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tv   Keiser Report  RT  October 1, 2013 5:29am-6:01am EDT

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study found that consumers tend to buy more of a product that advertises potentially harmful side effects like weight gain and heart disease than products that do not yeah it seems the warnings have the paradoxical effect of creating trust in the consumer pig this could help explain why david cameron has brought forward by three months the conservative party ponzi scheme marketed under the name help to buy the ponzi scheme comes with economic health warnings from mervyn king bank of england the i.m.f. and from economists around the world that the program will destroy the u.k. economy despite the warning greater fools are lining up to put just five percent down on a property worth up to six hundred thousand pounds so that they the taxpayer chump will put down the remaining fifteen percent. pop open the bubbly or is a perhaps a bottle of maggie maggie stacey what's going max it's called our maggie it's
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a beer being sold at the conservative party conference they're tearing the return of the housing bubble pm triggers new house sales spree two hundred thousand get chance to buy as cameron starts twelve billion pound mortgage guarantee scheme next week prime minister yesterday announced helped by scheme will start from next week three months ahead of schedule quote i will not stand by while hardworking people struggle to get a mortgage but critics say dangerous scheme will inflate the market well there's a couple things here one is as you point out in the opening people tend to gravitate toward things that are bad for them so when they advertise drugs that have negative side effects people tend to gravitate toward those things you know on cigarette packages the more cancer ridden long as they put on the package the greater people tend to want to smoke and this is part of the can behavioral economics that used are used by governments to induce people to do things that they
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don't want to do because we live in this casino glegg now and the rule of the casino is that the emotional kick from losing is greater than the emotional kick from winning and so casinos know this this this is why people tend to get addicted to gambling is the emotional kick of losing their effect addicted to losing now flash forward to george pond george osborne and david cameron's ponzi scheme it's a loser but people are addicted to it they know it's bad for them and remarkably because the opposition leader ed miliband had such a strong speech at his conference they're so desperate over there in the coalition camp the tory in the liberal democrat camp that they're moving forward this ponzi scheme by three months it shows you that this is not an economic policy it's a it's a help to buy votes policy help to buy votes. shameless pandering to the casino who led to the worst elements of british society and i think cameron ago today i think
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or this week i should say is the anniversary of neville chamberlain who famously appeased the nazis during the one nine hundred thirty s. i think here you have david cameron appeasing the house price builders and the banks in the city who are effectively the equivalent in today's screwed up global economy well in fact ok you mention a few things there but the housing bubble all economists will agree housing bubbles and collapses are the worst for economies more than just the normal cyclical boom bust recessions in the business cycle so we've just gone through five years we're now five six years into a global economic collapse and what do they do they want to spur it again well an estimated two hundred thousand people are expected to get a chance to purchase a house worth up to six hundred thousand pounds with a deposit of just five percent the government will underwrite an additional fifteen percent of the loan to make the deal attractive to lenders the twelve billion pound initiative will last for three years so that's the important thing is it's to make
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it attractive to lenders as buying votes because a lot of people are stoned and high and taken crocodile of the mortgage market but it's really about the lenders they're the ones that aren't lending because they know that anybody who can only put down a five percent deposit is very likely to not pay the rest of the mortgage well you know flash forward to three years from today somebody put up twenty or thirty thousand pounds to get a house will be sitting on a house that now has a five hundred or six hundred thousand pound liability they can't sell it they're underwater by hundreds of thousands of pounds with negative equity in that house so this is a guaranteed scheme to bring about huge numbers of rumor northern rock and bradford and bingley two banks here in the u.k. went bankrupt because of the same scheme from ten years ago leading up to the house bubble. pov of the mid two thousand people cope completely forget why the northern rock went bust because of
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a ponzi scheme called the housing bubble same thing with bradford and bingley now they want to re-inflate this the only question is which bank will go bankrupt or what maybe one of the big ones this time like a just b.c. or barclays or lloyds or one of the others will go bust as a result faisel is long from channel four was looking at some of the data from the f.s.a. and they provided data about what happened during the two thousand and five to two thousand and seven housing bubble and what they found was that first time buyers their average loan to value of the home mortgage was eighty three percent now these are targeted towards people who have to take a loan to value of ninety five percent so he also then goes on to tweet at ninety five percent l.t.v. loan to value reported mortgage difficulties shot up rapidly thirty percent for f.t. b. which is first time buyer an astonishing fifty percent for re mortgage and during the the last housing bubble the majority of the mortgages taken out were actually
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read more good years i people trying to avoid working for a living they were taking out those earned gains of one hundred ten pounds a day they were extracting equity so that was the majority of them and anybody who was doing a ninety five percent loan to value more gage fifty percent of them fail to pay. but well there's two classes of people in the burden right now they're the people on benefits. through the housing bubble yes they are getting more than one hundred pounds a day from osborne and cameron in the bank of england mark carney their houses are moving up one hundred pounds a day through this bubble through this ponzi scheme and then they can use that to extract equity the ignore the bank they can take out one hundred pounds a day because that's the value of the house going up that day due to the ponzi scheme that is in effect now then there's another group of people on benefits the people in the n.h.s. as it were being kicked off the n.h.s. are the people who are being thrown out of the spare bedrooms the people on the the welfare system here in the u.k. those people would not been given the opportunity to have jobs or to have savings
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accounts paying them for five percent interest that's where the money is coming from so you have two people on benefits the people that are the scroungers as they're called in the u.k. and then you have a scroungers who are in the housing bubble and there is nobody in the middle anymore there's nobody actually making a middle class a legitimate life who's working for a living in a decent way you have only speculators and the underclass the permanent underclass the people that are trying to be exterminated by this ponzi scheme well that's a good point because also with this conservative party conference happening george osborne has announced a plan that anybody on benefits for more than nine months and that's fifty six pounds per week. over the course of seven days fifty six pounds well he's saying that they have to work basically unpaid labor so they have to you know clean up trash or litter or graffiti or make meals for the elderly whereas all of these people who are earning one hundred ten pounds well there is an earned income
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they're being given by the taxpayer hundred ten pounds income it's not only through these subsidies whether it's funding for lending or help to buy or they're helped by two which is coming up but it's also because of their planning restrictions to prevent anybody else from developing and building new homes so that these ones in the market so-called ladder get to have this on earned income what happens then why aren't they out they should be working fifty sixty hours a day because they're they're making one hundred ten pounds per day but when there's an adversarial relationship now between the bank of england the city of london housing developers lenders and the real estate brokers on one side of the divide the apartheid divide on the other side are people who are not speculating and beneficiary beneficiaries of this ponzi scheme and those people as i was born now let's put them to work at the effective rate of two pounds per hour if you want to create you know a permanent underclass in britain well if you weren't trying to do that they would do this help to buy scheme at one hundred percent one hundred ten percent like
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bradford and bingley used to do because you sell to come up with five percent deposit and still only in the middle class upper middle actually only upper middle class at the prices in london can afford to put that five percent deposit down so they should make it one hundred percent that the government will back one hundred percent because otherwise they're excluding these people that are on the you know benefits for unemployment so why don't you get those people off unemployment shift them into one hundred ten pound. earnings per day on the housing market just give them one hundred percent mortgage maybe that will solve both of the problems with one stone well look bank of england has accumulated during the last five years of this crisis more than three trillion pounds of debt funding. these george osborne like ponzi scheme programs the bank of england could simply look at the other part of the economy the people that are not speculating in the housing market that are working for a living and you could quadruple minimum wage funded by the same money from the bank of england therefore you'd have a middle class g.d.p.
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expansion and you have people buying houses that they normally do but he doesn't like those people he has contempt for those people he's trying to exterminate those people he only favors the people in the city of london that's why the tory party is the party of toffs and the party of the ne'er do wells and the and the lord grantham of the world from downton abbey you sit on their duffs all day they're dossers to do absolutely nothing well it also shows you the financialization of the world and the economy and our politics because they're saying it's a twelve billion pound scheme but that twelve billion pounds of taxpayer money is being used to underwrite one hundred thirty billion pounds of mortgages that shows you the leverage that they can apply this is why they they favor of these sort of policies as well because if they were going to use it for capital expenditure to actually build infrastructure here they would actually have to pay cash up front because these guys aren't going to work on leverage the actual guys building the making the buildings and the railroad right with a twelve billion pounds or allocating to the banks to create one hundred twenty
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billion dollars worth of ponzi loans is exactly give or take a billion the amount of money that they're taking from the so-called benefits and scroungers in the u.k. they're not benefit they're not scroungers i mean they're no they're no less scroungers then any scapegoated community in any kind of ponzi scheme economy run by kleptocrats and psychopaths they're just people who want to make a decent living maybe they don't want to participate in a banking system that rewards kleptocracy and then finally along the same lines of these unearned benefits well the fed's gift to american business this is from business week and they said the us federal reserve efforts to boost the economy by holding down interest rates has saved corporate america seven hundred. dollars in interest payments over the past four years but while that once again you have a situation where artificially keeping interest rates low benefits one class of people essentially the global economy now is all running from the same playbook it's a battle between assets and wages and wages are being sacrificed to pump up asset
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bubbles and just like a game of musical chairs that when the bubble pops a few people have a chair they make money they're the new they're the new winners whether it's facebook or the google guys they were the beneficiaries of the last ponzi scheme and then there are millions of people who are castigated in the permanent poverty as a result of that they could very simply do the exact same thing but for a wage earners and they would have a more equitable society but they're to rolling the dice that society won't rise up and have them all you know burned at the stake and so far they're winning all right stacy ever thanks much bring on the guys report thank you stay tuned for the second half a lot more. there's
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a nine story building i noticed that standing on the troops was a man in civilian clothes holding a sniper rifle. to say something in the distance so there's no need to the news playing pool wouldn't show the building was good grooming how much time it took to restorers. reloaded for you in the referendum with the deputies of the supreme. sylvia didn't appeal to us out of all we have to support yeltsin otherwise it would have been civil war.
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with economic up and downs in the final. days to deal shanghai and the rest because i think week he'll be every week.
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cross talk rules in effect that means you can jump in anytime you want. welcome back to the kaiser report imax guys are timed out to go to said name and speak with the second most popular economist in australia goes by the name of das he's also the author of extreme money hello dolly hello max he's the most popular economist in this trade i think i am i think i'm the most popular economist in australia but we'll get to that a moment i want to ask you why didn't you. well i think in the end it's to been that he tried it and it was a nice try on but i think two things one is long and rates backed up quite a bit and he thought that would risk truncating the recovery that's number one number two i think it set off problems in other parts of the world with european
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deals going up and emerging markets starting to look shaky as capital flowed out so all of that would probably have come into the calculation and also in the end i think mr back he sort of took one look around the table and said well actually i don't want to end up being outvoted in my own fed because i think they wasn't a lot of support for yeah well how do you say it didn't want to truncate the recovery when you use the term recovery what are you referring to i mean you're not you're not saying that anything has happened in the last five years other than arena plating of a bubble crack there hasn't been any true underlying real economic activity correct off. well i don't think the fed or any of the policy makers now deal in the real economy that paid lip service but you're absolutely correct is that reflation of the bubble and the financial asset prices and remember what the nikkei has said in testimony before is that what they're trying to do is use the trickle down effect
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you know let's buy the stocks and houses and maybe people will start to spend maybe the economy will recover you quite correct this disjunction between the real economy and the financial economy but here in the u.k. as the house prices are moving up about one hundred pounds a day and then people extract that from their homes using the loan value of the home to go out and spend to go out and use that as a consumer spend and so the government has said you know this is a great ponzi scheme let's only require a five percent down so that people can continue this ponzi scheme of borrowing against our home why doesn't the government go to one hundred percent mortgage total guarantee to allow one hundred percent of the economy to go out there and leverage their home to consume why are they stopping at just a five percent ponzi scheme threshold why not a hundred or a member going back to northern rock and bradford and bingley they offer one hundred ten percent mortgages why not go that route das instead of this pretense
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that they are in fact trying to encourage anything other than massive ponzi scheme building here in the u k. look i think you're absolutely correct why stop at ninety five percent leverage i think let's be honest i think the policies that are in place just showed the i suppose poverty of economic thinking and also the lack of alternatives i think we've tried fiscal reflection doesn't work so we just printing money that's a qualitative easing that people don't like to call it that we've got syrian trist rates i mean the cupboards pretty bad and so we are now going back to what we were in two thousand and seven or two thousand and six and just basically trying to you did it to actually reflate the economy and i think it wasn't that i was on side who once said that doing the same thing over and over again and expecting a different result is kind of the sign of madness this is just madness the really interesting thing is it's going to continue and i think the real cycle which is
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really interesting here is we now live in a world which is q.e. forever and you remember the wonderful song by the beatles strawberry fields forever let me take you to a place where nothing is real that's where we are and we've got to just get caught in this for a very long period of time as it japan and we're going to see the cycle economy improves a bit which is asset prices go up this modest growth oh we'll taper says the central bank interest rates go up recovery slows down oh we can't do that so we'll basically open the taps again oh it's getting better we'll turn the tap spec down to get zero it's not doing that which going to be caught in this loop and to be honest i don't think any of his really know how this lou pens because the story is still playing in japan that the circumstances there are a little different let's talk about these markets as a ponzi scheme not from kind of a descriptive metaphor but as an actual ponzi scheme now in a bond just game fresh money is required to pay off the people leaving the ponzi scheme and the pyramid scheme as it's also known the base was always be bigger and
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bigger and bigger once the base of the pond just game starts to diminish the entire thing collapses like a house of cards and that's why. there was no taper because any reduction in money printing will collapse every major banks balance sheet in the world to nothing so walk us through now going forward how the fed and the central banks around the world are not only going to not taper but they're going to increase their monthly asset purchases and ponzi scheme is going to go up as an address well it's more likely than not it loosely stay where it is they might have to increase it you're quite correct the actual scale has to keep increasing to keep the thing going and that's what japan tells us you can't stop what you start to do now the interesting thing what they'll do is how they go about that because they may start to use different strategies calling it different things and i think one of the key things that you're seeing is in a strange way the e.c.b. as already hinted at it they keep doing these long term refinancing operations
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where they keep it out they just keep to make out the actual money lowering the rates and you have to have some accommodation on the other side which is the excessive debt that's in the system and you're seeing signs of that in europe where basically nobody wants to take a hit so what they're actually going to do is very interesting they're going to make these like nine hundred ninety airlines with zero interest rates and this is sort of go along with the pretense that we're actually not writing down anything so you'll see a competition both of the you'll see actual expansion of money through the central bank in different ways one of the most interesting ones that you'll see in terms of reflation and expanding the base is some debates which are taking place for this is a debate in washington that is taking place that i'm aware of is if the treasury is issuing debt and the central bank is buying it and it's all part of the same government why don't we just join the two and wipe out the did so you can stop the game all over again so we'll see some games around that the other thing you're
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going to see is obviously the effect depends of what i said you buy they've been buying high quality yes it is but as you know in japan they migrated from high quality. yes it's two stocks to other sorts of things so we'll see all of those types of things go along so that for the people who play around the financial markets it's going to be kind of a fun provided you can get decisions probably but in terms of the real economy for the ordinary joe public this is actually a deadly game where ultimately they're going to have to pay the price of these excesses somewhere down the track well dusty mountainous idea taslima debt where the treasury and the fat get together and simply knowledge by the debt but that's impossible because you have an institution like j.p. morgan with off balance sheet items that are shared by the federal reserve bank they are sharing a balance sheet of ninety trillion dollars worth of derivatives that j.p. morgan uses as collateral to buttress their ponzi scheme their books if in fact there was an agreement between the fed in the treasury then why are we willing to
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say that j.p. morgan we're sacrificing j.p. morgan we're willing to throw j.p. morgan to the boss and let the stock go to zero like enron or world com like the dangerous ponzi scheme that is absence i know i'm not saying that it's because ultimately the financial markets if everybody's willing to ascribe a value to it then it doesn't really matter what you're talking about here is a central bank has negative equity where you actually do this central bank basically loses an enormous amount of value now if you don't correct it with a lot of thinking you're saying these actual collateral these bonds of no value because a central bank issuing them hasn't got any substance but the real issue is we can all pretend that's not an issue and then we can still ascribe value to it and as long as we can keep the banks liquid because ultimately banks fail because a lack of confidence and lack of liquidity as people withdraw money as long as we can maintain that because it's more comfortable for everybody to maintain that we can keep it going they will come a movement which is the motive that you are talking about when this all on why but
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we are a long way from that at the book but does the fed is already levered fifty to one the fed is already in negative equity the fed is already losing money on their portfolio bond. well you know if he is you know a mark to market adjusting and that mark to fantasy adjusting j.p. morgan is already has negative equity there already all those major banks already underwater the deutsche bank is even worse than j.p. morgan isn't the policy of these policies are simply to just wait until the next thing blows up because number alan greenspan who was the fed chairman before ben bernanke he said well you know we can make the bubbles appear but we have no idea when they pop and we have no policy will deal with them when they pop all we can do is inflate a bubble so isn't the policy just a way for deutsche bank to go boss let the economy crash again let there be a civil war somewhere let's start a few more wars and then figure out what to do later is not the policy the policy is we have no policy is not correct we don't have a strategy but we have tactics and the tech ticket is in terms of banks banks and
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sovereigns in the longer different city to too big to fail banks are basically exactly the same as the sovereign so you're talking when you talk about j.p. morgan and deutsche bank something very akin to this over so as long as we can keep this game going at least as a tactical level that's what they're going to do let's talk about codes from a warren buffett who recently said that the us federal reserve is the greatest head fund in the world now warren buffett meant that as a compliment your thoughts are well i think they are a hedge fund but then if you actually look at the consequences of that it's very interesting because if it is a hedge fund and eat essentially holds a lot of u.s. treasuries you can say that china is a huge friend as well because the chinese central bank truckload of these as well so basically when you talk about the underlying premise of it inflating bubble of credit well every official is jewish and which can do this and leverage itself up to the gills is a hedge fund we live in a hedge fund world and that's because we have never dealt with the fundamental
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problem that we needed to do it which is the excessive debt did driven growth the imbalances the entitlements nobody wants to deal with any of those because they. would be a drop in living standards and no politician anywhere in the world wants to go around saying well you know lou city of forty percent of you living standard so we try to do it by stealth by the mic and that's what we see so the world is full of these hedge funds you're quite correct but it's alright as long as we all pretend they sold it and we pretend that the game can go on oh yeah but the people in greece they can't pretend anymore they're starving to death and they've got neo nazi ism on the rise and there's death and destruction the people in these account and the people in the u.k. and britain who are being thrown out of their homes who are being suffering by having their n.h.s. privatized and can't pretend like everything's great in other words this puzzle game is being fed by by the willful social reengineering of societies in a way we haven't seen sense in since the germany in the one nine hundred thirty s.
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this is a complete program of the lower classes to feed the ponzi schemes and warren buffett anybody calls the federal reserve bank a ponzi scheme is an event calling a federal reserve bank the next long term capital management which of course famously went bust and back in the late ninety's early two thousand you covered in your book extreme money and this is exactly the same thing but much bigger what was buffett think that is a good idea to have another long term capital management at the heart of the global economy in the world reserve currency das let me tell you something the people who mind don't matter and the people who matter don't mind and you quite correct this is no longer an economic crisis this is a political and social crisis about the bankruptcy of the system which basically does not want to confront the real issues all right thus well up down back on again soon a talk more specifically about australia where you are the second most famous economist and a still a das thanks so much for being on the kaiser if you want if you just save us all right now is going to do it for this edition of the kaiser report was may max kaiser and stacy herbert want to thank our guest das author of extreme money if you
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want to contact us via twitter go to keiser report on twitter until next time x. factor same bio. plenty of it was terrible they weren't very hard to take up. arms against a long disciplined life that never had sex with the earthquake their lives let's listen. to. this
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