tv [untitled] October 12, 2011 8:01pm-8:31pm EDT
stacy delve into the current global financial turmoil and expose to you all the tough details of a new plan to rebuild the european union economy. issues that so much is made in which of course you want to. call it what you will the major political tipping point for woodstock with the music in respect to the occupy wall street demonstrations continue to. kaiser walk with the kaiser report before we get started i want to mention as predicted sheffield wednesday big chesterfield i met john pearson he was so impressed with my prognosticating abilities he gave me his time that's right. say
server maxwell you may have been too busy at the sheffield wednesday game to have noticed that angela merkel and nicolas sarkozy have been photographed standing together and you know what that means that means another conning plan only this one chancellor merkel announced we are not going into the details today the whole package will be ready by the end of the month there are no details other than desperate money printing as the banking system implodes at least those occupy wall street people have finally figured out one thing it's not the government that's the problem but the banks recurring theme i'm sure but tell us more well i maintain there is no difference between banks and government they are the same thing but let's move on to covering this angela merkel and nicolas sarkozy meeting the uncredible dog and pony show merkel and sarkozy so this is our guest from last week charles hugh smith and he said that every time the ugly truth of systemic insolvency rears its frightening head once again out comes the psycho's the merkel
dog and pony show in order to do exactly as the fed says in their handbook is manage perception they don't need to have a plan they just need to manage perception well in a free and currency world all you need to do is manage perception because you're managing consumers the people who seventy percent of the u.s. economy are trigger happy drug addled consumer holic sewer wed to their food stamp card and their credit card and debit cards just manage perceptions if you just get them to go into a frothy frenzy based on a pack of lies which was what sort of cozy and merkel that's all they can talk about that's how you manage the economy because there's no underlying base foundation for the economy it's all based on fluff you know but that worked for the past thirty something years since the us went off the gold standard in the world turned to feed currencies on mass but as charles who smith said. here the problems of the global economy are not based on perception but in the reality of prices
balance sheets and income statements that concentrations of wealth and power precarious the systemic imbalances ruthless exploitation and command economies mismanaged by central bank policy and manipulation so we're at that end game of manage perception and work for quite a few decades sure at the end game but the question is how long they can extend the game using computer trading algorithmic trading where they effectively seized a price discovery mechanism they make the prices they've got infinite credit they're disenfranchising and stealing hundreds of billions of dollars every month that it goes on and on the occupy wall street crowd is growing in size to global insurrection against bank right to patient savers versus speculators we call that years ago it's finally getting a foothold it's working its way into the mainstream media world and wall it ends when they take the ability to create prices out of computer algorithmic trading is taken away that's when it ends well you talk about this occupy wall street and of
course they're operating against the bankers as bankers versus the people of the one percent versus the ninety nine percent but here's another takeaway headline from the merkel sarkozy meeting merkel euro leaders will do all necessary to support banks they will not support the populations they will continue to support the banks they have not learned any lesson this is what they are saying european leaders are coming under increasing pressure from international counterparts to end the debt contagion that president barack obama said last month was scaring the world and it's scaring the bankers. not scaring the world the world is becoming empowered by their efforts to capitalize and get rid of these bankers they're not scare the bankers are scared exactly why do they have merkel the chancellor of germany have to state these facts the bankers are afraid mostly. of the german population because they know that the german population is the one with all of the
cash and the savings and that's what they want to bail them out so it's up to merkel to manage the perceptions of the german population and any leader who defends the interest of the banks is clearly got the interests of the people running a second second place in that equation so i mean she's not doing great in elections on hope to get bounced out well you know the previous announcement merkel and sarkozy made was that the f.s.f. the european financial stability sic is that how you pronounce as i say it's not financial stability but it's they call it that anyway so let's look at this headline max greece activates rescue fund to save proton bank yes the first bank bailed out by the e.f.-s. f. greece's central bank said on monday it activated the bank rescue fund to save proton bank effectively nationalizing the small lender that is under investigation for possible violation of the country's money laundering laws well the name is
neutrino bank that allows them to go faster than light go backwards in time and undo this mess before it even starts well but it's so symbolic that the very first bank rescued by the f.s.f. is engaged in money laundering out now why are we rescuing a bank that is gauged in money laundering just like we rescued what covielle why not just let these drug dealers and money launderers go out of business because i don't believe in competition they don't believe in competition i'm all for free market competition but the operative word there is competition if you've got drug kone in rent seeking banking kleptocrats fudging up the works with their algorithmic trading in. outright larceny you don't have competition do you know one for competition let's see some competition just like the wednesday versus chesterfield like everyone should emulate sheffield wednesday football club they're
on a winning streak because they return to their roots as world clowns competitors. in the premiership so let's move to this next headline another bailout another break up another toxic bank across europe dexia board meets us france belgium tussle over troubled assets so you know belgium has bailed out the belgian arm of dexia which is now threatening a downgrade of belgium so again throwing the population throw an entire nation the existence and credit of a nation to save a group of bankers but i want to quote from this headline from bloomberg just the managing perception angle of this rescuing dexia the first victim of the debt crisis at the core of europe has become critical to preventing contagion in the region's banking industry again the managing perception rescuing dexia is absolutely necessary for the survival of human beings right they.
claim and brothers collapse in the varistor they got the rescue we now know that would have been better off they allowed the bad banks to go bust they were more attentive to the needs of the underlying competitive economy but now europe is making the exact same mistakes rescuing dexia at the expense of their competitive economy well max bloomberg goes on to say dexie is balance sheet with total assets of about five hundred eighteen billion euros at the end of june is about the size of the entire banking system in greece. a larger than the combined assets of financial institutions belled out in ireland in the last two and a half years it's also remember dexia was the number one recipient of federal reserve funds from the us federal reserve they were keeping it afloat in two
thousand and eight well folks i've got to hit you about a low legerdemain of grammar and syntax and word usage the word assets in this case are first in debt so whenever you see in the paper decks you've got one hundred nineteen billion dollars in assets you know that's it's assets for the bankers because it's debt that they're collecting rent from you in the form of austerity measures but it's not an asset in the sense that it's worth anything it's debt pulled out of their strange thing that has an interest bearing coupon that you've got to pay for through austerity measures yes it's an asset for them but it's a pain for you now the reason why the us federal reserve was propping up decks here for so long is that dexie is crucial they say to the municipal bond market so it holds the assets of many municipal bonds including new york city on its books look the pirates off the somali coast are critical for the economy of somalia that's true if you remove the pirates the economy in somalia would collapse. that's
true just in the same way that dexia is crucial to the european banking system that's true but it doesn't mitigate the fact that they are fricken pirates well custer is very worried to be picking up the best assets for. cutter right of course carter is going to be picking up any words that other frickin sound guy he's always taken things of the absolute top reason we're a stock broker that ever lived no but this is what's happening throughout we've seen throughout the european crisis is real assets real genuine good quality assets get handed out fire sale prices to insiders to the elite the bad assets which are not actually assets but debts that will never be paid back and so therefore are just black holes of nothingness they get handed to the taxpayer so it's confusing like you said the word assets is a confusing term and at the same time they vilify the word commodities commodities are worthless meanwhile they're taking the assets that is nothing but
a debt to buy the good stuff that they think stinks so again fighting this banker occupation is occupy wall street so i want to turn to this next head by max john there are four things that every wall street protester should know so this is a newsletter writer john houseman of housman funds and the four points he says that all occupy wall street protesters should know when they speak to the media is one failure means bondholders shouldn't be guaranteed every penny and he's in fact referring to the managed perception that somehow banks are too big to fail that if they fail you fail you ninety nine percent you must we are crucial to your existence and he said that's fake because depositors are protected when a bank fails it's the bondholders and stockholders who lose you know ok what else do they say the federal reserve's purchases the fannie and freddie were illegal number three creating shell companies like me doing to buy bad wall. assets was
illegal and for policies of balance only misallocated capital and exacerbate the wealth skew what do you think of those four demands i mean in my pin it doesn't get at the net all of the problem clearly the one thing that these protesters want is higher interest rates and that should be what their rallying cry is we want higher interest rates which went bankrupt the speculators and give us the savers a greater return on our jobs and our savings that should be the rallying with this kind of what are you saying on the fourth point the policies of balance only missed allocate capital so he goes on to write in his own letter despite inflicting massive damage on the economy too big to fail or for to protect its status that allows them to extract rents that don't reflect the cost they have imposed from that standpoint the occupy wall street protests are a welcome reflection of public trust ration over washington slavish coddling of reckless financial institutions sure great points but again you need to single rallying cry to win against the speculators there has to be
a connelly's of scale there has to be a certain of oneness of purpose to defeat the speculators and so far they're getting a huge base but there is no rallying cry ok fine the base was continuing to grow which is useful but there is no single rallying cry yet and you know i believe that this is where they are going they will eventually figure this out and they will figure out that their mess global protest can in a way in effect put risk back onto the balance sheets of these banks where it came from and capitalized banks you want to get rid of the cancer safety herbert thanks so much for being on the kaiser report thank you don't go away much more coming your way right after this.
only. welcome back to the kaiser report on max kaiser time now to go to los angeles and speak with ellen brown author of web of debt l. ron welcome back to the kaiser report thanks max always a pleasure all right well around europe in banks are being nationalized left and right as the ongoing global financial crisis continues to wreck havoc so what were once private banks are now becoming publicly owned banks but we already have a model of publicly owned banks how do these two compare well germany for example half their commercial loans are through publicly owned banks they probably have the strongest european tradition of publicly owned banks but they're being attacked by the private banks so their legs are being taken out from under them in the form of government guarantees but say in japan their banks are nationalized in the ninety's and then as nationalized banks they had to do things for the public in other words they were use this public utilities which is
a good thing and in fact the reason japan should carry debt to g.d.p. ratio of two hundred twenty four percent which is the highest of any of the major countries is that their debt is actually own by their own bank so so it's internal debt it's not debt owed to foreign creditors who can squeeze them raise their rates etc now going back to germany for a second lend us banks this is. a big system there so describe let us banks in germany lend this banks are public banks that ever been around for two hundred years it's a very solid tradition in germany it is how they funded their small and medium sized businesses which are the businesses that were responsible for their very strong export business in that in the second half of the twentieth century they were the leader in exports and they're relatively small country like they're half the site. texas and here they were global leader in exports well these are they're
small and medium size businesses which the latest banks the public banks recorded and i don't need the latest banks are they head of this whole pyramid of local public banks which are called spark and they're all geared towards serving the public interest and basically serving the local businesses so where our banks are not lending to local businesses particularly the big wall street banks that have all the excess reserves our member books. in germany that's their mandate to serve their local businesses all right let's go back to two thousand and eight for a second here of course the lenders banks in germany were some of the first banks or the first banks actually to get the big bell out from wall street from the u.s. so how does that play into the story well the reason they had they had to get into speculated derivatives etc at all was that in two thousand and one they were no longer allowed to the e.u. rules no longer allowed them to count their government guarantees as part of their
capital and so so that and they had to compete with the other banks to turn a profit for their shareholders or the shareholders are the public the local governments who don't really didn't really want the profits but that was the rule imposed supposedly to make them competitive with the private banks but that's the whole point of being at public bank this you've got the guarantee you've got the public behind you and so you can make lower interest loans you can make longer term loans you don't always have to be left in a chair quarterly profits for your shareholders so they're forcing them to fit into their private bank mold which naturally day they then got into trouble but as long as they were allowed to do the public bank think they were highly successful ok so and presumably the lenders banks were caught up in buying derivative some wall street that the rating agencies are right. aaa so they were unaware that the rating
agencies were corrupt and applying these ratings as part of a quid pro quo scam of under underhanded dealings and kickbacks so the american public ended up bailing out german banks again to pay for the fraud at moody's fitch and s. and p. so let me ask you something we see over and over again across the us you in europe governments use their authority and power to transfer state funds to cronies for example in within the military industrial complex now what would stop a state bank or public bank from doing the same well we only have one probably thinks that we can use that for the bottle that's banker night to try to and they they operate very honestly and the reason is first of all they have no motive to they're not getting bonuses these commissions they're just understaffed larry and their mandate is to serve the public so they have no motive to. do
exploited to thinks that politicians don't have control over the bank in that sense and that's in my melas there is no occupy north dakota campaign at this time is that your understanding that north koreans are quite happy with that i mean the bankers in north dakota are quite happy with the banker next friday because it serves as the central bank for the state they make cheap liquidity available for the local banks they partner with the local banks they do guarantee the local banks loans and that allows local banks to make much bigger loans and were secured loans then they went out there were right well having a public bank doing utility functions in the banking sector. would of course increase the competition in that sector and it would create a nice healthy competitive economy but america and the u.k. for the most part hate competition. and they preserve they rather have the rent seeking and the monopoly profits of
a kleptocratic class and we're seeing the result of that now on the federal level let's talk about the federal reserve for a second the idea of putting it underneath the treasury reporting to the treasury a suggestion made by dennis because senator recently what are your thoughts on this i think it's better to nationalize the federal reserve then to eliminate the federal reserve just because a central bank does serve many useful functions and it i mean the biggest when is the liquidity function the central bank is there to allow the money supply to expand its line is we have a system where banks create our money basically all of our money is created by banks in the form of loans except for coins which are the only thing issued by the government and the banks are always want more money back and they put out there in other words they create their principal but they don't create interest necessary to pay off their loans you have to have an expanding money supply or somebody is going to go bankrupt which is what's happening in the e.u. because they don't allow their central banks to actually create money flow just
kind of looking at this banking model for a second because we've talked about this before and you've talked about the existence of paper money or money is ok given that it's very very. controlled the supply of money is controlled. versus let's say a gold standard or that would be more or less implied however as you're saying here the loans made by any bank of course they not only create the money to circulate the economy but they must also create money to pay the interest on the money that they've just created so there's a built in to perpetually create money but you're saying that there if you put a cap on that money creation and very vigorously oppose that cap you can do fine with the. money system correct i would put a cap on that the money that the banks create banks create credit interests there
at the radically banks create credit in response to the demand of the people for credit so it's a very fluid organic system it's a good system the only thing wrong it is the interest the only thing that's not mathematically sustainable but it should be that anybody who's credit where they can go to a bank and get a loan and that's not true right now right now the banks won't lend even if i under the old standards you're quite credit where the businesses are all over california and that's the big complaint of small business they cannot get the loans they used to get that they only got in for a second so what about a cap on the interest rates when you have a public bank the interest goes back to the public so that is a sustainable system in the sense that you are feeding that interest back into the economy where it is available to pay pay principal and interest that the ideal model was in the bank of pennsylvania set up in the early part of the eighteenth century where the bank could create they created the money in the form of paper
scrip you know pennsylvania paper strip it would issue say one hundred dollars in loans at five percent interest and then it could issue another five dollars and spend that into the economy so let's talk about the currency for the second using your your idea as we see this playing out in germany and other places this is mean only one currency or can there be more than one currency can compete in currents can currencies i was big but i think the most efficient thing would be to have one currency if everybody agreed and this whole system where credit was a public utility because it's just easier to be dealing with the states same yardstick but if you if you have like the e.u. system right now or this economy can't expand the money supply can't expand then competing currencies serve a very useful for purpose for example i was just in switzerland where. i went to a spa that was funded by a loan from the beer bank which is
a community currency and it was a three million dollar loan and half a million swiss francs worth which is valued at more than a dollar was in fear interest free this is actually a community currency and that currency is so well accepted in switzerland that they could actually pay workers materials half a million swiss francs in viewer and it worked out are you saying you saying beer as in the stuff you drank you know it's w.i. are here i think it's been around here ok what is dear dear is a community currency it's the most largest established well established european community currency so just to follow up on the various telstar work so there's a swiss franc and there's a fear right so the fear is that countercyclical in other words when that when that . national currency shrinks as it has been doing lately relative to goods and services. then the local currency comes in and fills fills in the gap and the local
currency is issued by vir bank now issues both the local currency beer and the swiss franc but it when time they were on the issuing beer but this spa that we went to was very elaborate i mean there's nothing like that in the u.s. the fact that you could get a loan from a community turn it's a bank. to do to do a large infrastructure project like that was quite remarkable so it was zero percent interest and then half a million of the year and then it was one percent interest on the next million swiss francs and then the rest was at three percent so the whole thing was a very low interest loan ok well some of the the very is a currency chosen by the people so the people got to pick a currency they have a plentitude of currency to choose from that's the market while let the market decide. and that's what you're saying in europe but i guess it's growing throughout europe alan brown is that your perception yeah well they definitely need some
alternatives there because they don't have a safety valve we have the federal reserve which can print money and does print money and expands the money supply is needed all right well that's all it's all we have thanks so much for being back on the kaiser report thank you max and that's going to do it for this edition of the kaiser a four hour with me max kaiser as they see our work or i think my guest alan brown is going to send me an email please do so at kaiser reported r.t. t.v. dot argue until next on this and max keiser saying. he used to.
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