks made a brilliant decision they decided to hold the royal commission to them all they were and they thought that you know show all documents in the public and everything will be wonderful and the people who restored. faith in the banking sector which exactly what they thought would happen instead of them with a large number of them forced to resign by absolutely shocking behavior that made the subprime bubble look like a christmas party run by jimmy stewart so it's it's finally coming and falling over the debt so you can't borrow any more so the house process is being driven down well that natural dynamic but on top of that the banks have stopped lending because it's been shown how outrageous the lending has been so far so the probable that's kept the strong property market rausing the fall though the call has finally come out at the bottom of the so there's a key phrase there they banks stop lending. so walk us through a little bit about what the australian banking system they have their own central

bank right the australian central bank and they have some kind of committee setting interest rates and. so are what's happening with interest rates and why wouldn't the banks organize another bell out and say peak debt you know to walk us through why this might be kind of the end game there oh is it a skeptic or the end game was for america max you had a a credit bubble in america that was private it was rising at about the privilege of fifteen percent of g.d.p. every year at the end that's adding another fifteen percent of demand for the economy for growth goods and services and asset markets that the asset market side of that peaked in two thousand and six and then you started having declining housing debt that's what drove the united negative credit it went from plus fifteen percent of g.d.p. his credit some on a spawn of that's what gave you a financial crosses the strain managed to avoid that by stimulus of a can to thousand a night but now it's happening again and it's falling rather than having

a credit crunch when credit demands about fifteen percent of g.d.p. and it was about one hundred sixty percent which is the american we're going for about ten percent of it if there's a credit demand but you ordered ten percent of the level of debt. and not launching in the household sector rather than the corporate sector so the house is going to be forced to do it leave out as a day leave his house a process full and that encloses people to go back and do leave or even more all liquidating houses and so on and selling down their debt so you get a negative credit shock and that could go on industries cause the three to five he it's right that i started something like twenty straight years of g.d.p. growth right so this is something that two generations at least of never experience dave you have the reason it's done is that if you again look back over the long term the last time a stray had negative credit was during the non-singing noddy's recession since that period credit every year has averaged about eleven percent of jade a pate. now that's on average in america at american an average of about seven

percent across that's on so you had this four percent of g.d.p. additional demand over and above what america got coming out a credit line that's what kept the budget afloat but to do it you had to ramp up the level of providential magically and we're now at the point with the private debt is falling so the credit is going from positive to negative and that'll take the wind out of the strain economy and it'll finally get the recession it managed to sidestep back in two thousand and eight all right let's look at the political picture for a second so us tell you of course the sad to abide by any and all of the u.s. foreign policy such as the fact that the top administration they've turned hostile on china this does bode ill for australia's property bubble and commodity based economy so to put a finer point on that australia is definitely tied to the hip with china and what happens with the u.s. and china working out a trade dale look at what kind of impact that having steve well it's it's pretty strange being pretty stupid on that front by the way that's pretty much stock with

the the white gods rather than the ones that actually dominate their economy these dollars that it was at the chinese so i think the stress on some pretty stupid stuff backing america and that tried to speed rather than back in china so i think china over tally i hate to think of these that can do and one way to do that is site no more struggling call thanks very much which they have been doing so a struggle suffering by choosing the wrong side and that fought i think they should have sided with the chinese to geo political reasons if nothing else you know australia is kind of out of the middle the us and there are you know they've got to be careful because if they become a pariah things could fall apart pretty quickly steve this trade is always relied upon powerful friends to help out in times of trouble and that was one reason was part of the british alliance of course along for the colonialism vies then it america was its best friend so the american alliance is part of that. now of course america's power. whining in that region and sean has powers of growing and

identical strengths quite know how to handle the chinese but i think they really have to to realize that this strain economy shoots you really laws with what happens with china at the time rather than what happens with america so that i can see a conscript the politicians knowing how to handle that last felony is a china pivot now year is really not because the report viewer on twitter that there will be not be a financial crisis like two thousand and eight but instead we will have a japanese style decades long stagnation elaborate on that's dave you know the reason is to japan is the canary in the coal mine for the global economy because it had a period with literally cold the bubble economy grew from the one and i did not in ninety when profit the corporate sector and the household sector rose dramatically making it about two hundred twenty five percent of g.d.p. in the only nodded noddy's literally on the last day of it's not in eighty nine nick i think that about thirty's thirty i thirty nine thousand points is still the

seven over that's on process still seventy percent eccentrics said sure what you had was the rausing profit that stopped you then went from credit being positive can only be negative and that the early on and whenever the economy appeared to be reviving it was because people starting to borrow a bit more money again the japanese central bank like most of the banks not understanding private debt not understanding money because the stuff on their classical economists thought the economy's returning to wake librium and put off rights again or bring in taxes new conny moods would collapse again if on get is to slot revival the authorities tried to slow what they thought was a boom it disappeared because people they go back into deal a bridging reducing profit and that's continued on the two thousand and five the is and over that period shine a jump in his profit that's fallen from two hundred twenty five percent of g.d.p. which is why above america's level. down about the same as america about one hundred fifty percent now you're finally getting a bit of

a sustained revival but for that period of time it was caught in this stagnation funk and i think that's exactly the same situation america's got itself into most of europe the same sort of story the strike is now there and is now there as well so all these economies are caring too much profit their sponsors to spend most lowly which slows down the right of economic growth and to borrow a list of those less created by system and and what you get is a period of drown drawn out stuff jus not so much heading anymore in ideas and babies which is a larry summers approach of secular stagnation but credits to me the only solution is to find a way to write off that profit and get back to a profit in which you can sustain which is about one third of where account lee is right now imagine japan is the canary in the coal mine and let's explore that a little bit because japan has been now for a couple of decades the cheapest place to borrow money they're the ones who invented quantitative easing their interest rates have been basically their zero

for the longest and guys like ray dalyell in connecticut can borrow money from japan for free and then invest it in some other currency for what's called the carry trade or free money a positive carry rate and then leverage that up ten or fifteen times and of all wow he's a genius see he went to school he's educated now but if if was so so i agree that japan is really the epicenter of this global financial ised over indebted nightmare and interest rates in japan going up would set light the fuse on a genuine contraction and credit contraction like probably the world is never seen what what oh wait we're all we are in the cycle they're at what point do are we going to start to see something like that on fall i don't think we are back so i think. and see this is stagnation in slow decline rather than falling off

a cliff to fall off to actually break a neck jumping off a cliff it's got to be pretty high cliff. econ jump off a step and bright kinetic so you have to have a high level of profit that and the higher the pendants upon it to have a really big crunch which is what happened for japan back and not in ny happen for america in two thousand and seven two thousand and eight this time around the countries that are going to go through that at the small countries the strong canada possibly korea maybe thailand again switzerland's a possibility sweden norway but they're not a major part of the global economy so they could have a crunch china could have one as well but that's probably not up with the scale of china's government spending so i don't see a big crunch like we saw back in two thousand when i was his continued stagnation and that's the trouble is if you stay in that situation you start getting the social breakdown you see in europe and you know the jones filming you get the american heartland rebelling against the democrats or cetera et cetera. it's more

a political instability comes out of that last time of the guys with the second world war going to pick it up for a part. and stay on for another segment but this. guys are a part. thank you max and that's going to do it for this edition of the kaiser report with me max kaiser and stacy arbor and i want to remind you that steve king has a patriotic and his patriotic page is incredibly valuable it's popular you must check it out and become a steve keen patriotic today do not delay do that immediately it's a lifetime. after the previous stage of my career was over everyone wondered what i was going to do

next. different groups on one hand it is logical to go from fields where everything is familiar on the other i wanted a new challenge and a fresh perspective i'm used to surprising. if you. see the same goals going to do. by the way what is it that's why i'm here.

hello and welcome to worlds apart to many in the american policy community and don't try is a total disgrace and tila since he proposes to bestow the american values on yet another foreign country count trumps moves and when he's well there we didn't see him in the eyes of his critics. well to discuss that i'm now joined by former american ambassador to panama john. ambassador it's great to talk to thank you very much for the real pleasure now you made quite a splash resigning from your position last year as siding the difference in values between the you present trump and valleys especially american values a very broad concept for the russians it is sometimes difficult to grasp was there anything specific that made you quit there were a number of factors nobody decides to leave a thirty year professional diplomatic career based on just one advantage in my case i was very concerned during the election about the rhetoric that i heard the

president using with regard to building a wall on our southern border i had served in mexico twice i did the country well i knew how willing green we were in terms of our.