tv [untitled] September 13, 2011 5:31pm-6:01pm EDT
keyser explains why he thinks is the third world war going on in the financial markets the cars report is next. stacy herbert a sweeping so let me explain something. alex shaffer before he was an unknown artist now there's work is claimed and in demand all over the world this burned chose portrait twenty five thousand dollars on e bay there's no letup in demand for burning banks. or macs just because he's exposing that confidence game happening around the world and that's one of our big themes of the show today first headline reads goldman head gold trader speculates about authority intervention in gold sees precious metal pushing higher so this is zack. and he's the head gold trader for goldman sachs and he's referring to when
the swiss intervened in their currency market the swiss franc of course is the classic safe haven currency so he said the expectation would be of course that gold would rocket on that but in fact in the immediate aftermath was in complete contradiction to prior recent episodes of intervention and what anyone would have expected instead of spurring a further gold price rally on the basis that it was one of the few remaining safe haven currencies we saw fifty u.s. dollar collapse in minutes the source of this flow seems hard to pin down with some speculating over whether authorities were concerned about the signals of an accelerating gold price and its impact on other fragile markets soon after much of the losses were recovered but the psychological damage had been done well gold and skyrocket against the swiss franc and also this is world war three it's
gold versus paper it's authenticity like gold versus off to city like the. american paper empire it's about a new century with new values and it's about a country like the us with only paper behind it crumbling yes but it's also part of that confidence game in order to maintain confidence in the u.s. dollar everything else must have no confidence people must lose all confidence and all of the things including gold which has been a safe haven for five thousand years so america is trying with all its might to try to destroy the entire system as we've known it for five thousand years i want to say nothing by the u.s. but paper people say oh they've got eight thousand tons of gold but keep in mind that you've got a bank like j.p. morgan they have sold short the equivalent of many many many times that eight thousand tons of gold and silver to support the dollar so when all the claims are
made whole j.p. morgan goes the way of enron to zero the fed goes out of business as the u.s. goes into history and the other interesting thing here is that many gold analysts around the world claim that there is it's a conspiracy theory to think that the u.s. government or the c.m.e. or comix would intervene in the gold market but here is goldman sachs one of the biggest gold traders in the world one of the biggest commodity traders in the world who know these markets and they're saying they're suggesting that there is government intervention but goldman sachs is now agreeing with gold antitrust action committee data dot org which for years was in the wilderness people said oh it's a conspiracy theory now goldman sachs mainstream online some ottos down there on wall street are saying yes in fact that is correct the price of gold is manipulated by the paper whores and of course in every single war there psyops and that's exactly what this man at goldman sachs the first who is a psychological damage and i want to show you a quick headline in
a response to you earlier this week when gold fell fifty dollars in a matter of minutes joeys and all said. yes how look at gold just did so that's the psychological impact they're looking for joe is a ball is the propaganda minister over there business insider dot com he puts out propaganda no it's not you know you look at that look at look at the frank. you're wrong he if he were putting out propaganda he would be working at the treasury or at j.p. morgan in fact he is the person who listens to baghdad bob and it's like oh my god reporting in the guardian and saying baghdad bob says the infidels are being slaughtered at the walls of dad well if joe is involved all the propaganda meister over at business insider then his overlord. is enraged how come you don't come on the show you keep turning away my invitations and go. ok well let's look at
some more wars going on could offer you regime sold one billion dollars of gold well these are the allegations of cassim azouz the new central bank governor who said khadafi regime raised more than one billion dollars to pay salaries from trading twenty nine tons of gold with local traders in april with the metal then possibly being taken out of the country for resale so they pay a centrally of the soldiers in paper because they stole the gold right to raise well this is what cassim azouz the new central bank governor put in by serco is the blair cameron and america so he's their guy in the central bank and he's saying it looks like khadafi sold twenty percent of our gold twenty nine tons now we're taking at his word that it didn't just go missing because remember we zero hedge all the others before the as the invasion was happening we said what's going to happen to libya's gold well you know if you're still alive that's
a big lesson for you they're thinking of buying gold number one. number two he's sold his gold for paper and he paid his soldiers and paper so those soldiers are complete idiots and they took paper instead of gold the whole history of gold as we learned from our show with david graver yeah he said that gold always comes back into use as a currency because it's used to pay soldiers so america is trying to tell us a society that in fact in this case they don't want gold the soldiers didn't want gold they wanted cash they wanted u.s. dollars. terrible but again you know the article mentions and points out this is from the financial times that could offer it was unique libya was unique in that there are some troll bank actually held their gold in their country unlike chavez they point out so a lot of this is another theme we're talking about all the time is that many of these nations around the world including germany china and chavez were were holding their gold in america and whether or not they'll ever get that back much of ours
was two hundred tons of gold shipped back to venezuela one hundred songs of the bank of england undertones held by banks like j.p. morgan and if he actually delivered that gold j.p. morgan once again stock price zero so let's stay with libya here tony blair's libya policy fuel power obsession of khadafi son again this theme of the confidence game. tony blair snake oil salesman went to tripoli brought in khadafi and his son to pretend that they were part we're giving you our confidence you're part of this game say follow islam you know as nato is dropping bombs on him who is he shouting at sar cosey not a blair he still is a victim of a confidence game or he still believes the guy who sold him out is somehow psycho's he and not tony blair tony blair if push comes to shove he should start selling those nut choppers on late night t.v.
you know the guy vince is a famous seller of chomsky's on late night t.v. if you have a retires tony blair you gonna love my nuts watch this so easy one thing i can do one thing and you guys can do with the reason you're going to slap away every day is because it's so easy to clean so the confidence game sold to the west and to the people financing it the taxpayers of the west who think they're getting something is they're told that khadafi and say follow islam are uniquely crazy madman and dictators and killers and of course information is emerged that we were sending people there to be tortured over the past few months including up to a few days before the regime we decided to topple them that's i mean that's kind of a new revelation as a because we knew about egypt and these other areas where us people had tortured me to know there's actually happening in libya as well. you know america likes to outsource everything all the workers all the work all the jobs and all the torture torture jobs to americans why outsource keep those torture jobs inside america so but the story to the westerners is always that we're protecting the rebels we're
protecting the freedom fighters of libya and it has nothing to do with our oil we are pure people here so let's turn to this headline turkey to escort gaza aid ships amid rao with israel well this is turkish prime minister erdogan and he was saying that his country is now going to escort gaza aid ships and that's the headline chosen here by the b.b.c. but. the rest of the story i think reveals the true nature of this religious war going on speaking to al-jazeera mr erdogan also said turkey had taken steps to prevent israel unilaterally exploiting natural resources in the eastern mediterranean and it appears that israel has decided to recognize cypriot rights to the natural gas reserves that are allegedly have been found in the eastern mediterranean and now there's it's a resource war all throughout the middle east really it's about their oil natural gas and water yet it's also interesting that the i.m.f.
funds finding their way in greece seemingly work contingent upon greece shutting down the flotilla of boats from leaving the port of athens to go to palestine so continuing on with this theme of confidence man especially those guys operating from j.p. morgan one man lobby diamond presses washington to ease bank rules this is bloomberg serious the influential fifty and this article here is just amazing to read because it's paragraph after paragraph after paragraph of quotes talking about how fantastic jamie diamond is and they come from people like hank paulson and they come from people like some lawyer dude from a wall street firm that represents wall street bankers and it says things like when treasury secretary henry paulson needed someone to save bear stearns from collapse in march two thousand and eight he turned to diamond we've got done and we've got
diamond by the short and curlies he needs the entire regulatory infrastructure to change to allow his bank to go even deeper into debt to support his naked silver shorts we've got a prize goes higher jamie diamond is panicking that stock is like enron right before it collapsed mark my words hedge funds out there sure make a bundle well so continuing on this piece about how they're fluff piece on jamie diamond diamond emerged from the financial crisis a born again hero his bank took twenty five billion dollars in aid from the u.s. treasury out of patriotic duty not because it needed the money. political loser. of the bailout nation of america please send me a billion and i'll salute your every morning thank you and that. and then it goes on they then compare him to j.p. morgan's company's namesake john pierpoint morgan diamond was harold is that as the
lender of last resort when other institutions faced a run on their assets that's a ridiculous comparison j.p. morgan the big guy that was his money jamie diamond has all access to borrowed money these are he's a he's a facade exactly well that he has access to the taxpayers' aaa rating to borrow at zero percent from the u.s. treasury and the federal reserve bank on behalf of the u.s. taxpayer so you mean doubling plus double double a flat all right. thanks so much thank you max don't go away much more coming away stay right there.
sure is that so much of it. i mean it would give a real. emerging countries in an ever changing world but what does it mean when a country is finally emerged. welcome back to the chasm report imax keyser time now to go to new york and talk with nick verbinski he's the director of a new film called confidence game a documentary that examines the final week in the life of investment bank bear stearns let's take a look at a clip as bear was shoving billions in dubious loans through its c.d.o. pipeline management worked hard to cover up any problems along the way something van leeuwen found out when it was discovered that the firm had a legally sold investors millions in securities holding loans originated in west virginia. sometimes the corners were cut according to west virginia code you have to be licensed by the state in order to service loans secured by property in west
virginia. it was discovered that bear stearns would have been buying west virginia loans for several years now and were not allowed to service it without reporting the oversight to regulators there and forced a mafia style code of silence within its walls to quietly fix the problem ok that was confidence game directed by nick verbinski nick welcome to the kaiser report hi thanks for having me max all right nick before we get into the substance here tell us a little bit about bear stearns what sort of bank were they had they fit into the wall street matrix and when and how did they collapse just on a timeline well it's a good question of bear stearns was known for many years as the most brass bald profit powerhouse on wall street and they had a reputation that that they really reveled in which was that they did business with whomever and however they pleased. for many years at work to their great advantage
as the the profits kept piling up but what eventually happened was half of their fully half of their firm became sunk into the subprime mortgage business and once we saw him up in that business in zero seven when headphones blew up it was about nine months later where the firm completely collapsed under its own weight a lot of people say it collapsed in the space of a week but when you really look at the story the demise of this firm was many years in the making when the firm collapsed that had four hundred billion dollars in assets and two only twelve billion in tangible equity so really what the firm was doing was they were funding their daily operations of the overnight commercial paper market and what eventually happened was when that dried up that they were refinancing their mortgage on their business just about every day and when that source of funding dried up the firm collapsed ok now the wake of bear stearns collapse i recall that the company was effectively being attacked by naked short sells these were far more shares being shorted then shares existed for the company
in other words counterfeiting of shares sold to drive the price down of the stock do you have more information on this and what role did see n.b.c. play and driving this vicious loop of counterfeiting lies i've seen b c counterfeiting stock to sell the naked the shares down to zero well there's certainly a lot of talk about naked short selling and how it affected bear but really first of all we don't have any information on that at this point the f.c.c. launched a very wide ranging investigation when the firm first collapsed. the street was rife with rumors about all sorts of conspiracy theories where headphones had colluded to bring the stock down and bring the company down but really what you started to see was more the naked short selling what you saw was an incredible expansion in credit default swap spreads people were buying and. durance on bear
stearns that they didn't actually own and once that happened the incredible demand for insurance on bear stearns that widen their credit default swaps and really dried up their sources of funding once the overnight wenders and everybody else started to see these things they all stepped back from the firm and said you know we don't know how this sounds but you know we want to get out of this before you know we're in tangled in it so it really i think that the credit default swap part of the equation is a much bigger story than maybe naked short selling although naked short selling i'm sure had an impact. as far as c. and b. c. goes especially with with regard to credit default swaps there was a seminal interview between david faber and alan schwartz then the new newly minted c.e.o. of bear stearns on wednesday march twelfth and really you know the sensible purpose of that interview was for schwartz the calm the fears growing around the firm and before he even had a chance to do that david faber threw a question at him based on a credit default position that was looking to be closed out by an investor who later turned out to be kyle bass and apparently bass told faber that he couldn't
close it out with goldman sachs and once faber it kind of mentioned that on the air everybody on the street started running for the doors immediately and there was really nothing that alan schwartz could have done about that the really troubling thing about something like that is that that trade actually cleared the very next morning there was a point where c.m. d.c. kind of stepped over the line from reporting the news to actually making the news and it really had a material effect on bear stearns right on a couple of interesting points there the big c.d.s. market or the credit default swap market it was really borne out by this particular situation the risks involved there when the counter parties involved in that market don't have the where with all the cover those bets famously when a.g. collapsed everyone they were they counterparty for many of the c.d.s. contracts sent in the trainers on wall street now this and write contracts knowing that they'll never have to make good on them because the counterpart is bankrupt so that's part. the fraud that we see as far as naked short selling goes i know i can
tell you personally having looked at the situation myself and knowing having invented a lot of technologies that run these systems that there was massive naked short selling it's not a conspiracy theory it's an absolute stone cold fact and it's counterfeiting on a wide scale and it is pervasive on wall street and throughout the u.s. economy but let's move on best on c.e.o. jimmy cayne who is seen golfing while bear stearns collapsed was it just because what was that all about izzy i jimmy cayne is very famous on wall street for some of his peculiar habits but what was the story there well you know jimmy cayne was a long time c.e.o. of bear stearns you know and since the company had gone public in the early ninety's you know he had become really a legend on wall street he held over a billion dollars worth of the firm stock and by far he was the most heavily invested in his own company and he was really kind of the what brian burrow in the film calls the last of the wall street buccaneers you know he was really an old
school guy and i think that's one of the issues that that kind of came back to bite the firm at the end was that jimmy wasn't really down and dirty with the business when. the office headphones collapsed in the summer of zero seven he was reported to be in a page one article in the wall street journal on november first of that year it was reported that he was actually playing in a bridge tournaments and nashville tennessee just as the for at as these funds were collapsing you know and there were rumors that he was a big pot smoker and you know he was out playing golf you know first day through sunday all summer long while the fires were kind of burning around the firm and these hedge fund so you know he it really became apparent by the fall of zero seven you know about five months before the firm collapse that you know he really wasn't down and dirty with the business and beyond that the subprime mortgage business he he really didn't have a good clue about what was happening in that business and. and it later came out
that really nobody did you know the management style of bear stearns was very siloed so different parts of the company really didn't have a clue what other parts of the company were doing and you know at the end you know everybody kind of thought the guys at the top had some sort of bird's eye view. and in fact they didn't but beyond that the firm was it was effectively mortgaging itself and refinancing that mortgage every day for many years in the commercial paper market and the reason they did that was because it was it was a lot cheaper to do than taking on long term debt so you know there were a lot of things that were done to maximize profits you know for the executives at the firm and certainly jimmy cayne led that and at the end it ultimately doomed them how much did that j.p. morgan pick up bear stearns for what was that deal ultimately consummated that well it was ultimately consummated at about ten bucks a share whatever originally had come out in the number everybody remembers is that on that monday march seventeenth st patrick's day the public learned that the company was going to be sold for two dollars per share and what happened after that
was that which effectively meant that j.p. morgan was going to buy this firm for barely more money than than the firm's headquarters building on madison avenue was worth what happened was that there was a shareholder revolt and at one point jimmy cayne was exploring the possibility of actually blowing up the firm and taking it into bankruptcy and and just effectively said you know i'm going to take everybody down with me so after that revolt it was clear to jamie dimon and everybody and j.p. morgan that there was something that was going to have to there were some computer contractual problems as well that left g.p. morgan exposed so at the end of the day the firm was picked up for ten dollars a share and they got that deal done in may a couple of months later you know so. by any such comparison it is one of the great steals of the buy on wall street probably in history right and then of course j.p. morgan after acquiring those assets for less than pennies on the dollar they turned around and got. multi hundred billion dollars bailout from the american taxpayer so
fantastic for jamie diamond again another legendary scam star clarify some of the points there going back to the one nine hundred ninety nine and the long time capital management scandal when that has fun collapsed and wall street came together to balance out with this huge multi-billion dollar bailout one firm did not participate and there was a stigma attached to that firm was that bear stearns or lehmann it was actually both bear lehman only every firm on the street was told by the president of the new york fed that they all had to kick in three hundred million dollars per to bail out long-term capital management what ultimately happened was that lehman only kicked in one hundred million and bear pretty much told the fed to take a hike cain basically saw bear stearns as really a vendor to long term capital he cleared all of long term capital trades and you know he didn't see why he needed to kick in money to save this firm and in fact of course he didn't you know and that's really when when long term capital collapsed
in ninety eight that was really when the term too big to fail was coined and it certainly set up a huge moral hazard problem for wall street that we saw rear its head again in zero eight on a massive scale and so you know there are certainly a lot of parallels between what happened in two thousand and eight and what happened on a much smaller scale in one thousand nine hundred eight with long term capital management all right so let's talk about what's happening now the criminal proceedings and lawsuits that have been launched against bear stearns j.p. morgan sensed a collapse terry bull hooey following the show she's been a guest on ties a report even worked on details that are leading to a lawsuit can you give us some details and updates on that i worked with after terri who's just been a huge fan of the film for since they won and done a lot of really great reporting on this subject surrounding bear stearns and these other banks after she wrote an initial article in the atlantic i was contacted by a law firm who is bringing an action on behalf of some of them on a line and. sure the biggest thing that's just come out is the f h f a's lawsuit
civil suit which was released this past friday which details actually individual defendants at bear stearns all of whom were running their mortgage operations and are now in very high paying jobs at other firms. ally bank jeffrey virtualize or at goldman sachs these guys have landed in big jobs at other places so and although this is a civil suit not a criminal proceeding the word i hear is that based on the outcome of these proceedings you know some indictments are being bandied about and talked about so you know i think that after you know certainly the justice department lost the case against. his co-manager of the hedge funds at bear stearns where they were acquitted on nine counts i think they've they've really been going to school on how exactly to prosecute these people for the malfeasance that they participated in and you know i'm hopeful that some of these people you know pay for what they did because certainly lost email documentation as well as eyewitness information
apparently more than thirty whistleblowers have come out in some of these suits to describe the incredible level of fraud and malfeasance that was going on both on the factory floor it bears mortgage operation that really went all the way to the top we're going to leave it there nick verbinski thanks so much for being on the kaiser report thanks for having me max all right and that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert i will thank my guests next verbinski if you want to send me an email please do so i ties a report and. are you until next time this is.
the u.s. in the romania side in agreement as part of washington's plans to build a missile defense shield in europe. the agreement will formally authorize the deployment of american ballistic missile interceptors on the romanian soil i'll be back with more from washington in just a few moments. residents of besieged strongholds to me even two days old be ready to face an all slaughter meanwhile continues with rebel forces claiming they've taken control of more help. and at least nine people have been killed and over twenty two hundred in a way a ton of gun violence in the heart of the obgyn capital kabul insurgents at times the american embassy and nato coalition headquarters with guns and grenades along with suicide blasts in the city.