tv [untitled] June 28, 2011 7:30am-8:00am EDT
resume disease mentor peer resume just in deep to recruit him build a measurable who built a renaissance hotel ok rules we try to preface if your children resume from school . in israel look she's available in so many children have various sort of in her children recently. her watching our t.v. live from moscow have bonds to believe refuses to accept an arrest warrant for colonel gadhafi saying the international criminal court is just a bust and political tool and has no authority based tribunals has accused the libyan leader of crimes against humanity. free trade unions are staging a forty eight hour strike with thousands taking to the capital streets and marching towards the parliament pressure protests are taking place ahead of a key vote on new austerity measures which happen backing off the prime minister.
and russell ball makers discuss controversal restrictions on abortion designed to boost the birth rate in the contrary but many fear the move will support a more back street surgeries and a legacy out of that in children. that's our financial guru max kaiser explores the dangers of the e.u. debt crisis and its influence on the global economy. i'm max kaiser this is the kaiser report there's a common theme emerging all roads are pointing to one culpable source of it could be b b i'm not talking about brigitte bardot but ben bernanke stacey herbert please elaborate yes max 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 the law is i mean this is the beginning of all law because it 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 you know this that's why i've been lanky 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 sign. 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 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 was asked about ben bernanke lying to the audience there about monetary policy in the causes of it getting and which though he mentions 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 usual fund investors are taking him quite ponderable risks for about a zero percent return to the sludge building a few basis points only to get those few basis points these funds are crossing the atlantic right smack in the middle of the european banking crisis to try to take out 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 edge of ground also points out that it's the fed who's forcing the zero percent rate 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 keep their they're forcing them to be predatory lenders for a little tiny nickel in front of a steamroller as they say right now 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 a 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 ok 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 can see in the price of gold he points to 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 sales of gold coins of sort in recent weeks as people are converting all their savings into gold but gold and silver and you know we were not and recently writing a new documentary down there and had a chance to speak before thousands of people have been on the national television since and translated into greek and the message to the greek people is clear to buy gold and silver to protect yourself against the flu. now it's a whole cost provokers like o'byrne i remember back to the occupation days in one nine hundred thirty nine greece was occupied now greece is being reoccupied hibernate he 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 the whole of 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 justifying 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 he'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
part of the fault 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. you're 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 caused as the result of this financial hole the graham. 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 for nevada after death to our
floor and that he's hauled over greed and rooms again well. he already is too late to the party you know that already the chinese came in through wal-mart ten fifteen years ago by the word of you ben he's talking about the u.s. debt being the cause of the wealth of china but listen isn't the u.s. 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 work 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 these loose monetary policies and corrupt monster of all sorts of 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 on having the world reserve currency if your economy starts to collapse because you could be used your privileges for having the world 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 already scrapyards of the new pawn shops so remember everybody was saying oh no gold and silver are going to sink because everybody's going to the pawn shop and cashing in all their family so where and 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 off 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 cochran's ever higher which will incentivize people to read 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 us do that in iraq we see them doing it libya 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 burning he's crazy policies but now it isn't something is an american citizens to rip up their own infrastructure. yes that is where should he be gone tommo want you to be experiencing. and then one might think well my headline here because this
i know we're talking to somebody in the oil speculation work an expert on oil speculation french president compares becky elaters to mafia once again it was 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 i guess exactly and the top of the cap oh all to millions the bank of international settlements in switzerland there at the head of the mafia family and then the fed and the new york fed and 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 you articulation all right since you were thank so much for being on the cause report thank you max thank you i was more coming why stay right there. twenty years ago largest country. this. began a journey. where you take. well you. really believe just signed stems. from. the future and.
welcome back to the kaiser report on 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 book siloam if you haven't got your copy yet i insist that you get it. this is all about the run against a hijacked the world's oil market and a welcome because a report hi how are you doing today mac. all right so who are the renegades how they hijack the world's oil world's biggest oil market these are the boulders in the original oil market back in one thousand nine hundred three reagan left it well price controls and when that happens 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 left to those controls in one thousand nine hundred three that it got imposed by nexen they went ahead and said 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 is
when you had bits and offers that were freely exchanging hands and that was the beginning of it all this is the oral history really of these traders instead of not knowing who they are 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 to control the oil companies and opec at some point another nation record this is when these markets start to become dominated by those folks who are gaming the system when did the transition become apparent and talk to us a little bit about that what's interesting is if you look at the history of this market. because we need fuel that's life out of this world oil and gas this is sort of has always been game. there have been different evolutionary it or ations 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 prices go out or dropping lots of hope supply to make 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 there's demand and that is very much james and it is to this day and 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 yes 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 about 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 a supply ship re-enter as well trading in the paper market but if you can put them together there you have a lot of doubts 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 with this codified congress literally voted at 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 go. going on off exchanges well the exchanges do set the global transparent global price most of the training actually takes place off exchange and they just use the price set on the exchange as
a way of you know pegging like they're doing but at the end of the day of 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 dodd frank i'm taking so long to be put into into a fact has a lot to do with the war between last tree and 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 a 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 towers which imply that there is nothing but fraud yet if you want to
look at from 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 it's only a piece people can see so let's say you and i offer exchange or making a deal if you try to future me about price i can say hey i'm an imax is trading at x. today you just offered me why you have that kind of fan 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 it is 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 market and the b.p. scandal of course comes after the enron scandal and so the energy market has quite
a history of this type of shadowy dealing to work to greed does even if you live in the futures markets and through the transmission of moral hazard creating executives at oil companies who 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 and it's still more financially rewarding for it whether you're a regulator whether a politician or they're an executive going to oil company or whether you're a lost or a cheerleader if you engage in 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 resisted and i talk a lot in a 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 traitors who didn't do anything wrong who are you who are being prosecuted because the regulators are certified about not having done anything before they take
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 this can't go on price discovery is broken ok well in order for all the smart manipulation to go on all this huge volume of trading to happen off the market over the counter and it requires a lot of money to be borrowed from wall street banks to look to agree our 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 i think other end of the spectrum. street has been investing very diligently into creating loopholes in this market creating the legal over and. thanks. 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 trying to fix that now but when you when you've done this for decades and this is
going 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. sort of power 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 and should it be allowed to thrive well. 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 quiet yes it depends on how you define corruption and unfortunately a lot of things that we might have been considered corrupt before the one nine hundred ninety s. are no longer considered in our regulatory and legal system crofts well let's look like corruption as a false price signal generated through market manipulation we just agreed but most of the price signals coming out of the system are in fact false or corrupt if the
prices weren't represent true supply and demand and not fake supply and demand oh no it's profits would be impacted on these major wall street banks their profits would be impacted enormously if these 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 one with our financial crisis right we start to see things happen in zero six it came to a head in a way 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 to ok there is one industry however that has done something just last year cantor fitzgerald was going to launch boxoffice futures contract. they were sucked out of the motion picture association of america once a washington got washington outlawed box office futures contracts correctly asserting that it would destroy their industry so how can people who are being
destroyed with the gas price manipulation oil price manipulation commodity price manipulation can 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 moneyed enough to fight this battle so whale corn soybeans continue to be traded anything though we might need to eat sir just to survive continue to trade in the futures market and the bar is very low i mean if you're in theater in this market you don't have to put any money down to trade not a sense 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 movies like box office receipts we're going to see a lot more pushback because the cat's out of the diet 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 governed by the last question the flash crash of natural gas eight percent drop in seconds is being blamed on high frequency trading energy markets are now being co-opted by this new kid in town 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 x. 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 trade are all rather he was the clown his programmer he had taken from the code and he had twenty and he was presumably
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 calling it wasn't good obviously for the programmer but at the end of the day it exposed the east it seems are very very dangerous and they're also very expensive but they give a huge ads to banks like goldman and was revealed and we moved on right what's amazing is our own law enforcement and find it alarming that goldman had systems that could manipulate our markets. a programmer who walks over to code ok well the book is called the asylum but goodman it is a must read thanks so much for being on the cars report thank you max all right now is going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i want to thank my guests william mcgrath goodman if you want to send me an e-mail please do so at kaiser reported or are you until next time this is my father standing by.