a u.s. general confirms washington is in the process of bringing defense systems into iraq to protect american troops from a potential irradiate attack dumped off to tipperary insecure in iraq during an operation. and could potentially run again for president if the public vote for the new changes in the russian constitution next month and. biden sweeps it to these prisons off to the states strict response to the spread of the corona virus. from me for today neil harvey will be here at the top of the hour

with your next news update join him and tide you over until then there is the cause report. sure this is the kaiser report you know of open court adoptions driven by banks failing and countries failing and now in lebanon they've got a huge crisis and of course big clients come to the rescue stacey max we're going to get into lebanon but 1st i want to have some show notes here we are still in los angeles it is the busy suburbs where they did film brady bunch so you have a lot of leaf blowers you do have garbage man you have all sorts of stuff and we have flights going overhead as people are trying to flee the coronavirus apocalypse we're also going to try to flee the coronavirus apocalypse and so you may see us recording soon from home because if we can't get out if everybody is quarantined it

could be a situation where we're just like live streaming on periscope for the show for the future cool here's an headline from lebanon that happened in the past week and a half while the markets were tumbling while everything was going chaotic and that is distrust in lebanese banks spurs big coin boom more lebanese are embracing them don't tory asli volatile cryptocurrency as the country's economy founders so this was an al-jazeera english and they looked at after years of being knowing about bitcoin it was only when their country banks started to fall apart when their credit default swaps suggested there's a 99.5 percent chance of them bank going bankrupt and banks introduced the same thing that we saw back in 2011 with cyprus and they had the balan's 1st they had the the limit on the amount of money that you could withdraw so in lebanon we saw something like $4050.00 a day that they're allowed to take out and they focus on

a guy name are who asked for a surname to be withheld. he says he's not standing around helplessly he is trying to move what is left of his savings out of lebanon via a financial instrument meant many in the country have not embraced until recently big coin quote suddenly everything turns upside down and all the options are open said mark wright what's amazing is that this discussion of what's a better store of value gold or a bit coin and in lebanon we have a taste test case people are selling gold to buy bitcoin that proves the big point is a greater and more portable store of value than gold and that's going to be the story all over the world people can't take their gold across the border it's too heavy it's too obvious they can't take bitcoin and that's what people are doing their fling with their big point whether it's in china and lebanon all over the world goal is not the store of value that big coin is that's why peter schiff under his

desk in a fetal position crying this is why alex jones is converted now to being a full blooded bitcoin bear this is the new way so the banks in lebanon have been restricting withdrawals of how much cash you can access lebanese banks began imposing increasingly restrictive informal capital controls after a popular uprising 1st swept the country more than 4 months ago foreign currency withdrawals are now limited to be between $50.00 and just a few $100.00 a month transfers abroad were recently capped at $50000.00 a year for so-called necessary matters well yeah i mean they can try to restrain people from having access to their capital but all the kind of techniques that we saw before but going to be quaint is the. you know it came about because of a divine intervention as part of fighting back against the kleptocrats and they allowed this ultimate hard money to exist to offer a way out of banking shenanigans so this is our savior big coin is our savior they

. another young guy who is in lebanon and he says right now lebanese are interested in escaping tight restrictions on cath's withdrawals and transfers they basically want financial freedom so i'm going to cut to a clip here from las vegas where you and i were on stage with some oh gee original gangsters of bitcoin and we talked on stage with peter todd adam back trace mayor meehan you and we talked about those early days of bitcoin in 2011 that's when we 1st started covering it here on kaiser report and we asked them about what you know what it was like in those early days at this point when people in cyprus 1st turned to bitcoin when we saw the bail ins and in cyprus and after that bail and by the way it then became law of the land in europe so if this crisis this you know

coronavirus crisis leads to a financial crisis that is the next plan for europe and america can still princess way out perhaps but. let's turn to our event on confiscate a bull in las vegas last week with a controversial mayor amongst the mix after january 10th 2001 how funny tweeted running bit coin after that time how important is it that the only people who joined in on this thing with him were the gamers were they out was worth the price as were the freaks like if it had been like p.m.g. infidelity bank saying ok let's let's get in this together would it have changed the nature of decline do you think probably i mean i think there's a history so to me who was one of the. list co-founders and was one of those people to write really. made the point

but most innovation comes from the sidelines so if you want. change change things just do it i mean just build something if people want to use it they opt to use it and it changes people's expectations about what they should be able to use say skype as another example right say scott go into the telecom industry if they go and telecom sector is regulated so if they've gone to the regulator and said we want to build a voice a fry p. video system with free international calling they would have said no you can't do it all the lobby groups will stop them so instead they just did it and the regulators were too slow it got to what we used and they couldn't stop it so i think there is something in the area where people just did it you know initially had no value no stock no exchange price you know the 10000. that coin pits or experiment so people were just playing with it i mean i was going to happiest thing i think the fact that you could mine it helps add value there's

a psychological phenomena where if something's difficult today people ascribe more value to it you know a fallacy really going to labor theory of value but it's some people have the intuition say in the fact that the mining was difficult fiddly and people would exchange tips on how to configure graphics gus do things make them feel it was balibo and that maybe had a part to play in you know bootstrapping a bally because it had to bootstrap someone so i think. you know permission less innovation and then there's a history of. sort of open source. community technology being found to be agile and good and lead being adopted for enterprise uses you know make the point a. i think the kind of list of people who kind of say going to because i think that's actually you know much to restrict of i mean i know financial people who saw in a new immediately or so you know that's going to go by some you know one i mean my

dad's in a standard comedian economist i mean used to do consulting for pension plans and when i 1st described what bitcoin was to him to him his reaction was full of course it's. it was just completely obvious to him if you have a limited thing you send over the internet that's useful you know i don't actually think like this is that radical of an idea i think what's more radical is being able to actually do it in pull it off but you know if you do it a slightly different way when i think you'd still get a similar kind of outcome but at that time you know they show the velocity of bitcoin from 2009 through present in terms of how often they move and it does look like a lot of those early last forever they lost their coins so it was that took a while to overcome i feel like in 2010 and 11 i mean these things like would pop up and somebody would run off with 53000 coins and it just felt like a kind of

a game that it wasn't real and that maybe it would never have value is just. the notion of something is a game and it's not real yet doesn't change who might be in shit playing with. you know someone like my dad if they actually knew technology and frankly doesn't but. if he had you know the technical wearable tech she could do sing i mean he's so personal would i understand peter's point of kay's somebody who's reasonable really involved in finance would get it but i don't understand why people who are into gold don't get it i don't understand i never did it we came into our programming side when gold peaked in 2011 and we transitioned to doing heavy bitcoin coverage because it was gold was no longer hot topic to talk about because it entered into a very long bear market so this gave us a programming supplement if you well that and we and then we the more we talked

about it the more access we had to more key people who would contact us and say hey i'm a programmer much developer on the doing this i'm doing that so then we just kept putting them on the show and and so from the programming side it was great but how do i talk about it to people who are newbies or whatever you know it just it as far i just found this wall of resistance i think there's people who either want to be free and there's people who want to be slaves that's it so i'd actually become an investor in gold money that max and i were both involved with gold money before it went even existed and so i was an investor there and i think 20052006 timeframe and then i started a blog run to gold and i had had breakfast with dr edwin vieira and. he gave a talk at the gabba conference and someone asked like well you know why why do we

do this you know it seems so weak we don't have oppression everything this was 2008 middle of 2008 and dr vieira said well i don't want to live in 1956 just lots of akio with a boot on my neck. you know so that's why i got more active blogging about gold and the monetary role that it plays in protecting human rights and civil liberties stands as a protector against despotic inroads on the part of governments as misa says and so then when you know i came across because it was very natural to merge at least for me as a digital native growing up with lime wire and because on all the bit torrent and eat gold and the digital games and transferring value over communication channels and dealing with charge backs and trying to get paid for your thing in the game right like you know so for me immediately no i was able to see the implications of

the software code and what it's going to do and so you know that's why i kind of picked it up and actually on this stage in. the 1st public appearance i asked him the question like you know what niches should we go after and he is like you know we have to go find particular niches to sell to coin to that's exactly what i've done i went to the libertarians is they. are just crazy and i want them to have a lot of money a don't change because they call in changes you. see the course will get old but will try to get it was me if the sun and she left the

stuff you should see that she had pushed a few feel and i'd be most useful role for the 2 of them would not only do they go for push but i will push so kodesh are going to get us. no coercion a good system is. child's seemed wrong wrong when all we're all just all. the world to get to shape our disdain becomes to add to it and engage with equals betrayal. when so many find themselves worlds apart we choose to look for common ground.

welcome back to the report yes do you not worry max is still here i know with the coronavirus people get worried about that but we're still here for the 2nd half max i want to interview you because you're my afraid to go near anybody else because of the virus but there was a story in bloomberg business week bloomberg a long special about reddit forum board and the these reddit forum boards are wall street and the allegation that they're manipulating the options markets in

particular the specialist market maker because this we're in hollywood still you created the hollywood stock exchange. and you created the virtual specialist technology so it covers your entire domain here and so i want to hear what you have to say about this read it's profane greedy traders are shaking up the stock market chatter on message boards the shaping the options market and sparking wild rallies members of our believe there they have discovered a kind of perpetual motion machine and the interplay of stocks with options contracts which offered cheap way to bet on whether shares will rise or fall without buying the stocks itself it goes like this members make bets that rely on market makers the professional middlemen will sell you a call a bet on shares rising or put a wager on a decline market makers like good bookies don't want to go out on a limb when taking a bet they lay off the risk if someone buys

a call for instance speculating on a rally the dealer buy stocks and the underlying company if the stock rises the dealer may have to pay out on the option but that's offset by the gain on the shares they believe that they found a secret formula to rig the markets so that their call. options basically force market makers have to buy supply of the stock and of course this is before the huge market crash so you know they were betting on stock prices like tesla virgin galactic continuing to go up and rig in the options market that way do you believe it was working. well there's not a new scam but i would say this is the democratization of a certain style of market manipulation so up until all this group which has access to 0 percent commissions on trades and access to huge pools of very very cheap capital this game was played amongst market makers themselves so this is typically

the way market makers try to game theory each other and if we talk to rick ackerman who is a specialist in chicago for many years he's been on the show a few times and we've talked about the games that market makers play in the options market in between specialists so they have the dubious task of maintaining an inventory of stock to fill orders or to hedge their book of trades that they're. allowing to be made so this. the idea that you're forcing the options market maker to go in the market and pay for a stock to give him the requisite hedge against these call options that are being created because of the options market there's not a finite degree of options is what's called open interest so the open interest will expand or contract depending on supply and demand so if there's a huge expansion of the open interest in the call options in this case it would require the specialist to hedge their risk of making these markets to expand their

inventory by going into the open market to buy the stock so so you've got a gang of folks on reddit who are able to trade options and they're swarming so you can and options if they're out of the money options are very cheap right so they're . if it's $100.00 stock option it's out of the money might be worth you know it could be $0.50 or $0.25 so you've got to swarm could be thousands they swarm on a 25 cent option they're going to do now expand that open interest with very little capital they do put up some capital but the very little capitals distributed over this gang this manipulation gang and so the specialist is forced to buy stock in the open market so you can therefore capitalize on this. gaming the system and cash it does require everyone who is participating in this to operate as a cartel and they can't cheat on each other typically what'll happen is if there is a market correction as we're seeing one or 2 will break the cartel they'll cash out

quick and then everyone else will lose money so it's not without risk it's only risk close if the cartels operating completely together and that of course never happens in a system you never have a you never have a cartel that doesn't encourage at least one or 2 to cheat that's why because ultimately will go to a 100000 because there's no way for the central banks to create a successful cartel against it unlike in the precious metals market where they have created a successful cartel to knock down the price of gold they will never be able to do it coin for a variety of reasons well indeed so i mean you used to be aside from hollywood stock exchange in the virtual specialist technology you were an options trader. when you worked on wall street so you know this market but the article points out that and again this is before the the fastest sell off an s. and p. 500 history that's the fastest sell off in 124 years so i'm sure this entire some credit. here they all got wiped out but before this that it was an interesting take

on all the sort of technologies that you have and in fact in invented or worked with they mentioned that usually the market is dominated by put options because people are you know hedge funds or are banks by show. as for their clients and their long that they need to short it just for protection for a hedge but now and the 1st few weeks of this year there has been definitely a lopsided number of call options and they say the form's zest for call options is a key force behind a broad market trend by one measure the value of options traded rose 77 percent over the 1st 6 weeks to 2020 much of this expansion was concentrated on a handful of stocks popular among individual investors said john marshall head of derivatives research at goldman sachs he said quote the size of the increase in options volume is definitely moving the needle it's a variation if you will on the theme that greg gave us the stock market crash of

1987 because in 87 you had a product and i was working on wall street at the time the product was portfolio insurance so you have a $1000000.00 portfolio and you can hedge that portfolio by buying options that spend one or 2 percent of your capital in this way if the market were ever to crash 101520 percent the most you could lose would be the value of that option which would be one or 2 percent so what happened is that there was chicago which is the futures market and the options market versus new york which is the cash market they got locked into contention where the amount of hedge that was required to cover the underlying cash market was out of whack due to a technological contention in this massive database and it created a meltdown so you had this massive selloff and i think a 722 that almost 23 percent collapse in one day and i don't mean 1987 here it's similar in that what they're doing is they're forcing a contention in the and the risk profile the specialist by forcing him to take

a risk that matches books by not buying puts in this case but by buying call so it's kind of like the inverse of what happened in 1970 so you created a melt up so they created an artificial melt up with the derivatives market that you know the options are a derivatives market people say what is a derivative. it's an option essentially those that's the option market that was invented in the late seventy's early eighty's the listed options market that is the derivatives market and so if you we've all seen men much much much abuse many many different ways this is just the latest i could cite 20 different instances of massive derivatives abuse i mean we talk a lot about jamie dimon and j.p. morgan using options and derivatives to sell naked shorts to bang down the price of gold that's the that's the sun other words if you're democratizing what jamie diamond doesn't need to touche the level to make money by fraud you will be making money might be nimby laying the price of gold using derivatives on options you're giving kids on reddit that ability using 0 percent commissions and access to

a lot of pool capital cheaply to game a specialist to create manipulation in the options market so they're just mimicking jamie that's the problem with moral hazard if you look at jamie good diamond manipulate markets and just give a slap on the wrist or give a fine that he can then fund from is open window at the fed just money for 0 you're saying to your society you're saying to your public fraud is ok breaking the law is ok stealing is ok and so you're going to end up with kids on reddit mimicking jamie diamond by perpetrating massive fraud in the derivatives market and it's completely predictable i might add that the article suggests that some of the high frequency traders who have you know hundreds of billions of dollars that their access and very fast trading machines have been like plugged into these radical groups apparently and trading on it before these kids whoever is in these groups being

like 4 chan acting like they have a big portfolio and they probably only have a 100 bucks or a 1000 bucks you know they are big traders trading on this stuff and it does make you wonder because in january you and i were covering here in kaiser report and yeah sure maybe americans don't really know much news that happens outside of america. in a political season when they're all concerned about you know what's going on with domestic politics in the primaries but you and i were noting like the whole supply chain was cracking across china and you know there was a pandemic clearly on the way and we kept on noting that the markets just kept going out then out then up and it made no sense and it was driven by a few of the shares mentioned in this article including tesla virgin galactic some of these companies that were directly tied to this wall street bets form board so it could have been that we don't know and we'll probably never know because of the catastrophe now unfolding so we'll never know because there won't be time to do a you know an autopsy why does america offshore all of its production capacity to

china including medicine right and so the chrome i ever said it and suddenly all that manufacturing is in the hospital stay so this because we allow things like high frequency trading to go and without penalty for that scheme which is also a criminal activity you're stealing we say like lloyd blankfein lloyd blankfein of goldman sachs at the time say we needed to create liquidity for the markets which is false he's lying when he says that it's about it's about it's about larceny just stealing liquidity for the market and and so the that money that lloyd blankfein and goldman sachs are j.p. morgan steals it doesn't go into the productive economy doesn't go to building factories so we create our own medicine it goes into hamptons estates it goes into it goes into swiss chalet is so they're like we're so smart we stole billions we bought a picasso it went up and all of our drug manufacturing in china made by slaves ok

coronavirus it and they're like. we never saw it coming that's a lie we are need more liquidity we need to put more money that's also a lot. we're now going to retire take all wrong. since a runaway any coward like blankfein or or. the head of disney or all these c.e.o.'s they're all frickin cowards running away after they've committed massive fraud for 2030 years just want to jump in there because during the 2008 to 20120072010 financial crisis it was all the big guys left holding the bag at that point and in terms of today not only do you see a lot of the c.e.o.'s have fled in the last you know quarter or 2 so you've seen them flee and the who is owning all these bags in the market as it crashed well it was a retail and in fact even on the options market they mentioned the average number of contracts purchased in a single stock option trades shrunk to just 6.7 contracts in 2020 roughly half of

what it was in 2015 so really retail is the only audience they say and so they are the ones holding the bags will we have will we have a bail out for these people if it's just resell because if the system doesn't care about retail you know and terms of overloaded hospital system and coronavirus or an overload of fed system and in terms of financial collapse they're going to protect their friends right they're going to attack those who they care about most often traders for often traders you know here's a. market could drop 50 percent from here and we'd still be in a bull market. until next time max keiser and stacy were saying check us out on twitter as a report by you know. as

a nation which should give us some of those but it. was a little. blue. the ritual to improve for. the german i. know to be true. but what. it was because of global was going to have simple truth is that in your voice you. have to display the bulk of us a little bit in the school of thought easily meaning you're fighting one of the most of the books and the. only thing left to push out of the focus of much because of the so. join me every thursday on the island so i'm unsure when i'll be speaking to get us out of the

world of politics business i'm sure i'll see you then. markets are rebounding after a few 1000 point decline this is a boom bust so one business show you can't afford to miss unfair monteith's aopa and on bridgeboro in washington coming up biggest measures have been floated to tackle the effects of the coronavirus but how are markets responding we'll break it down and do it. plus as markets are moving day by day what is the long term plan for manufacturing as china begins its road to recovery we're going to take a look at the nation's industrial base and what life in store for supply.