with. the b.b.c. with. the kremlin reveals that it is laying the groundwork for possible talks between vladimir putin and america's top diplomat. the european commission president scoops a leader of the year award and confesses that he made a mistake by not interfering in the u.k.'s sixteen bridget referendum. as russia mourns the victims of sunday's plane crash in moscow which killed forty one people the story emerges of a young a flight attendant who sacrificed his. cabin on we'll have

a full news update for you next hour the financial lowdown is next right here on our. max keiser this is the kaiser report death by algorithm that's right the truth may trigger an algorithm in your browser taking you to this show that has actual facts where. you know i have been traveling quite a lot lately and when you tune into m s n b c or c.n.n. or fox it's one hundred percent nowadays one hundred percent just opinion shows they don't offer any economic or financial shows no which is remarkable because you

know bill clinton is the one that said it's the economy stupid what really people are going to vote on is the economy and yet you have these presenters who are supposed to offer political opinion about the you know politics in the beltway in the the bubble they live in but they don't know what voters voters are going to vote on economic matters. and yet rachel maddow has no idea for example what's going on in the u.s. economy because she doesn't talk about that like we do here. basically within three minutes and three basic economics finance questions i can obliterate rachel maddow and prove she is financially illiterate and therefore on justify any kind of presence in media you know her virtues are very high according to her signalling metrics but i want to look at some data going on in the united states because g.d.p. was up three point two percent so we're going to look drill down into that data and find out what's really happening with the u.s. economy because associated press tweeted breaking s. and p.

five hundred and nasdaq indexes close at record highs recovering all the ground they lost and the nosedive late last year you know you could look at that and say well the stock markets are benefit of course this very small segment of the american population something like the top five percent of income earners own like ninety percent of all stocks. that's a debate to have another question to look at is that is that the fact that the fed has suggested assoon as the stock market dove that they're going to print more money and they're not going to taper and the ponzi scheme can keep on going or is that the g.d.p. numbers at three point two percent and of course m.s.m. b. c. and c. and i won't necessarily want to talk about that because that my look good for. the orange clown. that's true i mean the stock market keeps pointing toward the nic an economy and

a country that is kind of gone loopy with all the money it's making i mean the average stock market property investor making trillions of dollars across the united states and with the wealth and income gap there's two parts to it there's the people who don't make any money they're living on the streets that's the gap down of course on the flip side you've got millions of americans that have never had more wealth ever in the history they're probably the wealthiest group of individuals ever in the history of the world on this scale i mean this is an amazing wealth generation and again in a tune in to c.n.n. or fox or m s n b c do you ever see those people ever leave new york city or in some of them in washington d.c. they never leave there and all that free money that's coming from the fed is feeding the property and stock market bubbles there where they live so they look around them and they see just everybody getting wealthy you and i as you know we've crossed the country twice by car driving all over so we've seen

a little bit more and ben exposed to a little bit more dow jones market watch opinion behind the great g.d.p. numbers the real economy is slumping so they look at those three point two percent g.d.p. numbers but they say that the heart of the real economy private sector consumption and investments flowed sharply in the first quarter to one point three percent annual rate the slowest in nearly six years consumer spending rose only one point two percent in the first quarter after a healthy two point five percent growth in the previous quarter spending on durable goods plunged five point three percent the worst since two thousand and nine when we were in the midst of the last global financial crisis right way have you know it relying on data that is not very well defined like the g.d.p. number of the gross domestic product number is. notorious for being very opaque and it doesn't really give a picture that you can draw any definitive conclusions from it that's true of

almost every number that's produced by the government because it behooves them to control the data because the data controls the algorithms and the indexes and things like the vix volatility index if you can manipulate the vix felt guilty index you control the market effectively and if you can do that using specious you know very spurious data you know it's in your it's in your it's in your advantage to do so is a sustainable well i would say no it's not sustainable you know ok so they're looking at the real data and they are using one of. barack obama's former economic advisors to say this business investment has slowed investment in the real economy is down but how does the economy grow by three point two percent if all those numbers are down and consumer spending is down investment cap ex is down where did it grow well i'll tell you because this is really interesting data california the

only bright spot was investment and intellectual property such as software movies and r. and d. this is great news but these intellectual property numbers are a bit squeaky which i don't understand that as a financial or economic. squeaky thing lenny and squiggy i remember that but a cousin of twenty. well ok so california is basically producing all of the wealth going on in the united states right now and we have a whole headline coming up about california and their economy wanted does they you know they've got the. film out there that a billion something in its opening weekend they have the star wars franchise you know it goes back to you know and they've been very active the lobbyists in washington are very keen on keeping what we would call a cartel the copyright. tell by extending copyright indefinitely as part of their profit mix and then extending that those laws globally they want the whole world to

adopt u.s. style perpetual copyright laws that that's an incredible monopoly position and there's only a few entertainment companies now really left and so and the margins on these properties are norma's so yeah i can see where the g.d.p. could get a boost but i mean intellectually and culturally you're talking about you know what the french would call cultural chernobyl the american slime that kind of permeates the global guys who are just watch the anthony bourdain show state and you know start to throw up that's your view i'm going to look at the positive in that it's not just hollywood it is silicon valley it is farming it is agriculture it is healthcare they entire economy across california actually dominates the globe in terms of how much profit they are able to earn whatever it is it has to be studied it's like the german middle ston sort of companies in terms of how good

they are there this is a headline from bloomberg the california economy isn't just a u.s. powerhouse there are good reasons why one american state leaves big countries like france and italy in their rearview mirror and overtook the u.k. last year california has one eighth of the u.s. population of three hundred twenty seven point seven million it's a third of the size of japan half of germany and not quite two thirds of the u.k. but its economic strength looms larger than any of them just about every measure of growth shows that the golden state is pure among developed economies for increasing population expanding gross domestic product improved joblessness rising personal income investment in innovation and wealth created by its stocks and bonds so the california g.d.p. by the way just to put it in context is number one in the united states and it's sixty percent larger than number two. which is texas well certainly they have microsoft they have apple they have well as i say yeah i don't believe north yet

but they say silicon valley clearly they have a lift all of these are the biggest you know the biggest corporations in the way of the legacies feces and all that stuff so there's a potent mix right so no doubt that it is a potent mix of about but for sure something is happening there with innovation so we're going to look at some of the drill down into some of the data here if you were the thirty four nations in the organization for economic cooperation and development could come close to california's three percent average annual growth rate for the most recent five year period more than two point two percent for the fifty states and two point four percent average for the one thousand countries sharing the euro currency so this is a chart showing california the only area really beating them is china and let me ask you this so those who argue that the tax rates in california are onerous doesn't seem like it's cutting into their growth that's that's what they do mention

is like that people complain that there's so many regulations and taxes and it's going to destroy it but eventually but it doesn't because such vitality catapulted the largest u.s. state to number five economy globally last year behind germany japan china and the u.s. it overtook the u.k. two years after britain voted to leave the european union triggering economic struggles including a record devaluation of the pound is a lot to do with their publicly traded companies out of california because california's publicly traded companies returned four hundred twenty percent by comparison the s. and p. five hundred gained two hundred thirty nine percent china's index events fifty seven percent japan's topix climbed by seventy percent and germany's dax just one hundred twenty one percent so their companies are returning more and it has a lot to do with their margins i mean these are the craziest numbers of this this entire article in bloomberg california companies turned one hundred dollars of

sales. into fifty seven dollars of gross profit they topped the forty nine dollar average for the u.s. so in the u.s. you sell one hundred dollars worth of goods forty nine dollars is profits here one hundred and they get fifty seven of gross profits that's versus thirty five dollars for china thirty nine for japan and germany because of a new scale of these companies it's just a matter of adding one more server to the network and the enterprise value increases exponentially so the cost another server is somewhat small compared to the growth that you get the exponential growth the metcalf's law of the value of the network expanding exponentially versus the linear addition of networks of nodes right so this is the california effect in the grocery business right to put this in the context there their profit margins are one percent. you know that's

that's a huge part of the economy is the grocery business it's a one percent margin area talking sixty seven percent margins well it's also indicating that they have a lot of monopolies there because only a monopoly could get that sort of profit margin which is interesting that warren buffett loves to invest in monopolies and yet he was very slow to enter the tech sector and here they're showing and demonstrating that you know twenty years after the dot com crash that they've now have you know we have a different paradigm happening we have like monopolies controlling everything but they didn't invest in jobs because what did corporate california do with its robust earnings it created more jobs increasing its employees by thirteen percent twice the average for corporate america almost double china's eight percent more than seven times japan's two percent and almost quadrupled germany's four percent well it shows you the benefit of having nice weather you know why not surf get a tan and build a multi-billion dollar company while you're on the beach. well we're going to take

a break when we come back from our surfing a lot more coming your way carol bunga. parties holiday international memorial awards twenty nine see the now open for entries the media professionals are eligible whether you're a freelance journalist work through terms of media or part of a global news plan to participate in sunday's show published works and video awards and. go to award dot altie dot com i'm going to now. this is a stick from the open water bottle phone in the stomach of the fish the brand is sponsor of the coca-cola company which sells millions of bottles of soda every day the idea was that let's tell kids. there are the bad ones there are the litter bugs

are trying this way industry should be blamed for all this ways to company has long promised to reuse the plastic. especially. on the. mountains of moist only grow. back from our surfing. surfing in. the beach boys they called it you know two girls for every guy. that's build an economy. take that.

smoke it. well max now we're talking about california being the number one economy in the united states number five in the world is overtaken the united kingdom and there is another thing that the u.s. is number one in the world of course and that's incarceration we lock up more people than anybody else at least according to publicly available statistics perhaps china has more who knows but here is a very shocking. this past week from the san francisco chronicle and it is juvenile hall costs skyrocket counties haven't reduced expenses as the number of use in juvenile hall is plummeted as pressure grows to trim spending officials say it won't be easy a lot of juvenile halls prisons for juveniles and california they have managed to cut the number of children they incarcerate so some of these juvenile halls are only like a third full however they still the same amount of union guards and service

around these in the building cost so california taxpayers spend an average of two hundred eighty four thousand seven hundred dollars to keep a child locked up in juvenile hall last year county level data from the border state and community corrections reveal from an inflation adjusted one hundred forty three thousand two hundred twenty eleven so this doubling the cost in just eight years but several bay counties were among those spending the most per child topped by santa clara where the figure showed an annual cost of five hundred and thirty one thousand four hundred to detain a youth offender a jew in juvenile hall no way five hundred thirty one thousand four hundred dollars for one kid in juvenile hall in santa clara. stales a candy bar from the seven eleven and we pay five hundred thousand years to keep him tied up in a juvenile hall those in the bay area where they're making

a lot of money. and their property prices are escalating rapidly but yes they're paying five hundred thirty one thousand they should just you know they're going to profit margins in california basically they should say here kid take three hundred thousand and you know don't don't commit any crimes for the next ten years well i mean clearly they kid even using the lorry loughlin metric of what it costs to get into university to afford the finest university in america with those types of numbers part of the problem is that you have the building costs of those are fixed you have to pay these workers the guard the prison guards who are mostly unionized that's why california spends more on prisons now than they do in universities. you have a perhaps they could divert some of this put the prison guards in the university so they spend more in universities than they do on the prisons but it's pretty decadent they are the fifth largest economy in the world and their profit margin as we covered in the first half is close to sixty percent of that making on every

sales they make so they can afford this but very few other places in the world can be so decadent small obviously it's an absurd situation and the only way it works is because these juvenile hall companies are able to tap into massive credit lines and so that there's a bank industry willing to lend them to create these worthless juvenile halls that end up spending half a mill i mean that's half a million dollars per child yet to think of it this way that's all half a million dollar loan so some banker may you know thirty forty thousand per juvenile blocked up in detention center and then you get enough of those juveniles locked up and now you've made three four million dollars for the year and you're a thousand bankers in los angeles alone probably that in on the scam like this so that's where it pays off they in fact then spend some of the money in the overall economy buying intellectual property stuff and going to see disney movies. so it

recycles into the economy somewhat but a lot of us just socked away into bel air mansions that don't answer the general economy the article does not indicate how many are private prisons and how many are state run prisons but this is ultimately on the taxpayer that the taxpayer has to pay for these they incarceration rates and the. prison union guards that guards there the prison are unionized and that is one of the most powerful lobbyist groups in california so all governors all state senators and congresspeople have to get the approval and support of any of the prison guards there so i don't know if that situation could ever be corrected but of course in terms of education and you know a lot of the wealth of the of california is tied to china including the property markets in san francisco and to a lesser extent perhaps los angeles and certainly the regions around los angeles i

want to look at this tweet from assad. and he's looking at an article from the economist where the economist is talking about chinese money pouring into the middle east which is this this is new for them. this is a new region for them to start investing in but he points out from the article that diplomats from beijing often have a command of arabic that puts their western counterparts to shame so right now the u.s. is very concerned about chinese you know advancements and five g. technology in ai technology but also that they're spending money on the road initiative and now investing in what america considers a part of their monroe doctrine that we control the middle east and they're pouring billions in there but also showing up with actual diplomats who could speak arabic apparently we don't have any of that many that can speak arabic you know particularly these days what these apps you can download and learn the language in forty eight hours you think that some of these high paid diplomats would simply put

some headphones on and learned a few words vera before. they go over there and trying to cut deals chinese people . not going to let. you know their linguistic shortcomings get in the way of making a few trillion dollars it also shows what monopoly position and hubris so when you're the empire and you know you can bomb anybody and nobody can do anything about it or you can squash an economy of sanctions and nobody can do anything about it when you have to compete you have to do things like innovate you have to learn the language you have to you have to you know you have to be better than the alternative which is you know the empire can explain something to me why is there no universal the used sign language and other words every language in every country has a unique sign language you would think that you have a very easily if we had a universal sign language that worked every word un all you had to do is learn sign language and you could communicate anywhere in the world you know why not while

they are for you filing which is. to. can i have my bill and there is money chinese money is behind some of the arab world's biggest projects of course the economist has headlines that the region's autocrats appreciate beijing's no strings approach of course their region have been a least has been under are for decades so why. assume presumably we dealt with autocrats right but there is not much to see for the first five hundred kilometers south of oman's capital muscat as the highway slices through the house are mountains and down a barren coast that has dicom sleepy fishing village that is being transformed into a mega port the government's hope is to capture a share of the shipping trade between asia africa and europe and there in the middle of nowhere a consortium of chinese firms want to invest ten billion dollars to build a one thousand hectare industrial zone petrochemicals glass solar panels car

batteries they want to attack all these markets says. reggie vermillion the ports c.e.o. so they're pouring billions of dollars in there this of course could trigger u.s. investors possibly finally. giving us some money to develop infrastructure and projects like that that's one thing about our empire that we do not do like the british empire before us did which is build infrastructure or write him every single village in hamilton port and every single town and every single country the huddled masses are dying to see disney films and that's where we add value to the global economy with superheroes flying through space saving the world for america that no longer exists superheroes fly into space well for decades the middle kingdom saw the middle east as a petrol station about half of china's oil came from arab states and iran little went in the other direction and two thousand and eight the region got less than one percent of china's net outbound foreign direct investment skip ahead

a decade and chinese money is everywhere ports in oman factories in algeria skyscrapers in egypt's new capital last year a pledged twenty three billion dollars in loans and aid to arab states and signed another twenty billion investment in construction deals so you know it speaks to the fact that oil is probably going to be less of a component the global economy going forward because it's kind of running out even in saudi arabia they're kind of hitting peak oil so the governments there are diversifying so they're embracing the globalization and to do these deals around the world and so this is why you see these types of initiatives now because they're heading into a post carbon economy i mean when they talk about the fact that it's connecting asia africa and europe this is part of that road initiative but it goes back to the old silk road and there was a book that we read once about something like five thousand years of trade and it's coming full circle of so global trade you know before we. invented these terms in

the last few decades of globalization and free trade deals and stuff like that there was a lot of amazing amounts of trade and it all came from china and it went to india and it went to africa the middle east i guess up to europe it was aus of years of global economy was dominated by china and india as well it's an anomaly that it had a brief period where america was really the global superpower but now it's going back to a long term trend which would be china india and these countries dominating global economy so yeah like i said five thousand years ago china was the leader in world trade you saw like all these guys get in their boats and go over there and now they're restoring matter the balun road initiative and china just had their annual belt road big meeting in combat and now a lot of european nations including italy was the first to really say forget you

know whatever the u.s. says or nato or anything we're going to do a deal with china because you know our economy of course italy is suffering greatly under the euro so they need flows of capital to come in there because capital is not flowing into italy is flowing into germany and it's flowing into maybe the u.k. or in other places in europe is not flowing into their region so they're looking for any capital that they could get in basically they're in a depression rights and they have their banking system on the verge so they need if if europe won't deal with them if europe won't trade with them then they're going to have to trade with china so china stepping up and spending billions on you know western corporations who are willing to do deals with them on the ballot wrote initiative you know this show is dubbed into spanish and i think we should get into mandarin as well. why not but we have made only quadruple our view numbers i think that's an excellent idea. what we go by every regime in the world where we're in

india we're in latin america so our show has to abide by all sorts of regulations on tree species it's not just america if we if we were just america we could say whatever we want because of course you can say whatever you want here but we have to abide by all the regulations and we do here is that there's a universal. so many many many when you can do it on sign language has a report. are you saying follow us on twitter at kaiser report until next time by all.

the that. the b.b.c. with. this info go through a period of sort of the whole world to see whether it's first right if. you're doing what you know well some of your believe that it was and i go to the book. because it's if you'll see all of the good of that all you want the solicitor got it would put me on the none of that it's. been done but well it was pretty let's go it was a. robot use their tool which can go along with. but i come.

here do you mean you're going to be old did you sort of storm the lead here so my look a mood subversion during the closure coconspirators. in front of the cameras coca-cola c.e.o. promise is a world without waste that's our. rod behind the scenes the american company is doing everything in its power to eschew any alternatives to plastic like the return of a bottle i think obviously the shelf. after months of negotiations with the american multinational we have a meeting at the headquarters of coca-cola france for an interview. was. when i did receive. a polite and welcome.

in the school.