tv [untitled] June 28, 2011 3:31am-4:01am EDT
it's. triply refuses to accept an arrest warrant for. the international criminal court is just a western political tool and has no authority the hague has accused libyan leader of crimes against humanity. trade unions are staging a forty eight hour strike with tens of thousands expected to take the capital streets and tuesday. the greek prime minister urging the parliament. to avoid bankruptcy. discuss controversial restrictions on the design to boost the birthrate in the country from any further. back streets. abandoned. explores the dangers of the e.u.
debt crisis and its influence on the global economy. max kaiser this is the kaiser report there's a common theme emerging all roads are pointing to one culpable source of the catastrophe b. b. i'm not talking about brigitte bardot but ben bernanke stacey herbert please elaborate yes the mags we're going to talk about the root cause of our financial catastrophe being the chairman of the command and control federal reserve committee greece impact small for u.s. banks bernanke so this is ben bernanke speaking to the press he says we have asked the banks to essentially do stress tests and ask looking at all their positions all
their hedges what would the effect on their capital be if if greece defaulted the answer is that the effects are very small right now this is going to be a recurring theme throughout this entire portion of our program the fact that ben bernanke he lies i mean this is the beginning of all law because he doesn't mention the shadow banking system as it was described by former prime minister gordon brown when he says that the effects are minimal he's talking about the effects of what these banks report to regulators as being their balance sheet but we know now going back to two thousand and eight that they simply don't report trillions of dollars of liabilities on their balance sheet and then when these blow up they claim that the market did it we had no idea and bernanke knows this that's why bernanke at the end of the day because he's sheltering financial terrorists he should be
waterboarding i mean he actually says there they even looking at the hedges that this will be a. negligible impact of greece defaulting but we know from the bank of international settlements recent release that there's one hundred fifty nine billion in credit default swaps written by u.s. banks against the european sovereign debt holdings of greece ireland and spain and portugal so again he he's lying when he makes that statement in front of congress he is telling a lie that's causing incredible global financial damage again i suggest waterboarding ok well let's look at this video here and this is jim grant being interviewed on bloomberg news and he's asked about ben bernanke lying to the audience there about monetary policy in the causes of it getting and which he mentions in the money markets so the fed has pushed interest rates to zero it has
flooded the system with dollar bills pity the poor saver who wants to get something some little taste of interest income on his or her balance so that they invest in money market mutual funds the money market mutual funds having nothing to do in this country is richard zero go to europe so many more neutral fund investors are taking. quite ponderable risks for about zero percent return their yielding to these funds building a few basis points only but to get those few basis points these funds are crossing the atlantic right smack dab in the middle of the european banking crisis to try to take some measure of yield this is a prime example of the unintended consequences of this massive intervention by our central bank that's right and let's not forget that in two thousand and eight there was a five trillion dollar iran on the money markets because they're totally exposed to this crisis and as jim grant points out the returns people are getting on their money markets are less than one tenth of one percent it's like trying to pick up
nickels in front of a steamroller. is that a good risk reward ratio no jim grant also points out that it's the fed who is forcing the zero percent rate he's and he's penalizing savers he says so the fed is the one forcing people to lend more than is necessary to other countries who they're forcing them to be predatory lenders for a little tiny nickel in front of a steamroller as they say right the command and control concept is that there is command and controlling interest rates and taking a position outside of the supply and demand of what people think is going on in america free market capitalism that's not what's going on it's a command and control type economy of centrally planned bureaucrats like bernanke they're causing the global economy to collapse ben bernanke is in fact the cause for greece's problems because that's the model used by the e.c.b.
in the bank of england and the bank of japan again i suggest waterboard k.-max so he's also saying that the greeks are not the problem it's not the people of greece that caused this problem it's the monetary system that is the principal agent and the fact that this is true you could see in the price of gold he points to so that takes me to the next headline greeks turn savings to gold and perth mint silver coin sales surged to record on haven demand so the financial times this article points out is reporting that greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and a run on the banks so sales of gold coins have soared in recent weeks as people are converting all their savings into gold that's not gold and silver and you know we were not friends recently raking in a documentary down there and had a chance to speak before thousands of people have been on the national television in athens and translated into greek and the message to the greek people is clear to
buy gold and silver to protect yourself against the fire. natural whole cost provokers like a burn remember back to the occupation days in one nine hundred thirty nine greece was occupied now greece is being reoccupied by bernanke and his central banker and whole cost provokers well one person interviewed in the financial times does say that he converted his entire savings to gold coins he said quote i keep them at home just like my grandmother did in the second world war so it is like in back to the global world war but speaking of whole a cost i guess the entire destruction of financial wealth we have that in this next headline here to which also proves that ben bernanke is lying about the impact of a greek default greek crisis could cost u.k. three hundred thirty six billion pounds british exposure significantly under
estimated so the bank of england alleges that like ben bernanke. the u.k. banking system is just fine the exposure to greek debt is only eight billion pounds but it has emerged that britain could actually be hit with losses of three hundred sixty six billion pounds which is equal to twenty four percent of annual g.d.p. and this is based on complicated derivatives and insurance deals again mervyn king is ben bernanke u.s. counterpart in the u.k. he should be water boarded as well he is lying he's talking about the risks to the economy in the visible economy not talking about the whole of graham economy of credit default swaps that go bust due to the fact that they're manufactured in a faulty way that part of the problem is you know if you had tainted meat and it was making people sick you go and you do something about it and hopefully there will be some redress if you're buying toys that are painted with lead paint and
they're making children sick and you would have some redress you would go to the manufacture. or here the world is being flooded with faulty credit default swaps these products don't work they're completely in congress with any notion of a capitalist system they're used only to destroy as a weaponized financial instrument as a credit default swap c.d.'s and blitz on these economy causing financial hole of cost as the result of this financial hole the ground. well let's talk more about debt let's go back to the u.s. because there's a hysterical video here this is an ad for a guy named mark only day he's running for congress from nevada after death to our floor to do it and that he's home owner agreed and hired rooms again while. he already is too late to the party that already the chinese came in through wal-mart ten fifteen years ago but he where if you bet him he's talking about the u.s.
debt being the cause of the wealth of china but listen isn't the us doing the same thing to europe aren't they occupying greece at the moment in order that greece doesn't default on their debt so that american bankers like jamie dimon lloyd blankfein don't have to pay out on these insurance products that they haven't any reserves for that's right it's a cause and effect problem and this is propaganda as we see in this t.v. commercial just like the problems of greece ultimately come from bernanke loose monetary policies and corrupt month very policies the problems with china as america perceives them that they are quote unquote currency manipulators is also the result of america's loose monetary policies america has the world's reserve currency and there's huge benefits when having the world reserve currency if you're autonomy starts to collapse because you abuse your privileges for having the world's reserve currency i don't blame people like john in greece for your sins but let's look at what the state of the united states is it looks like
a land war already scrapyards of the new pawnshops so remember everybody was saying oh gold and silver are going to sink because everybody is going to the pawn shop and cashing in all their family still wearing stuff like that well apparently they've run out of that now people are going around snatching copper wires from electrical transformer is actually taking the entire transformer risking death. rip up the copper of the zinc and the lead. is the basis for the infrastructure. it is the platform upon which the economy is operating of course to satisfy that problem the fed will do what they'll increase the money supply which of course will drive the prices of lead copper and zinc ever higher which will incentivize people to rip more of it out of the ground the other point here is max that we're talking about here's a congressman saying oh it's the chinese who will invade us and what do people do when they invade what do nations do when they invade a country they wipe out the infrastructure we've seen the u.s.
do that in iraq we see them doing it in libya and now they wipe out the infrastructure and what you're seeing here a train derailed in taunton massachusetts yesterday after thieves apparently used a blowtorch to steal two eight foot nine hundred pound chunks of solid steel track so the american population themselves are at war because of bernanke yes crazy policies bernanke isn't something as an american citizens to rip up their own infrastructure. yes it is where should it be guantanamo what you to be experiencing. and then one why i think when we headlined here because this i know we're talking to somebody in the oil speculation work an expert on oil speculation french president compares speculators to mafia once again it goes back to the top of the show ben bernanke he is the cause he's the root cause the central banks are the root cause of the financial chaos around the world and here nicholas sarkozy is saying that it's speculators who are the mafia not the guy who is
causing people to speculate on oil and other products yes exactly and the cap of dicaprio all tamilians the bank of international settlements in switzerland they're the head of the mafia family and then the fed and the new york fed and the e.c.b. and bank of japan and bank of england are regional mafia captains and their techniques are the same they lend money you can't possibly pay back and then we don't pay back they steal everything you've got and then they crush you with rampant inflation and food and energy well he blames financialization for bringing the world to the edge of a precipice and it is true i mean that's part and parcel of the u.s. federal reserve system it's the private bankers it's jamie dimon a white blankfein who are the fed and they've created this financialization as a way to occupy our economies and the people in our revolving it's a global insurrection against ben bernanke the occupation all right stacy we're thank so much for being on the cause report thank you max don't go away much more coming why so stay right there.
twenty years ago or just country. janet europe. where did it take do. you believe this science technology from the round. we go to the future of covered. welcome back to the kaiser report i'm max keiser time now to go to new york and talk with william a graph good men she's the author of this gripping new blog this siloam if you haven't got your copy yet i insist that you get it. it's all about the running game
to hijack the world's oil market and lay a welcome because a report hi how are you doing today max all right so who are the renegades how they hijacked the world's oil world's biggest oil market these were the boulders of the original oil market back in one thousand nine hundred three reagan lifted oil price controls and when that happened and some traders who had destroyed their own exchange which had traded potatoes this was called the new york mercantile exchange decided they were going to try to trade oil and when reagan lifted those controls in one thousand nine hundred three that had been imposed by nexen they went ahead and did it it was effectively the deregulation of the market it became a true free market not big oil setting prices or opac behind closed doors this was when you had bits and offers that were freely exchanging hands and that was the beginning of it on this the oral history really of these traders instead of not knowing who they were we know their names and we find out exactly what they were thinking how it happened all the way up to the present day right now at some point
what you call the transformation of the market into a more of a free market system away from the control the oil companies opec at some point another mutation occurred this is when these markets start to become dominated by those folks who are gaming the system why did that transition become apparent and talk to us a little bit about that puts interesting is if you look at the history of this market because we need fuel it's lifeblood of this world oil and gas this is time has always been gay and there have been different evolutionary interation of how it's games. but often it's the same thing and that is cornering supply or creating panic about supply running out to make the price go up or dropping lots of supply to make the price go down but really it's about being able to predict what's going to happen by. moving a few things around really just ponds on the on the chessboard and
a lot of that is in terms of oil supply and perception of demand and that is very much james and it is to this day and it was as well but when you say predict which way things are going on it's easier to predict which way prices may go if in fact you are manipulating prices correct yeah some of the biggest players in this market own huge amounts of oil and huge amounts of fuel and we are not really allowed to know how much everyone has but we do know that increasing oklahoma where most of the oil stored in this country or rather it's the largest onshore oil storage facility in the world this is a black box if we are not to know who owns oil there who is doing why there are a couple big companies but they lease out tank farms to go in and sachs morgan stanley large banks large oil companies and then these groups also trade oil and it's very good to have the supply ship as well trading in the paper market if you can put them together there you have a lot of that's covered and that's what
a lot of these groups do now you talk about the eighty three period of deregulation there was of course another major wave of deregulation i believe it was in two thousand when the commodity futures modernization act was passed and how did this transform the market what this did when it codified congress literally voted to add to take away any anti-fraud powers that might have been implied by the regulator of the oil market so that they could not do very much about the kind of trading that was going on off exchanges while the exchanges do set the global transparent global price most of the training actually takes place off exchange and they just use the price that on the exchange. as a way of pegging what they're doing but at the end of the do the big trades take place off exchange and this basically made that arena which is now worth about six hundred billion dollars a day a free for all and to this day it's still a free for all what we're seeing now with the frank frank i taken so long to be put into into a fact has
a lot to do with the war between austria in washington over how are we going to rein in this thing when we threw away the key and shut the door all right so this idea of price discovery the idea of supply and demand meaning in the exchange and the result of price setting the market has given way to price discovery happening off the market and then what we see quoted in the exchange is actually just kind of a shadow of what's really going on in the forces that are really shaping the prices are completely invisible and unregulated and as you just said they took away the anti-fraud powers which is to imply that there is nothing but fraud if you want to look up a global price on the new york mercantile exchange for oil it's like the tail that wags the dog you want to look at a valet it represents a small piece but it's only a piece people can see so let's say you and i often are making a deal if you if you try to mislead me about price i can say hey i'm an amex is
trading at x. today you just offered me why you have that kind of thing so it is used as a benchmark but at the end of the day the big trades take place off exchange and this is where a lot of the gaming takes place i don't know if you noticed that b.p. trader recently who are now being pursued by the c f t c this is been a three year and the making a group of charges and yet why would it take three years to go after these guys well because they were doing this over the counter and it's very hard to piece together what happened because there's really no paper trail right so over the counter another one another way to say off the market and the b.p. scandal of course comes after the enron scandal and so the end. energy market has quite a history of this type of shadowy dealing to what degree does the manipulation in the futures markets and through the transmission of moral hazard creating executives of oil companies to also are completely insensitive to committing fraud the biggest problem here is that it's still more rewarding to game the system
buying into the culture of corruption is still more financially rewarding for you whether you're a regulator whether a politician or they're an executive in an oil company or whether you're lost. if you engage this culture on the level it's now playing out you're going to do better than if you john those who stood up and resistant and i talk a lot in the book about different people from different walks of life who tried to stop this out of control train and they were broken just as badly as the system is broken and it's very sad and to this day what's happening now is we see traders who didn't do anything wrong who are you who are being prosecuted because the regulators are sort of fun about not having done anything before they pick a fall guy and vice versa you see traders who you know feel that they're actually trying to make a better system but they're not getting any help i get letters from more traders than anyone else saying disaster awaits the scandal on price discovery is broken ok well in order for all the smart manipulation to go on and all this huge volume of
trading to happen off the market over the counter it requires a lot of money to be borrowed from wall street banks to what degree are c.e.o.'s like lloyd blankfein jamie diamond culpable in committing massive fraud on the futures exchanges i would be very surprised if they don't understand how this works but at the other end of the spectrum wall street has been investing very diligently into creating loopholes in this market creating the legal openings to allow themselves to do these things it's their best investment amber is to be able to manipulate the financial system and be able to do it legally and that is what we're seeing over china fixed. now but when you when you've done this for decades and this is been going on and getting if you look at the history since the great depression of the loosening of the rules and the chipping away of the regulations it's a very long sordid path that we're going to have to cross over again to fix it in the meantime many people will try to present it as hurting business and in
a way it is hurting business but if business is corrupt then they shouldn't be allowed to thrive well a lot of them it asked the question this way if you take a major wall street bank and you were to eliminate all the trading profits gleaned through corruption what percentage of their profits would remain well i guess it depends on how you define corruption and unfortunately a lot of things that might have been considered corrupt before the one nine hundred ninety s. are no longer considered in our regulatory and legal system crops well let's define corruption as a false price signal generated through market manipulation we just agreed that most of the price signals coming out of the system are in fact false or corrupt if the prices were to represent true supply and demand and not fake supply and demand how much profits would be impacted on these major wall street banks their profits would be impacted enormously if he's rules were to change and to make it much more honest and that is why you see this battle going on and on and that's why you see when
with our financial crisis right we start to see things happen in zero six it came to a head and. and here we are it's going to be summer of two thousand and eleven and we haven't done anything that's made any material difference and we're not going to if we haven't now we're not going through ok there is one industry however that has done something just last year cantor fitzgerald was going to launch box office futures contracts they were shutdown of the motion picture association of america went to washington and got washington to outlaw box office futures contracts correctly asserting that it would destroy their end. so how can people who are being destroyed with the gas price manipulation oil price manipulation commodity price manipulation can't get a lobbyist for them to go to washington to save them from the financial terrorists well it's a sad fact that the lobbyists are strongest for those who have money and consumers
aren't united enough and money to fight this battle so. you know corn soybeans all that continue to be traded anything that we might need to just to survive continue to trade in the futures market and the bar is very low and we fear india trainer in this market you don't have to put any money down to trade not. and when you're talking about hollywood these are people who are very aware very aware of the effects of futures on the price and the value of something and you're going to see a lot more battles going on for those who are trying to commodities things like movie box office receipts we're going to see a lot more pushback because the cat's out of the bag that this is not fundamentally a good thing how do you decide how speculator should be governed that has to be a discussion we have but certainly they need to be covered better one last question the flash crash about eight percent drop in seconds is being blamed on high frequency trading energy markets are now being co-opted by this new kid in
high frequency trading what's happening here well i guess we're seeing a lot of cases where the equipment is superior to the operator but. these systems have a great deal of power i don't know if you remember in zero nine but there was a russian american computer programmer who was apprehended you probably covered macs and goldman sachs literally engaged in a manhunt and the u.s. assistant attorney here in new york said goldman systems can easily manipulate stock and commodities prices in this. rather he was the quote here's a programmer he had taken some of the code and he had quit and he was too. they might be starting a job somewhere else goldman was so upset that they went after him very publicly and also rest exposing their own their own computer programming and it was not good for common it wasn't good obviously for the programmer but at the end of the day it exposed that these systems are very very dangerous and they're also very expensive
but they give a huge ads to banks like goldman and that was revealed and we moved on with what's amazing is our own law enforcement and find it alarming that goldman had systems that can manipulate our markets and it upsetting that a programmer walked away with the code ok well the book is called is silent but good mit it is a must read thanks so much for being on the cars report thank you max all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i want to thank my guest and leo mcgrath goodman if you want to send me an e-mail please do so at kaiser reported r t t v are you until next time this is my guys are saying bye.