tv [untitled] June 28, 2011 3:30pm-4:00pm EDT
three. three. three. three. billion dollars for your media drug free media guns aren't cheap something. welcome back here's a recap of the top stories on our t.v. version on the brink of default greeks go on strike with hundreds of thousands taking to the streets to march against austerity cuts china's prime minister on a tour through europe has offered to buy the embattled euro out of its troubles with. the international monetary fund chooses a french finance minister christine lagarde as its main chief she was backed by
europe by the u.s. russia and china making her the clear favorite. prosecutors in the hague call on libya it's turned over colonel gadhafi for allegedly ordering the killing of civilians but the country's leadership refuses to recognize the tribunals legitimacy labeling it as a cover for nato's illegal actions in libya. activists say claims that a full tilt heading for gaza is carrying chemical weapons to music as soldiers are just israel's attempt to undermine the aid mission. the next our financial guru max cars are explores the dangers of the e.u. debt crisis and its influence on the global economy that's up next. 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 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 a stench really do stress tests and ask looking at all their positions all their hedges what would the effect on their capital be if if greece the felted 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 a fair 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 water boarded i mean he actually says there they even looking at the hedges this. would be a small 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 it's a good thing he's lying when he makes that statement in front of congress he is telling a gross 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's being interviewed on bloomberg news and he's asked about them going to be lying to the audience there about monetary policy in the causes of it and which the dollars he mentions in a money market so the fed has pushed interest rates to zero it has flooded the system with dollar bills. for savers 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 and money market mutual funds having nothing to do in this country because richard zero go to europe so many more mutual fund investors are taking him ponderable risks for about zero percent return or you'll be. dealing
a few basis points only but you 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 know jim grant also points out that it's the fed who's forcing the zero percent rates 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
keep their they're forcing them to be predatory lenders for a little tiny nickel in front of a steamroller as you say right the command and control concept is that this 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 to shape 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 the points you see
that takes me to the next headline greeks turn savings to gold and perth mint silver coin sales surge 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 thins and translated into greek and the message to the greek people is clear to buy gold and silver to protect yourself again. the financial hole 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 by bernanke 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 the cost i guess the entire destruction of financial wealth we have 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 e. b u k banking system is just fine exposure to greet that 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 grammar economy of part of the fault swaps that go bust due to the fact that they're manufactured in a faulty way but 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 man. if you actually are here the world is being flooded with all the credit of thoughts wops these products don't work they're completely in congress with any notion of a capitalist system they're used only to destroy as they weaponized financial instruments 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 that 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 and their dad to our fortune and that he's hot over greed and groans 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 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 worked but 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 he's a loose monetary policies and corrupt monetary policies the problems of china as america perceives them that they are quote unquote currency manipulators is also the result of america's loose monetary policies america as the world reserve currency and there's huge benefits on having the world reserve currency if your economy starts to collapse because you could be used for privileges as for having a 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 that 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's going to the pawn shop and cashing and 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 it's actually taking the entire transformer risking death as food
republican operative 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 is a congressman saying oh it's the chinese who will invade us and what should people do when they invade which 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 write out the infrastructure and what you're seeing here a train derailed in taunton massachusetts yesterday after thieves apparently used the 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 policy yes there but no it isn't something vising american citizens to record their own infrastructure. yes it is worth to be. what you to be experiencing. and then one would 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 secular leaders 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 i guess exactly and the. ultimately is the bank of international settlements in switzerland where the head of the mafia family and then the fed and the new york fed and the e.c.b. the 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 us federal reserve system it's the private bankers it's jamie dimon the lloyd blankfein who are the fed and they've created this financialization as a way to occupy our economies and the people in the revolving it's a global insurrection against ben bernanke the occupation all right thanks so much for being on the couch report thank you max don't go away much more coming why so stay right there.
twenty years ago or just country. just because he. was. trying. to teach began the journey. where to take. welcome back to the kaiser report i'm max keiser time now to go to new york to talk with william mcgrath goodman 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. this is all about the run against a hijacked the world's oil market and lay a welcome because a report i how are you doing today mac. all right so who are the renegades how they hijacked the world's oil world's biggest oil market these were the boulder is of the original oil market i can one hundred eighty three reagan left it well price controls and when that happens some
traders who had destroyed their own exchange which had traded potatoes this is 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 had been imposed by nixon they went ahead and said it was effectively deregulation of the market it became a true free market not big oil setting prices or opap behind closed doors this is when you had bids and offers that were freely exchanging hands and that was the beginning of it all this is the oral history of 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 the what you call the transformation of the market into a more of a free market system away from the control the oil companies opac at some point another nation record this is when these markets start to become dominated by those folks who are gaining the. system when did that transition
become apparent and talk to us a little bit about that place interesting is if you look at the history of this market because we need fuel it's lifeblood of just world oil and gas business 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 price go out or dropping lots of hope supply to meet the price go down but really it's about being able to predict what's going to happen and 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 kind 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 going to be letting prices correct yes and 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 are still are just onshore oil storage facility in the wild this is a black box we are not to know who owns oil there who is doing a lot 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 these groups also trade oil and it's very good to have a supply ship as well trading in the paper market if you can put them together there you have a lot of that's a story covered and that's what a lot of these groups share now you talk about the eighty three period in 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 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 up a 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 your pegging what 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 think in 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 to can shut the door all right so this idea of price discovery the idea of supply and demand meeting and the exchange and the result of price setting the market as giving away 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 that circle way the anti-fraud powers which imply that there is nothing but fraud if you want to look at the global price on the new york mercantile exchange for oil it's like the tail that wags the dog you want to get in valet it represents a small piece but it's only people can see so let's say you and i often were making a deal if you try it out if you try to mislead me about price i can say hey i'm an amex straining 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. traders recently who are now being pursued by the c.f.c. see this is going to three year and then made. charo group of charges and yes why
would it take three years to go after these guys will because they were doing this over the counter and it's very hard to piece together what happened because there's really no paper china right so over the counter another one another way to say off 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 what degree does the manipulation 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 you whether you're a regular whether a politician or they're an executive in an oil company or whether you're a lost or a cheater 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 resist 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 to this day what's happening now is we see traders who enjoy 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 from more traders than anyone else saying disaster awaits this can't go on price discovery is programmed 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 last three 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 i feel 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 as their best investment ever is to be able to manipulate the financial system and be able to do it legally and that is what we're seeing or trying to fix that 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. sordid path that we're going to have to cross over again to fix 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 let's ask the question this way if you take a major wall street bank and you were to eliminate all the training profits gleaned through corruption what percentage of their profits would remain 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 crofts 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 of profits would be impacted on these major wall street price 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 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 box office futures contracts they were sucked out of the motion picture association of america once a washington got washington outlaw box office futures contracts correctly asserting that it would destroy their industry so how could people who are being destroyed with 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 as the 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. you have corn soybean and all that continue to be traded anything a we might need to eat or just to survive continue to trade in the futures market and the virus very loud i mean if you're in a train or in this market you don't have to put any money down to trade not a stance and when you're talking about hollywood these are people who are very
aware very aware of the effects the future is 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 commodify things like movies like box office receipts we're going to see a lot more pushback because the cat's out of it by 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 one 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. 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 the max. and goldman sachs literally engaged in a manhunt and a u.s.
assistant attorney here in new york sad goldman systems can easily manipulate stock in commodities prices and this trader are rather he was a client his programmer he had taken from the code and he had quit 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 computer programming and it was not good for calm and it was incredibly asli for the programmer but at the end of the day it exposes these systems are very very dangerous and they're also very expensive but they give a huge ads to banks like goldman and thousand revealed and we moved on right what's amazing is our own law enforcement didn't find it alarming that goldman had systems that could manipulate our markets if not enough studying a programmer of the code ok well the book is called the asylum but limit graft goodman is a must read thanks so much for being on the cars report thank you max all right