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tv   [untitled]    May 19, 2011 8:30pm-9:00pm EDT

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more and dad and is making ten percent less than someone who died a college in two thousand and six a life costs more food costs more gas costs more many cases rent costs as much or more and yet people are making less from they go to school and they're getting out of school with more debt that was not spread well senior analyst at green cross capital and that is all we have time for today thanks so much for watching i'm christine for sure to check out our team dot com slash usa or you tube dot com slash our senior.
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to day violence is once again flared up. these are the images. from the streets of canada. keyser welcome to the guys are in for a special in the same. club strauss is in the us a great people i go to court to do that.
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for. yeah that's for a spring is two zero over say server well max this whole suicide banking crazy insane banking model is spreading to the entire world everybody is actually like a crazy banker headline reads south korean staged bomb blast to cash in on stocks and this guy obviously learned from hank paulson he was the best that this the all star at this a south korean man staged two minor bomb attacks with homemade explosives in seoul last week in an attempt to cash in on stock investments by affecting market sentiment police said they said quote he invested fifty million won or forty six thousand dollars this month and said he believed bomb explosions will send stock markets falling giving the concerns of terrorism after osama bin laden's death well
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this is a huge issue this man has stumbled upon something very important markets are over leveraged markets are reflective of hundreds of trillions of dollars in leverage so yes a small thirty or forty thousand dollar bomb can cause markets to crash because they are so highly leveraged by the professional hedge fund managers five hundred thousand dollars and nine eleven cause of multi-trillion dollar collapse forty five thousand dollar investment there could cause a multi-billion dollar. plus this is not really this guy problem so much as the problem of the markets themselves they're all over leverage because of the fraud in the. world where is robert zoellick is robert zoellick and the going to trust god having a meeting at the world bank. how am i not. yet.
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there is another quote from the policeman of the situation which is important to me to address because he doesn't take it as seriously people don't take these flash crashes and hank paulson holden the american population hostage we see no intention of political terror here the policeman says the suspect was just trying to affect market sentiment again let me emphasize that due to the propaganda they have successfully delineated between financial terror and political terror this is been commingled into one global financial terrorist dominated global economy there is no political terror anymore there's no ideology no no political parties there are no religions there are no country boundaries there's only the market leverage and events to make the prices go where you want them to go this guy is the hank paulson
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of the retail side he is you know basically you know the equivalent of hank paulson going into a liquor store not going over but he's the same mindset from the same over there sprung from the same place so much. semen. well so here it's not political terror it's just affecting market sentiment so let's look at the head politician of the world see if this is political terror or just affecting market segment let's look at those head politicians headline reads obama says u.s. default may on rob all global finances. so is this obama doing the same thing so he's trying to get the republicans or will scare the population into convincing republican politicians to vote for an increase in the debt ceiling not that it matters apparently that you even increase it technically right well if i had a blue and red balloons together would get the right color for obama to listen to
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you could create the obama version of this yeah if you don't raise it to clear the postal over you have made poor mates leave people there ok didn't go far enough obama is a financial terrorist just like the extra just like no no no the south korean police might say he's just trying to affect market sentiment it's not terror right sense of it not prices they don't even understand that sentiment drives prices well so now that you have you know the president of the united states going in front of the people via face the nation program on c.b.s. and telling him you better the entire financial system is going to unravel unless you give us more debt well look at this headline our b.z. urges gold back zim dollar so this is the reserve bank of zimbabwe and their chief dr getting go now is advocating for a gold backed zimbabwe dollar gideon gono yes well he made quite the stir when
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he introduced the one hundred trillion dollars i'm bob wayne note it was right for inflation now they're the first into gold background see now here's the thing according to game theory which of course drives the global economy in this highly leveraged kok the world if one country goes to the gold standard there's going to be a lot of money actually going into that currency it will force other countries to go into gold standard both were obvious to go i remember once talk to go no started printing badly before the hyperinflation that led to the hundred trillion zimbabwe dollars on the central bank of zimbabwe's website they actually cited the u.s. fed policy and bank of england policy of quote. state of easing that they said they were doing the same thing well their currency has now collapse and now they're saying ok well everybody is going to abandon the us dollar because we know because we copy them and look what happened to us so now we're going to he says quote zimbabwe is sitting on trillions worth of gold reserves and it is time we start thinking outside the box for our survival and prosperity that's going to work i
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totally recommend going to the letters i've been hoping that some country in fact does exactly this i thought china or india or brazil would be the first country to have the first mover advantage in this case first mover advantage is going to be huge because once you get on the gold standard people look around of currencies or like work and i get a natural resource based currency older zimbabwe dollar on this and this is going to bring huge amounts of capital into zimbabwe in the make i'm an international global player well ok and then some can look at some way and think ok they've had a hyperinflationary collapse they're run by maniacs but then look at who else holds the u.s. dollar who's the biggest bond fund trader in the world max kaiser cucolo there in this next headline bullish on cognac yogurt and gold so fortune magazine interviewed pimco equities portfolio manager and good fein and she said quote the largest position in the fund is gold which we think is
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a very good form of protection against what could go wrong we were encouraged by the fact that a lot of central banks especially in asia are big buyers we think that's an underlying trend that's very favorable for gold that's right although grocers name salon owner of pimco. due to the way that that fund the charter that created that fund he's not allowed actually to own precious metals but he's a believer in inflation if not hyper inflation so you would naturally think he'd be a buyer of gold so here's one of his satellite phones actually buying gold so now the circle has been complete pimco is pumping gold as he should be in this environment where the bond market will get creamed well there are also as gold and silver have corrected over the last two or three weeks that they've had big declines silver up to thirty percent there's been all sorts of shouting and screaming especially in the b.b.c. saying it was the bubbles burst that's popped so what do these sort of people who do you trust for example the largest bond fund trader in the world or the b.b.c.
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i trust the actual people who are dealing with money day to day not the lackeys of the b.b.c. who are an extension of the corrupt government and after the hutton affair of course the b.b.c. lost all objectivity and in the pocket of those nasty number ten downing street operetta check well and this goes on to the other things so gold as i said fell back here is the headline gold coin sales reaching one year high signal no end to rally in history so this is from bloomberg another big financial news service the u.s. mint sold eighty five thousand ounces of american eagle coins since may first as the standard and poor's g.s.c. i index of twenty four raw materials fell nine point nine percent the last time sales reached that level bully on rose twenty one percent in the next year freedom is on sale as i explained on the show many times days or in particular would surprise us over when it got up to the prize of j.p.
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morgan stock price that there would be a huge turbulence because j.p. morgan is going to defend that price because they've used their own stock to collateralized against naked silver short sells just like enron use its own stock to try to keep the walls of the door and then eventually collapses or. well j.p. morgan stock will collapse to zero at some point so when it got to that price of j.p. morgan stock in the mid forty's then you had j.p. morgan pull in a lot of favors with the those in the treasury in the global banking system in the various sisters of deceit led by dion and tim geitner and they you know stage an attack on sober as they've done before but they can only take it so much because what they've done is they've radicalized more silver buyers the silver liberation army has been radicalized by more of these attacks and so you've got a much wider base developing which will translate into a much higher amplitude and eventual target of five hundred dollars i'm sticking to
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it's not just the u.s. mint that's all the record amount rand refinery which sells the krugerrands which meets krugerrands they also had record month also u.b.s. had a record month in selling gold so but this is that big theme that we've said to focus on for two thousand and seven that's the collapse of the us empire which is the collapse of the dollar and you'll see that there's no getting around it and the final headline max this shows you without any doubt just like this pimco story that the dollar is ready to collapse and gold therefore will be the new currency j.p. morgan's hunt for afghan cold oh so to be more what tell me more a team of bankers starts to tap the country's vast mineral riches with help from the pentagon. so j.p. morgan capital markets are in afghanistan backed by the pentagon and they believe that afghanistan represents a gigantic untapped opportunity one of the last great natural resource front here is and they reckon it has hundreds of billions of dollars worth of gold and they're
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in there to acquire that they don't want to pay thirty five dollars an ounce or so over fifteen hundred dollars an ounce for gold they want to pay nothing they want it free they want to have that u.s. taxpayer financed the pentagon to go into afghanistan murder about. people destroy the civilization kill the culture and steal all the resources that was a strategy in iraq with oil that's the strategy of the pentagon j.p. morgan slash goldman sachs around the world these two fused together now how somebody can argue that this is a song you know a bastardization of fascism explain to me how this isn't fascism when you've got the banks of the pentagon fused together and the pet the goes bombs the country and the bank steals all the precious metals how is that how is that a sustainable foreign policy and how is are not going to lead to a social unrest an oncoming. law to me listen this is goes in with the collapse of the dollar is all and the collapse of the empire the fact that the u.s.
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is the empire the article states this wealth all these natural resources in afghanistan has lain there mainly undisturbed for thousands of years as armies of persians greeks mongols britons russians and now americans trapped above invaders have dreamed of exploiting it since the time of alexander the great but no one has yet succeeded in a large scale and i reckon the us won't succeed either us or the empire is go to day before we go let me do my impression of scott when he arrives first first night in a prison cell surrounded by a bunch of hardened criminals. well buddy gotta learn some new tricks all right that's going to do it stacy herbert thanks so much thank you max when we come back much more coming your way so don't go away.
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magazine reports time now to go to boston to speak with an energy analyst gregor mcdonald of gregor dot com gregor welcome back to the kaiser report good to see you max it's great to be writing on your blog you write paper vs real exit from normal ecological economics and probably ballistic regimes in one chart wow you got all that in one chart the chart is the thirty year treasury bond versus the c.r.b.
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the commodity research bureau index tells about it tells us a couple of things first let's just note that since two thousand and two the u.s. dollar has expressed you are in dollar terms we're just in terms of. u.s. treasury bonds has lost about sixty five percent of its purchasing power against a broad basket of commodities and i just find that with this latest ramp up over the last two years in worldwide commodity prices in the global financial community there's a real reluctance to own up to the fact to face up to the fact that paper currency is losing its purchasing power against natural resources so i do think is it starting off point it's worth just pointing out and purity that the u.s. long bond has lost sixty five percent of its purchasing power against the natural resources which are all the things that we used to live every day sentence for air
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since two thousand and two. the sixty five percent loss of purchasing power against resources the stuff that you buy for money for and the the dia x. y. the actual dollar index that people look at that has not depreciated sixty five percent since two thousand and two. so i think what also is saying here is that there is a bit of a complete disconnect in terms of comprehension on the part of those who follow markets and follow economics that they look at these technical indicators like a dollar trade weighted index but they missed the big picture here that sixty five percent of purchasing power of the dollar's been smashed says two thousand and two and i think it the trend is not good either you know it's not and i don't understand why so many in the financial community were guarded these types of comparisons as as arcane i mean as anyone who's retired or you know
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knows we all use our financial assets eventuality to command services labor resources energy food and so what the financial community has clever cleverly been able to do. it's to talk about g.d.p. in nominal terms talk about corporate earnings and nominal terms talk about the rebound since the financial crisis lows of two thousand and eight in nominal terms but to avoid talking about these figures in real terms what does the s. and p. five hundred buy you now what does u.s. g.d.p. buy you know what do those corporate earnings buy you know they buy you a lot less of just about everything you need to run a business or to live in retirement so you know this is a a reality that sort of you know behind the front page and of course we're starting to see professional professional money management we're certain is you the first few professional money managers like the university of texas pine colby got journey
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grantham in mon boston talking about the problem of scarce resources are starting to see the first few escapees from the world of nominal and they're starting to face up to the world of real. part of all the other factor in this of is the percentage of income that people spend on food and energy now in the developing world that number is quite high they make very little money and a huge amount of it is spent on food and energy like fifty sixty percent in some cases in the united states and in other developed countries up until recently that number was almost negligible so due to the growth of the fianna currency period after the one nine hundred seventy one and the ill and the income that was derived from the bond market and the stock market and the artificially inflated housing
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market this component of the household income was ignored but now it's coming back with a vengeance at what point does it do we start to see parity between the developed world and the developing world we're the entire world is going to be paying a lot more for food and energy on a parapets to basis d. is a fancy banking term well i love that question just a couple of things here if we look at the united states in aggregate. the drag on rising food and energy costs doesn't look catastrophic yes but if you look at the for the first three quintiles of americans in other words the sixty percent of of income of income wagers earners in the united states you're actually seeing enormous stress among those first three quintiles of wage earners in the united states and when you get down to the first quintile new lower quintile you know certain americans are almost struggling against food and energy costs the way many
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other people are developing and all over the world not just in the developed world but in the in the in the developing world you know the larger issue is the fact that as we move through this world where we've got we're posting you know nominal prices. everyone's living in a real crisis you know we see certain asset classes our salute collapsing for example wait us housing us housing got its first blow from the fact that it had been put into a bubble but now it's really suffering from the fact that with food and energy costs housing can't really recover in those conditions and so housing looks like it's probably one of the prime victims of peak oil and the fact that higher energy costs are basically raising the real living costs of everything in the system are let's roll back for a second and talk about the three fifth's quintile out just to put that into a layman's term you're talking about sixty percent of the population is coming
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in to the point of contact with stress in the terms the rising price of food and energy and the bottom twenty percent the lowest quintile is actually now you could say on par with a lot of the developing world who is struggling on a day to day basis almost of handsome out existence and this is trading in the i states social strata which seems like it's completely ignored by the political class nobody running for president for example addresses the fact that the economy is producing a permanent underclass of people who because as you point out due to the constraints in the energy industry constraining future growth these people will be in the lowest twenty percent in perpetuity because there's no way to climb out of that permanent underclass given the restraints on growth tied to the restraints and oil correct there is absolutely correct in fact we've seen the price of oil
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globally basically leave whole tranche of people both in the especially in the developed world behind the price of oil is now of course at one hundred dollars a barrel and it's basically left behind the poor of the of the o.e.c.d. of of europe. of the united states these are people that may never really be able to afford oil again and you're right there is i almost call this emerging america it's almost like emerging market america where a certain portion of our society is unable to feed themselves their own able to afford gasoline we caught on extraordinary number of people who are we're going to probably hit fifty million people on food stamps next that's in a country of six hundred three hundred million people and you know supposedly the wealthiest nation on earth fifty million people will not be able to feed themselves i want to talk about volatility for a second because this is something that i think is completely under the radar as
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the energy constraints start to say oh kick in and as a country start to actually hoard their own energy from saudi arabia and other countries that are oil rich they're saying we want to hold onto our energy we don't want to export as much as we used to because there's not that much around this is increasing the volatility in paper assets and we see huge volatility in the currency market talk about that relationship place what we have come to understand is that the steadiness and the consistency and the liability of industrial growth is really the driver of what allows paper assets to hold and maintain their value when you're floating paper assets which is either promissory notes of zero maturity like cash or or some other promise which is maybe a chain your bond those paper assets are basically promising to the holder of those assets but there will be future industrial growth it would occur at
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a profit and the profit will be used to pay the coupons and pay that his paper us expect and what we've seen is once we run into the energy limits ok and i mention a nineteenth century scientists named liebig who talked about limits within natural systems once we ran into the air. limit then paper us it's not only began to falter but now they become unstable they become wild the forex markets are wild the foreign sovereign bond markets are wild and unstable and i see very dim prospects that any walder of a ten year u.s. treasury bond or a fifteen or a thirty year u.s. first record will be repaid in any sort of dollars or any sort of paper capital the allow them to go out and purchase the food and energy that they need or are you know which is this is supposedly their savings and so at one time max paper assets were a secure place to store your capital they are no longer they do still have
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a group of rent seeking predatory in the banking industry who know that this volatility is real and they know the causes of the volatility but their answer is to put on a volatility spread on the volatility index they'll buy the put and the call simultaneously and they'll pay for the spread and they'll let this whole market and ecology collapse knowing that the volatility itself will generate returns for them and this predator class is really. in charge of not only milking the system necessary capital but to what extent are they actually adding to the volatility gregor mcdonald well you've heard the expression i b g y b g which is gone you become you don't and that's sort of credo of the short term. you know global buccaneering. trading capitalist who's not interested in extra
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analogies in the system is not interested in future risks basically just wants to lay current volatility in bank short term profits and of course you know this is sort of the tragedy of our system we really do. you need to have the political complex and the financial complex working more in concert to address longer term issues if we were addressed longer term energy issues climate issues environment issues it would bring down volatility but since we're not interesting those were hansing the volatility we're almost in hansing the volatility just by the fact that we've refused to deal with these large long term pressures that we need to face all right greg mcdonald thanks so much for being once again on the cars to report great to be with you max and have a good afternoon all right i'm going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i was like my guest gregory macdonald of
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gregor you ass if you want to send me an e-mail please do so if kaiser recorded r t t v dot ru until next time this is nice guys are saying bye l. h l marvin here broadcasting live from washington d.c. coming up today on the big picture. if you.


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