tv [untitled] August 10, 2012 8:30pm-9:00pm EDT
stop and look at the current a bit unemployment the national debt. ceiling governments ask yourself does it really matter who wins with billions created you can gamble with your money or turn it into solid gold. request the gold and silver investors god. call today eight hundred two five seven gold. max keiser this is the kaiser report we've got a turf war brewing on the global banking say between the u.k. and the u.s. state max and all of my headlines here we have lang grabs and power grabs and just plain old money grabs labor m.p. john mann attacks anti british bias by u.s.
regulators and call for money laundering inquiry john mann who is a member of the treasury select committee said he was concerned about an increasing anti british bias by u.s. regulators and politicians which he said was shifting financial markets from london to new york this is the standard chartered debacle where the bank is being sanctioned by some new york and some new new new york regulatory authority that just popped up under andrew cuomo and they are attacking the standard charter which is a u.k. based bank but they do most their business africa in asia and this is developing into a bit of a turf war and the idea is that the u.s. is trying to attack the u.k. city the city of london in a power grab. to try to steer business toward wall street versus the city. it's not
about iran son about iran's not about the politics there's nothing about the politics because clearly of a was then the question of h.s.b.c.'s money laundering and drug trafficking or barclays libel or rigging would come into play but it doesn't this is purely war now between wall street versus the city of london this is what we've been waiting for this is the this is going to be the greatest show on earth yes but this is the poodle that bites the hand that feeds it you know they they were fine acting as a poodle for all these years and egging on the u.s. bully to attack invade and steal and grab resources from other nations and other sectors of the world economy. and yet here now they're all like wanting an investigation don't know that that's a good point i mean when the the u.s. stumbled into iraq there was the u.k. you know tony blair's down to crawford texas with george bush trying on the cowboy hat when the u.s. the stumbles in afghanistan there's the u.k.
will give you support when the u.s. stumbles into the city of london now wait a bit when i'm at it were i thought we were allies well no nobody's ally of the us except for maybe israel but certainly not the u.k. and now we're going to see an interesting confrontation but in terms of empire you know you render on to caesar what is his and caesar see these the globe no corner of the earth is immune from caesar and you and i were in doha in two thousand and seven and we saw dr gerard lyons who is the chief economist for standard chartered speaking to a group of investors in the middle east and saying we saw the subprime crash at that point it was just subprime because we don't have any exposure to the u.s. he was telling these investors so we're safe we only have exposure to those with assets asia and the middle east and of course now he's been proven wrong in that you're you're always exposed to the empire you know it's interesting that this
mario cuomo his office the financial regulatory office they made a big you know virtual perp walk demonstration against energy orator and then timothy geithner over the treasury popped up as a way way way way way you know that you don't do this because you're going to upset the status quo of all the graft and malfeasance that we all profit from incredibly don't upset the applecart by starting to force ethics in the law into global banking that would kill the golden goose well that's a good point to make is that standard chartered thought and they say that they were they had to deal with the department of justice and the f.c.c. and these other regulators but there is this new regulator new york state department a financial service. says that andrew cuomo created in last year so this is just perhaps their way of making their mark on the scene on the global mafia sort of racket shakedown scene and they're saying hey we're the new al capone on the block we have to play it big we have to make a big mark so you know we need our kick back now to be just
a shakedown by the this new group of standard charter. which probably will end up paying a fine they'll pay something behind the scenes they'll they'll pay off when i'm andrew cuomo says a reelection campaign will suddenly triple in size mysteriously and you know this will be swept under the carpet but oh are you know the you can make it grow a pair that in the city of london good so you know what you know we've got enough is enough we were tired of the u.s. wall street telling us where we can a going to do business and then they go at it which would be fantastic by the way i might add that we posted the story on our site max kaiser dot com and the number one source of traffic to our site yesterday was you americans obviously you're not able to hear what the standard chartered chief financial officer allegedly said but it made me realize that you know our whole show about goldman sachs is fraud was also bleeped out because they introduced you know curse words that are not allowed
to be said on television so it's a great way to censor the media talking about your financial crimes is just to use expletive laden dialogue that's why i had to make up my own first words like frank frank ok i mean i use it all as i'm going to get bleeped but it is pretty bad. and it's only in your mind right now i mean. you've got to bang. we've got that means but passes muster with everybody on the regulatory front because it's not a curse word but again go back to the standard chartered thing we saw h.s.b.c. get away with just apologizing for longer and far more money from the mexican drug cartels and the saudi terrorist organizations so this. is part of that post magna carta a world where the king the emperor the elites are able to rule with total caprice they can just at a whim decide well they don't like you committing that crime but their body committing the crime it's all fine here's
a headline from the new york times record penalties for fraud few charges for executives pharmaceutical companies military contractors banks and other corporations are on track to pay as much as eight billion dollars this year to resolve charges of defrauding the government analysts say a record some more than twice the amount assessed last year by the justice department but while the collections are a boon to the government and taxpayers yeah right they are resurrecting questions about the relative lack of charges against executives at the companies that are getting the stiffest penalties what you made a point earlier which is a good point in the fines meted out against these banks and against these pharmaceutical companies or any of these clips kratz they're running the global economy and making the rules to govern themselves all they do to pay the fines is they take it out on the taxpayer don't they they end up stealing more money out of people's accounts like jamie diamond of them up global or they end up exposing the public to more toxic products like subprime mortgages to pay for the fines so in
other words maybe the the white house and number ten downing street and other folks in politics would do it all favor by stop imposing fines on these corrupt companies because all they do is they turn around and they stick us with the penalty in the form of jack coney and surveillance technology and outright thievery from our accounts stealing our money so just leave you alone you're obviously not interested in justice the support of this thing from your mind to eric holder has got to be the most timid department of justice that in the history of america this is what happened in pre-revolutionary french times everybody there was a trickle down shake down that crown was having to pay for their american revolution. and financing then they shook down the church which then shook down the the lords which then shook down the peasants and it was a constant shakedown so if you're shaking down these you know corporations for just eight billion dollars by the way which was a fraction less like half of the wall street bonuses last year so it's
a little amount but it's still enough for them to exact a price tag on the population it's trickled down down you know a great piece this week saying that the return on crime on wall street is something on the magnitude of five hundred percent on your money so for every dollar of crime you commit you get five percent return which is even greater than the amount of return to get as a lobbyist in washington by corrupting politics lobbyist it's fantastic rate of return but committing fraud on wall street offers a fantastic rate of return and obviously with no deterrent now you're going to see this continue just to warn you if you're not one of the connected and close to the emperor that day you know he could actually charge you with fraud he might have been jailed so i wouldn't think you can get away with it yourself now speaking of this you know turf war and resource war and land war hillary clinton's morally superior speech in africa was deluded and this is on the guardian who usually
agitate for war and resource wars in particular for empire but in this case they let in the back section of their blog commentary jihadi gauche an economist from india and she says reports on hillary clinton's trip to africa describe her as warning african leaders about cooperation with countries that just want to exploit the continent's resources she notes of course that the u.s. and the u.k. have done this for hundreds of years and they're continuing to do this and then she says if anything they're concerned now is that competition from chinese and indian and even brazilian and malaysian firms is forcing them the u.s. and u.k. to offer better terms for their resource extraction as some africans put it it is better to have competed. imperialist in action to allow the objects of interest to play them off against one another now if you want to say it's competition they would rather just go to africa steal the resources for pennies on the dollar the fact that china is there bidding up prices they hate hillary want to go down like
you know how the africans both before zogby give us your resources for nothing because after all why i don't know of no particular reason and then speaking of plunder here's another story that's been getting a lot of attention and this is the chart of the day h f t edition here's the animated gif here and what you see here is relatively low levels of high frequency trading through all of two thousand and seven then in two thousand and eight a pattern starts to emerge a big spike right at the close at four pm which is often mirrored by another spike at the open and then after that two thousand and eight things just become completely unpredictable sheer noise intraday spikes can happen at any time of the day and volumes can search a fallback in pretty much random fashion it's fair to say that there's something quite literally out of control going on here you know the computers have taken over all the trading and the people who have the greatest algorithms to steal stealing algorithms are taking capital out of the system it's a longer free market capitalism is still longer supply and demand
a stone longer bit off or it's washed trades enabled by high frequency trading that are enriching the top one percent of the top one percent of the kleptocrats class and everyone else is being forced into the prison again another prediction i made is coming true i said that facebook ultimately would get into the gambling business they are now going to offer real money gambling in the u.k. as part of the emergence of what i call the casino girl leg model that's the only way to justify the valuation more than one or two billion for that company is that they get into online gambling so that's coming it will be global people have no jobs but they'll be there and they'll be forced to gamble to try to get their way out of the gulag which of course will just put them deeper into debt and i think you know on the high frequency trading thing what you see. when you go see mad scrambles that they say are in explicable that's literally i think half a penny falling on the ground now it used to take tens and hundreds of dollars to be thrown out a window to cause a mob to go freaking over trying to get the free mind of the i was three this is
called trying to scoop up pennies in front of a steamroller right so the risk of getting this penny is enormous and we saw this with the knight capital collapse because people were trying to make a nickel they lost four hundred forty million. clearly that's not a sustainable model but they get bailed out every single time they screw up but they can't expand the fed's balance sheet in the e.c.b. balance sheet past ten or twenty trillion dollars or euros eventually when you get to hundreds doing a trillion dollar euro balance sheets of these central banks around the world you will have difficulty and keeping even no matter how much market rigging you do interest rates from popping up to four or five percent and then you're going to have of course a return to the sixteen or thirteen hundreds. thank you much being on the kaiser report thank you michael i know i might try coming away.
stop and look at current events unemployment the national debt failing governments ask yourself does it really matter who wins with billions created daily you can gamble with your money or turn it into solid gold request the gold and silver investors guy. call today eight hundred two five seven gold. welcome back
to the kaiser report imax kaiser time now to go to niceville florida and talk with carl denham ger of market ticker dot org karl is also the author of leverage how cheap money will destroy the world karl denninger welcome back to the kaiser report thank you max i was reading your most recent tweet carl you say new york throws a wrench into crony banks tourism explained well yesterday. new york state decided that they've had enough of the games that the banks play. and issued a rather stinging indictment if you will against standard chartered which is a british institution. alleging that it had essentially process two hundred fifty billion dollars worth of prohibited trick and sections for the benefit of banks in iran. there are sanctions against doing that sort of thing and there are limited
exceptions for what are called u.-turn transactions and what the new york regulators said is that the bank not only willfully and intentionally circumvent it in violated those restrictions but that they knew they were doing it that they stripped identifying information from the wire transfer data that passes through their systems so as to evade detection and then they also included a snippet of an e-mail communication that said oh well i did a little bit too to be politically correct what the f. do those people in united states think they're doing trying to tell us what we can do. this opens up the top and something up here kind of interesting kyra because also a lot of the rhetoric today coming out of the u.k. is that the u.s. has taken an anti british position and that they're attacking the city of london that they want to try to transfer business from london the world's preeminent financial capital to wall street so there seems to be those turf war developing and
what if that happens i mean does that open up a very interesting scenario if these two financial centers decide to battle it out well max i you know i think that's a little bit disingenuous you've got a bunch of banks here that are trying to find some way to spin what the new york ranking regulator actually found and said and that is that the here is an institution that has circumvented united states law and now we can argue whether or not that laws which it had made or whether it should be on the books whether it should be against a lot to do business with iran and iran central bank and all of you know just a mentality that's that's a different discussion the fact of the matter is that if you do business in the united states then you have to conform with what the united states says. it's legal code yes and when you start sending around e-mails within your institution that say essentially these guys we're going to do what we want and we're going to circumvent their rules and it essentially falsify documents in order to do that and that's
what the document terry chain of evidence of appears to show you've got a problem i don't know that this is so much a matter of turf wars as it is a matter of may be the policies that we've had for the last ten fifteen years both under obama and the bush administration where banks violate the law. and they get caught and then they do this hush hush you know oh we're going to be quiet about this we want to actually put anything on the public where people can see it here have a little bit of money to make this go away kind of thing if that paradigm is changing and it appears that it's it's coming not from the federal government not from the obama street but from the new york banking regulators that's a positive thing right so the andrew cuomo he's got a new ages see this new agency less than a year old they do a number on standard charter in this way and draw attention to these events your point is that the state it is if there's
a turf war going on it's between the state of the federal government the state saying we don't want any more this year and it is going on now economy minds me a little bit of going back a few years when eliot spitzer remember he was the sheriff of wall street and he was attacking wall street banks and then he and his career ended quite suddenly with events that some some considered a set up but you know it's clearly he had a role in his own demise but what do you see the perhaps that if the state continues down this path of taking a hard line against the banks hers that this will create some tension similar to what we've seen already and is that a possibility carl do you think well i hope this this gentleman number one doesn't like to frequent option number two he used you know very good at keeping his belt cinched around his waist unlike eliot. because clearly if there's anything that people can expose about him and try to discredit him i would expect him to try to do so the you know the first rule of being
a law enforcement official is that you probably ought not to be smoking joints if you're boston drug dealers car let's talk about high frequency trading for a second is this free market capitalism or is it rigging markets and plundering passive investors and if so would a financial transaction tax help at least slow the plunder well it's clearly plunder max there is the problem. and with high frequency trading as it is currently practice is that it has nothing to do with price discovery which is the purpose of a market is to discover the price at which a transaction clears what you essentially have is legalized front running which back in the day used to be illegal and prosecuted now days we just say well computer did it therefore it's ok a transaction tax is not the right way to deal with this though my opinion is that you could stop this immediately if you did two things one is for every order that is outstanding you must have cash margin to back it up so if you have a billion dollars worth of orders outstanding you must be able to clear a billion dollars' worth of trades and secondly every order you place must be valid
until it is either hit or until two seconds elapsed which means that this practice of putting in thousands and thousands of orders and immediately canceling them goes by the wayside no to the purpose of a transaction of the place of place a buyer or seller in the market is to buy or sell a security the law says that if you put an order into the market for any purpose other than to actually transact in that security you quote in the law so if we have all orders valid for a minimum period of two seconds so they are exposed to actual execution risk by actual people and secondly if every order that you have outstanding has to be backed by enough capital clear that order then this problem goes away because the kind of games that we have going on now were orders are placed for the explicit purpose of trying to get somebody else to move as opposed to actually buy or sell the security disappear and this conduct is supposed to be illegal maxed it's already against the law and has been since the securities act the original
securities act to place orders into the market for the purpose of manipulating price right time at the securities that the thirty three and thirty four when it's right over the past seventeen years have been system at the magically chipped away getting rid of the entire regulatory framework that really created the huge a bull market to begin with but ended. ross sorkin let's say over the new york times of course he came out of the piece as an apologist saying high frequency trading as liquidity to the markets your response no it doesn't and i've been over this multiple times in columns and i think i've spoken to it with you as well max if i passed one hundred dollars worth of stock between you were not and we passed that same hundred dollars worth back and forth the market may believe that there's ten thousand dollars worth of stock there if we do that transactional hundred times but in fact there's only one hundred dollars worth of liquidity in the market and this is discovered as soon as somebody tries to buy or sell ten thousand dollars or
the stack disappears and the price either collapses or skyrockets this is what we saw happen during the opening when the white knight capital went crazy it's also what we saw happen during the flash crash and both of these facts underline the reality of high frequency trading which is that they're not actually adding liquidity to the market volume and liquidity are not the same thing right transactions themselves do not equal liquidity you know there's an old saying on wall street trying to pick up nickels in front of a steamroller to describe you know a risk reward balance that doesn't make much sense now this high frequency trading is at the heart of the knight capital implosion four hundred forty million dollars blown away in forty five minutes why because somebody was trying to make a nickel with high frequency trading they lost four hundred forty million dollars if that's not sustainable correct well yes that's true max but let's look at the facts here ok knight capital is the system working when you do stupid things you're supposed to suffer the consequences so in this case nice can one capital came very
close going bankrupt as a consequence of their own stupidity now you know if i put a stupid computer program out there that drains all the camp a lot of firm i deserve what i get the question that it raises however is how did knight capital manage to put enough of a position on that they were potentially expose. the inability to clear that where is the supervision by the regulatory systems to require that the capital be available to clear those trades because the real legitimate question that was being asked in the hours after that was discovered was could they clear the transactions and that question should never be asked i as an as an individual trader i cannot buy or sell securities that i do not have the margin capacity clear why is it that a market maker is not required to be able to demonstrate it why isn't it monitored in real time to prevent the trade from being put into the system if they can't
clear the trade at the end of the day this is a serious problem and we haven't done anything to address our currently does much in the securities act of thirty three and thirty four which of course part of the recovery from the crash of twenty nine that was caused primarily by the same banks are doing the same illegal things back in the twenty's part of the securities act of thirty three thirty four we got the glass steagall act sandy weill recently suggested we need to restore glass steagall of course steady while over at citi group and by travelers corp is the guy who demolished the glass steagall but now he's repainting or he's recanted his initial thought. what are your thoughts on this conversion by sending while this foxhole conversion i guess you could cause i'm wonder whether or not the guy has terminal cancer death bed conversions are very common. not only can i exactly just say he sounds like he's he's at the end of the line and he knows that he's going to hell for having done what he did and now
he's trying to desperately talk his way out of hell like any good stockbroker would do you know i do like the fact that he's come clean on this i posted an article on that at the time it's about time that we started talking not only about west eagle but about the broader implication of this which is what i've called one dollar of capital for several years in. and it is all tied in the same principle year which is that the counterfeiting of currency unbacked emission of credit is what least of these bubble problems in the first place and this is essentially equalized version of what would be recognized by you were used counterfeiting we go to prison for when a bank does it it's considered ok and something that helps you call me but what we have seen is that it doesn't help the economy what it does is allow them to siphon off ever larger portions oh gross domestic product and bonuses and fees and costs and all of this and then when the bubble we always taxpayers get stuck with the consequence right and it's part and parcel with what you were just describing on
back time frequency trading is yet another form of counterfeiting let out now carly wanted to talk to you about a brilliant piece you wrote on libertarianism which i found you know really hit the nail on the head but we're out of time we'll have to have you on the back again soon but karl denninger thanks so much for being on the kaiser report you but thank you all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i would thank my guests carl denon jerk of market ticker dot org if you want to send e-mail please do so at kaiser reported r t t v dot are you next on nice guys are saying by all.
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