tv [untitled] January 25, 2011 5:30pm-6:00pm EST
in the republic russia close up on r.t. . if you just joined us for a moment and this is. the russian capital top stories now. action against those behind a terror attack at. russia's lower house of parliament ratified the new russia strategic arms reduction treaty. and europe's top human rights watchdog report on organ trafficking in kosovo more than ten years after the alleged crimes were committed. to them and he continues in less than half an hour from now. and dig for scandal behind the latest financial headlines that's in the kaiser report.
hi i'm max kaiser and this is the kaiser report hate everybody in tunisia is rioting because it's part of the global insurrection against banker occupation notice that nobody's talking about islamicist themes no these are workers these are the workers and say murders that are rioting against the bankers and speculators and it's happening in dublin it's happening in athens it's happening in iceland it's happening in the u.k. it's happening in tunis it's happening all over the world there is a global insurrection against banker occupation and this year we're going to see it heat up even more let's get more on this global perspective from stacey herbert's those who are low who do hi max kaiser i'm in the united states of america fantastic i heard of it it's a it's
a landmass quasi between canada and mexico as i recall lucian tao the president of china of course has been here this week in the united states china's president lays groundwork for obama talks so this is president hu jintao before he arrived to washington and he said the current international currency system is the product of the past and he highlighted moves to turn the yuan into a global currency so a lot of people are looking to china for a possible answer to the fiscal and monetary and economic insanity that the west has turned to then go on up they've got a good all thought terry and government that can simply make rules on the fly to force them what the jack boot this is something that america aspires to i noticed that somebody in america made the comment believe it was read the head of leader of the senate majority you refer to hu jintao is addicted. later and then quickly had
to retract that statement but hey he's a dictator but everyone aspiring to be a dictator including america they would stay out of their dinner like to enforce all kinds of price fixing and inflationary policies but max you know president obama allegedly mentioned human rights to who should tout but then obama goes in and bites. henry kissinger to the ball for who so how much of it is just talk and exactly how much of it is talk with china because if you look at the next headline strong china growth boosted by nearly one trillion pounds of loans so china's economy grew by ten point three percent in two thousand and ten but it turns out that quote the banks are lending more than twice as much as they were before the financial crisis and they're also printing new money money supply is up fifty percent from a couple of years ago according to elsa thornton an economist at i.h.s.
global insight in beijing well who is really the new ronald reagan and in china now you've got three hundred million chinese yuppies this is just like the one nine hundred eighty s. except they're chinese up bees they're chappies and they're out there spending money that they don't really have and projects that don't really exist in the hopes of an economic growth that will never materialize well and if you look at what they're doing with this money supply how the money supply is growing and why you'll understand that they're adopting the same exact business model that the u.s. has which is banking oligarchies because according to the article the banks were keen to lend out this one trillion pounds or over one and a half trillion dollars for many of them their business model depends on the growth of their loan book the chinese central bank has set interest rates on deposits of two point seven five percent and loans at five point one percent giving the the banks. difference between the two in profit well that's the way
a bank should work of that's the very nature of of banking right there in a nutshell but the problem is when banks don't hold any of their capital on reserve and this is the problem the global banking system in the us china and elsewhere it's ok to engage in classic banking as you just described but if you have no cash on the books in reserve if there is a need to step forward was some money and you have done you have the huge crisis that we saw in two thousand and eight which is going to be repeated in two thousand and eleven because these banks still have no money on their books they're engaged in the suit global ponzi scheme and china's at the tip of the spear of the global ponzi scheme they're printing like mad they're building ghost cities that don't exist and there's hope that they are faking it in the hope that they make it you know i want to insert right here stays there but a video of me from one thousand nine hundred seventy one i was working on wall street talking about the dangers of yuppies back in one thousand nine hundred seven
let's play that tape right here for twenty seconds play the tape this is max kaiser thirty seven where you go wall street blue your broker mexico's or the idea of a yuppie you know money. and without stopping that if that's not the case anymore i personally am glad to see it but i'm sick of these no more yuppie church no more yuppie magazines no more yuppie clubs no more yuppies great the silly thing we accomplished anything we got rid of yuppies and i'm happy about it all right stacy yeah it's not fantastic nice time x. . so with this china printing money alister thornton says they are making automatic profits referring to the banks but at some stage you have to pay for all this and so let's go to the point place in the world where they're already at that at some stage where you have to pay for all this irish lenders besieged central bank for emergency loans. and other lenders had borrowed fifty one billion euros
from the irish central bank by the end of december under an obscure program listed in the balance sheet as other assets jim condon from international monetary research says quote this is a horror story it shows the cataclysmic condition of the irish banking system the banks have borrowed one hundred eighty three billion euros in total or one hundred ten percent of irish g.d.p. they have burned through all of their capital and a lot of their deposits as well this is going to end up on the national debt yeah the key phrases there they've burned up their capital as in capital reserves exactly what i was just saying go blue go back to iceland circa two thousand and six two thousand and seven they loaned out ten times the country's g.d.p. and then gaze and stock fraud by lending money to insiders to buy shares in the banks to force the shares higher so that the option would go higher so that the
executive could cash out with bigger bonuses which they then used to buy more shares in the bank they train a daisy chain a fraud same thing in ireland that figure of one hundred ten hundred twenty percent of g.d.p. debt is full as false it's six to seven hundred per cent g.d.p. david mcwilliams who i spoke with in dublin just a few months ago told me that the numbers are shockingly higher than what is officially being reported to ireland is going the way of iceland but unlike iceland stacy herbert they haven't shut their bad bank stone and they're not pursuing with the hope of prosecuting the financial terrorists and of course the irish people are being asked to suffer austerity measures for thumb thing that they had nothing to do with the wholesale end of the i.m.f. isn't there now and they've using the collateral virally to stage a hostile raid of that country they're using irish assets as collateral to take over the country the irish people to join their brothers and sister in tunis in tunisia in staging this global revolt against these banking terrorists the people
in dublin the people into this common cause is the same or a wall revolution it's one global revolution. you mention this hell hole of money preachers world means one hundred trillion dollars more credit says world economic forum so the world expected economic growth will have to be supported by an actual one hundred trillion dollars by twenty twenty so they want to double the world's credit supply not that we don't already have too much debt outstanding but wait a minute they say look this is exactly what is going on in ireland the government can't resolve the problems they can't stand up to the crooked bankers like sean fitzpatrick and others so what they're doing is they're saying well we need to re monetize reka lot of allies refloat just another few transfers of bonds to try to
make this problem go away now endeavor the global banking elite are saying well instead of pursuing the corrupt bankers instead of putting these guys in jail instead of cutting a few heads off as they did during the reign of terror when a similar revolution was upon the world they're going to create a hundred trillion dollars worth of more bad debt they're going to take the u.s. dollar the euro and all these fear currencies roll them into yet another global currency already on the stage with the special drawing rights one hundred trillion dollars worth and it's all going to be worth exactly one one hundredth of what you'll see versus the price of gold today gold and silver as a result of this irresponsibility will double triple quadruple quintuple in price because nobody is willing to stand up to the cricket bankers that's the easiest ploy on gold and silver i can give you because nobody stands up to the terrorists because america and the u.k. and israel are in bed with the financial terrorists gold and silver it's
a slam dunk it's a one way bet well there are people even in the united states now standing out this is my final i have mine here and it's a tweet. protesters have entered the m.b.a. service in conference with bullhorns bankers and regulators have fled yes so this is a journalist called john pryor he's a journalist for housing wire and he was at the the mortgage bankers association conference in washington d.c. and as you see from this footage some protesters threw a sheet metal workers union invaded the conference and freaked out all the bankers there jon cryer then tweets one banker to me we would have listened to the protesters if they had worn a suit and asked a question without making a scene so they were in particular protesting against coal to homes which is the biggest home builder in the u.s. who were able to receive nine hundred seventeen million dollars of their nine
hundred fifty five million in profit from a tax carry loss that barack obama gave to these homebuilders we were they were allowed to offset their losses in two thousand and eight and two thousand and nine against all their gains from two thousand and three through two thousand and yet at the height of the housing bubble so total homes was able to collect nine hundred seventeen million dollars in this tax loss carry back and then laid off three hundred fifty workers are owed stay sara thanks so much for being on the cause a report thank you max all right don't go away much more coming your way if you're on your way to your fly again forty seven pray for get a plane took off without your mother just sit where you are watch the rest of the show ok stay right there.
it was that so much that you should be sitting on. a country in a country divided living on faces the prospect of a government controlled by hezbollah will live in on this democratic. welcome back to the kaiser report time now to go to new york and talk with the regime middleton of the boom bust blog dot com that's boom bust blog dot com regimental welcome back to the kaiser report well thank you sir good to be bad rigi middleton close global credit needs to double to two hundred trillion by the year twenty twenty so says the world economic forum your thoughts i don't think so only if you're going to have an economy that space to pull on debt spending do you
need credit to increase two hundred children for the economy to grow children trillion i'm sorry. it all depends on your viewpoints i personally don't think that kind of me that is based on credit spending and deficit spending is sustainable because after you get to two hundred trillion but you do then yeah well it seems as though the fed is now trying to work into the minutes of various regulatory meetings the idea that they don't need to have any reserves at all going forward and we're all headed toward a new virtual currency could be playing games on facebook i still like facebook like farmville i noticed that the facebook deal of goldman sachs completely broke down the domestic side what happened there reggie belt i couldn't tell you but it was a fly on a wall that looks like this he threatened to do the job right exactly the f.c.c. threatened to do their job apparently goldman sachs is trying to do an end run
around the way the law works you can only have a certain number of investors before you have to come forward a lot more disclosure they are. were openly floating that law and a lot of people now are upset because this whole deal looks like a complete catastrophe what what what gives goldman sachs the idea that they can simply flaunt the law like this they don't have the idea they were from presidents haven't they done it before i mean you know of the last three years goldman sachs is been pretty much goldman sachs but i must say. any investors who are upset because they couldn't get into the i.p.o. should count their blessings you know they were done a favor do is just run a numbers an i.p.o. and it was outrageously priced let's talk about those numbers are talking about a fifty billion dollars valuation how do they get to that number and why is it overvalued it's hard to tell how they got to that number because there's no disclosure at least to the level of a public company because facebook is a private company but the numbers that was floating around for revenue is about two
billion dollars if you use our operating margin. comparables who facebook's potential peer group that means they're putting in roughly half in profits they give them an outrageous price earnings in a few surprise or earnings growth ratio. facebook would have to register effectively the entire world the entire population of computer using individuals to justify their favorite today for discounted back to the present. that is. effectively impossible it's possible to register everybody but if i'm not mistaken united out they have facebook accounts in the most populous country such as china. the number is pious guy again it's probable but if i was a high net worth client of goldman sachs would i put my two to five million dollars in it absolutely not tell us about the state of foreclosure crisis you're right that the banks are now walking away from the foreclosures what's going on there
reggie melton starting on the fringes with lower value properties but there are cases in. chicago where banks are actually. banning properties of properties i warned of this last year and when i did one of it a lot of. so-called experts were putting the idea of basically saying that there is no. is a very slim chance of economic situation where a bank would turn down any recovery that's assuming that there is a recovery to turn down there are several situations where the bait simply comes out in the negative of the a typical after property. i don't know if it's that simple because the bait could potentially still be on the hook with the municipalities for back taxes fines etc but as it is starting on the fringes and i believe it's going to work its way up towards the core and the mainstream of loans if things continue to go the way they are and there is absolutely no reason the world to believe that they're not going
to go the way they are because going on this path because you still have supply as compared to demand credit still tight underwriting standards are returning back to a practical perspective because you simply can't use of the people's money the way you used to. and we still have you still have yet to come anywhere near equilibrium what's interesting about this is that the banks are still carrying a significant amount of the river products based upon housing. and they've ever since the mark to market rules have been changed most likely due to regulatory capture the banks and the s. and p. has literally have literally skyrocketed throughout two thousand and nine you know with the biggest bull market ones in the history of the u.s. markets the problem is fundamentally the problems are not only not gone but they're actually worse than they were back in two thousand and eight yeah what's interesting is you know the point you bring up here is that during the lead up to the crisis the banks are engaged in fraudulent do in terms of getting people on
board with these mortgages they committed fraud in packaging these mortgages and securitizing these mortgages and. adding them they committed fraud during the foreclosure price. process and they made a ton of money doing committing all this fraud billions of dollars of bonuses hundred forty billion dollars and years of bonuses this year on wall street tied to fraudulent behavior for the most part and now going forward and you make an interesting point here all of the derivatives that were the exhaust of all this fraudulent behavior hundreds of billions of trillions of dollars at the derivatives they're still being traded amongst these banks amongst themselves for profit but they've divorced themselves entirely from the underlying real estate market the mortgage market which they've been dumped into the lap of the government of the american people they said well we have bill thing to do with those houses and yet
they still traded derivatives associate of those houses this is taking fraud from goldman sachs j.p. morgan wells fargo bank of america warren buffett to a new it's got to be a new definition because it's fraud to to the degree of fraud fraud to the fraud it's a new hyperbolic fraud middleton it's called tangible tradeable fraud. yes they've been able to securitize your fraud and trade your thought and of course this is the argument you hear all the time they say we can't bring any accounting regular story count to regulatory accountability to these firms because otherwise they'd go out of business let's suppose you have a thousand houses in the suburb of chicago which is the story that i'm quoting a terrible offhand but you have see it with thousand houses in a suburb of chicago of which. one particular bank wrote the mortgages on the majority of them securitized sold the mortgages off to secure toys trusts and to
securitize trusts allegedly all of the mortgages to have this foreclose a fraud closure issue of a. but let's say they actually do on these mortgages. the house is or have dropped in value to close to zero if not negative due to incompetence from the city taxes fines etc so you have you know three hundred million dollars with the mortgages. let's see pick a number number of the houses are worth zero the banks of there we walked away from the houses the owners of what we from the houses how much of those mortgages worth . best case in a row there were zero potentially they have a negative value because the municipality can potentially go after the banks for it yet they're actually being traded is that securitize trust now written down to zero or negative number. now i'm not a lawyer i don't know what the legal intricacies or but. i can guarantee you very
very very few of these trusts have been written down so the correct door tradeable market value. is completely they are worth zero and they're trading them as if they have one hundred cents on the dollar and it's a as you say they've they've taken public you're a fraud the facebook deal goldman sachs as a taking fraud public it's not as if there's a barrier to entry any twenty six year old you know college kid going to start a social networking site there's no barriers to entry as we saw in the in the movie it took ten minutes to create facebook and you can do it easily anywhere in the world as though it's like twelve year old scotch raney twelve years to create the product you can do it in five minutes now let's talk about you know we're talking last time you're on the show about j.p. morgan if memory serves you made the point technically with the derivatives on their books there they also have a book value of zero and that's also they just came in with record earnings but two questions regimentals and i don't know if you've tracked this or not number one is
the j.p. morgan earnings a result of trading fraud as a problem as a public security number one and number two. is j.p. morgan involved in any of this book counting that we saw lehman brothers when they were around when they simply park liabilities off their balance sheet for a couple of weeks during reporting season well not insider. to the best of my knowledge j.p. morgan accounting is in line with gap general. rules that doesn't necessarily mean that it is accurate. a significant portion of j.p. morgan's blowout you know quote unquote earnings came from the releasing of reserves. and i've always disagree with releasing reserves because the housing market is still in a significant downturn the economy is not on the up term. and there i don't see a credible reason for the releasing of risk reserves of event to pare earnings and then there's the matter of the accounting earnings themselves even the ones that
are not attributed to the release of reserves let's go back to the foreclosure issue. we have a hypothetical bank j.p. michaels so i don't pick morgan all the time you have a j.p. michaels a very large bank and it has a bunch of loans on houses which which only goes to the stop paying the mortgage the houses go into foreclosure ok they're non-performing but j.p. michaels can technically continue to accrue interest on these loans on the books despite the fact the interest is not accruing because the house the properties in distress by the time they do foreclose they go to. the house back so they may have to take a loss on the phantom accrued interest but they're still the phantom principal loan which they might not have taken a full also if they will when they sell the property but since properties are not selling they hold this property and inventory. from this point on what looks like
potentially in perpetuity so they don't have to take the full write down so it's a profit was never so so we buy a house for two hundred thousand dollars you get one hundred fifty thousand. join it stop paying it the bank still accrues phantom interest on this one hundred fifty thousand dollars until they decide to foreclose which is a year and a half to two years after the person stop paying the charge loan off. the person stop paying. they don't necessarily charge the loan off they go to focus a year and a half later they buy the property back to the only better because nobody else wants it and they hold it in their or your inventory real estate owned over tory and they don't have to write take before write down on this investment until they sell the property which could be no i can see now which is no time soon many properties on selling so you have found some profits on the books of j.p. michaels and they're actually occurring and growing they're getting paid bonuses on it they're probably potentially paying dividends on it is capital coming from the
government has issued trillions of dollars to save the banks but eventually you know capitalism is about ups and downs it's about. you know wins and losses and you have to take a loss so eventually you're going to come to the. prices mark the market and when that happens you're going to have a collapse and it's guaranteed unless the government or whatever it is he could blow a bubble big enough to inflate this debacle that i just explained when that happens if you catch a bubble then you have your money inflated. that's if you can catch it and when that bubble pops it's going to be worse than the last but was going to two thousand and eight look like a bull run all right well right you middleton thanks again for being on the kaiser report you're very welcome to be here again ready and that's reggie middleton and amongst the end solders in the blogosphere many consider a. site boom bust blog to really be i say the radio jackson
financial bloggers he's consistently ending all runs with his insights so check out blood. that's reggie middleton and that's going to do it for this edition of the cars the report with me max kaiser and stacy herbert i will thank my guest reggie middleton of boom bust blog if you want to send me an e-mail please do so at kaiser reported r t t v dot are you till next time this is max guys are saying bye yo.