tv [untitled] April 6, 2011 7:00pm-7:30pm EDT
market finance scandal. find out what's really happening to the global economy with max keiser for a no holds barred look at the global financial headlines tune in to kaiser report. contingency plans for the shutdown have been made we were all capitol hill appears to be in chaos. why is everyone moved into crisis mode we still don't know if a government shutdown will really happen so is the panic justified or is it just a lot of hype is if you're worried about the government's financial fallout possible the worst is yet to come here in the u.s. . and in portugal it appears already to be here the country crumbling under the weight of its debt is now saying it needs a bailout for bailouts in greece and ireland does this threaten the euro zone in the global economy which of the u.s. learned. and what if the u.s.
can't get out can't get its books together what would happen if the u.s. lost its golden aaa credit rating and people started worrying uncle sam couldn't pay his debts back. all the variations of accidentally killed your family. and looking back at iraq that outrage of the toll of you as air strikes killing civilians hidden from american eyes are we seeing deja vu in libya. that evening it's wednesday april sixth seven pm here in washington d.c. i'm lauren lyster and your watching r t now breaking news late this afternoon portugal's prime minister has made it official that country in the midst of a sovereign debt crisis is calling for a bailout from the european union this after sovereign debt crises and bailouts happened in greece and ireland so joining me now for more on what this means for
the european union the euro zone and if we can compare it to the u.s. in the midst of its own deficit problems debt crisis from niceville florida is karl denninger of the marketing mr jenner and that enjoy i want to thank you for joining us you know first of all portugal of course is a very small country small economy. but this comes on top of for the eurozone greece and ireland and its concerns about a much larger economy not spain so what do you think the toll of this portugal announcement is going to take on the eurozone and the global financial economy but the first question one has to ask is where is the credibility behind the projections of both the european union and over here in america we've heard of stress tests we were told that everything was ok a the banks were turning around and buying this debt thinking that they were going to be back stopped and now all of a sudden loops or trickle isn't ok as recently as a week ago we were told they were going to need
a bailout so this is the third time and i'm wondering how long before the market says ok that's enough will that then go do you think investors were expecting that because the euro was actually hit too hard after the news today why do you think that it if you look at the the bond yields and for trickled it didn't rocketing higher for quite some time so the market has been expecting this but again we come back to credibility it's there's only so many times you can tell somebody everything is going to be all right and then come back to the well and say oops before investors turn around and say you know what we're tired of being lied to now you're going to have to prove it and that's when lending begins to get very expensive ok but what about the role of investors what about the role of wall street for example in some of these sovereign debt crises because that is a big market with a hot market so if they play any role in that are they to blame it all. i don't think wall street personally is responsible for portugal there were a lot of allegations that wall street were running derivatives in greece i don't know that we really got to the bottom of that but portugal is just simply
a matter of we're spending more than we're making which incidentally is what we're doing in the united states as well it finally people are throwing up or you have to say we don't think we're going to get paid and that's where the problem was comes from we are but to be you know it would be a little disingenuous to compare portugal and the u.s. apples to apples the u.s. president's own money happens to be the global reserve currency i mean at the at the differences are ways in the u.s. is responsible for a little much larger portion of global output still even though the economy has taken a major hit but you make a good point the u.s. is spending a lot more than it takes and it has a deficit problem that it can't resolve we're seeing a stalemate on capitol hill and in the white house and between the two right now so what should the u.s. be learning from portugal because you mentioned there is kind of a crisis of faith also portugal's parliament was able to pass austerity measures the u.s. government seems to be at a stalemate as far as dealing with this deficit issue what do you think should be taken away from here. i think the primary thing to consider is credibility because
that is all a government or an individual or business has and when it's lost it's very hard to get it back so we have gone down this road in our four years where we have made claims that we could fix this with quantitative easing interest rate cuts and all of the other platitudes and all that's happened is our deficit is skyrocketed we most certainly have a longer leash than portugal or even spain does in this regard but it's not infinite and the lawmakers in washington seem to have this idea that they can continue to play this game on an indefinite basis there is a line in the sand beyond which international investors in particular are going to throw their hands up and say we're just not going to deal with this anymore and then the federal reserve is left with all bad choice right and wanting investors global investors because they forget it we don't want u.s. debt and i'm curious if you think this most recent crisis in portugal this most recent bailout that possibly reignite concerns over the e.u.
will reignite global concern over us that i even saw that just on the blog this afternoon and evening after then you can now. i think it's a real concern and what i would also be watching news to see what happens with arlen because i don't believe this story is over by any stretch of the imagination if the irish refused to knuckle under and frankly i think they should then you're going to see another round of the big problem that comes up is that the banks have been buying this from the service including the united states under the premise that it will always be money good and there is never any risk associated with it we're finding out in portugal that's not always true same situation applies in ireland and ultimately it could come here but again it's more of a problem in the european area right now and as long as it stays or trickle it probably doesn't do you really think that i just don't want to unless we get credibility back ok and what if we don't i mean when are these bailouts going to run their course right now i mean it looks like portugal will get
a bailout but but one of the one of the buck stop you know the bailout won't always laugh when the german citizens get tired of subsidize actually take that away. so it's the question ben what about just in terms of lovely i mean what do you think will happen if for example quantitative easing that program is due to run out what do you think will happen if there is not a connotation easing three that's kind of been propping up the u.s. economy in some way i don't think you're going to see a quantitative easing story because the impact that we've had on commodity prices from the previous quantitative easing has been extreme and you can blame that on quantitative easing i mean oil price of clearly has been a very affected by what's going on in the middle east whether affects the economy prices are some issues there i mean speculation really you can only blame for part of that. that's true we have a question delivery point for service intermediate school and yet we have oil trading up and hundred dollar plus range this doesn't make any sense if you have
a glut of supply at the same time you have a price start those things so good for well i think my all trading friend says a third there's that is a delivery on that but i do hear your point i hear your point it's a great point so what do you think related to say get you quickly on to the top of mind of the u.s. budget crisis right now what do you think is the biggest concern facing the u.s. right now is it this kind of short term budget deficit issue that we're looking at or is it the bigger picture fundamental inability to get the house in order as far as the budget is concerned with the city debt these are the are bigger spending issues and you have to pull the lens back on the camera on this because we're arguing over a fraction of one percent of the budget for this year the truth of the matter is we need to find five hundred billion dollars worth of cuts this year five hundred billion more next year on top of the five hundred so that's a trillion in trouble and then another five hundred after that that's not going to happen without major changes and enjoy the moment there is no way to solve this
problem the getting into that again nobody's willing to take it on so i do believe it's a problem but it's something that's going to come by just six or twelve months down the road and that is a much bigger conversation and maybe we'll be having success falls months down the road but thank you for bringing us home with how portugal really is something that affects the united states as karl denninger with an architecture meanwhile as we just talked about u.s. lawmakers and president obama continue to haggle over the two thousand and eleven u.s. budget over budget cuts they cannot a great and a government shutdown would be what happens if they can't it's been one of the top doom and gloom stories on the mainstream media for days now and the president getting into it too he's warning the public about the cost of a showdown here arsons that if it's. you better start thinking differently because you know if you need a passport can't get it done planning a visit to a national park or monument to bad can't get there contingency plans for the shutdown have been me we were all capitol hill appears to be in chaos this is not
happened in fifteen years what does this potentially mean for the american people at a time when the economy is just beginning to grow we're just starting to see a pickup in employment the last thing we need is a disruption that's caused by a government shutdown. but is this really the big deal everyone's making it out to me earlier i spoke to economist and pancho analyst max broadwell i asked him if all this panic about a government shutdown is really just hype or is this response. some point some of these stories are all but suggesting people stock up on shotgun shells water flashlights and of course that's fairly ridiculous a number of ways i think there's still a very good chance that we'll see a last minute deal tomorrow and or we'll see them kick the can down the road because that is a bit of past time on budgetary matters in washington for a long time and to another stopgap to give them another seven or eight years i think symbolic value about the lack of car mars the lack of ability to work
together on the fierce fighting over a symbolic position of the election cycle for twenty twelve is probably more alarming and more something for people to worry about even the government being shut down for a day or two which i still think is in no way a short saying well it's interesting and it's an interesting point you make about symbolism because i want to look at even what these cuts are that they're debating right now i do believe we have a graphic that shows what portion of the budget this is if we could bring that up it's just when you look at the pie of the budget it is such a small portion that they're looking at will do the things that actually it would mean if there was a shutdown and there you know harks passports wouldn't be issued those kind of things that's kind of what the media is playing up but i want to look at what's not being discussed enough how small this portion of cuts is of the actual budget and that's my question to you obviously you can't see it but you know thirty some billion dollars that they're arguing over is a tiny piece of the pie has this argument in the gridlock. yeah does it take away
from the did give our budget to yeah that's nothing that's nothing to take away from the bigger picture which is the toll of our debt the continuing borrowing the continuing spending the fixes like connotative eating that come the really high cost. a little bit of a dress rehearsal for what are going to be big or bigger massive fights about the four trillion dollar twenty twelve budget and also how to respond to the debt ceiling the fourteen trillion dollar debt ceiling that we're about to go crashing through unlike many others feeling that's not a ceiling you want to really go through that's not something we should have never been forced into the situation of having to debate like we are right now i do think that part of the reason we're seeing this much fighting over it is because it's pretty clear that the republican party i think federal state and local level are going to run at the budget cutting party in two thousand and twelve for state houses and senate seats and house seats for the presidency and this keeps them front and center in the news on that subject in terms of the thirty to forty billion dollars that they're fighting over here it's nine or ten days of budget deficit so it's
a very small number given the four trillion dollar government budget we're going to have for next fiscal year two thousand and twelve on the other hand because we never really deal with our touch the eighty nine eighty eight percent of the budget that's non-discretionary it's a bigger piece of the discretionary spending and both sides have large it up their proposals with ideological things to excite their bases which are making compromise impossible which is which is going to have a pretty significant symbolic value if nothing else and i would also add that most people aren't covered but depends on how long the government stays down how big of a deal it is shut down for a day and resumes that's one thing if this gets worse and worse than the impasse cascades over several days then we're going to have a slightly different thing we need to debate here on your another show right and really got the lack of you talked about the debt ceiling isn't that a bigger debate that's just down the road it's a lot more important i mean if they can't get that debt ceiling higher on the naplan the u.s. would actually get calls on i mean that's what's at stake it's much bigger deal right. well if they couldn't actually get the debt ceiling raise which i think is
fairly improbable a little bit like not being able to get a budget then what you actually have not so much as united states to fall going on dead devastate you ation which massive emergency cuts would be made in the helter skelter disorganized fashion and that's what everyone wants to avoid because no matter what your ideological commitments are having a dysfunctional and disorganized american government on display for the world for many days and in many ways is the worst possible outcome whatever your priorities for the budget might be for the years to come. the worst possible outcome while we want to take it one step further you heard my guest earlier talk about credibility what if the u.s. credibility the ability of the u.s. to pay back its debt was questioned well in some ways it already has been but we're going to look at what would happen if the u.s. lost its aaa bond rating credit rating and got downgraded take a look. while u.s. lawmakers in washington big over the budget and blame across the aisle for the
gridlock calling opposing colleagues relatively small stream group of. who are an anchor dragging down the budget negotiation process give me a berth another group of decision makers has been weighing in on the to be one of the country's top credit agencies telling the feds something has to get done on this debt ratings agency standard and poor and moody's has been warning for months that the u.s. debt could threaten the country's golden aaa credit rating telling investors in u.s. bonds essentially they may have to worry about getting paid the u.s. debt problem is big fourteen trillion dollars big meanwhile the solutions lawmakers are coming up with to solve this problem are small this tiny dot represents even the larger sixty billion dollars in cuts republican lawmakers originally proposed meanwhile the u.s. government continues to spend a lot more than it takes in resulting in more than a trillion dollars in budget deficit so with all of this there rating agencies as
unsustainable and a concern and if the path the u.s. has been on for forty three cents of every dollar we spend this year. we borrowed against the future of our children continuing on this trajectory of borrowing and spending however would not be an option according to financial analysts if the u.s. was downgraded so what would happen it would be another crisis economist max fraud wolf says even putting the u.s. on official downgrade watch would be devastating it would create global shock waves in part because most models and understanding of the global investment landscape include the landscape take is there sort of central banker with us ten year treasury bond as the risk free asset and if that asset goes from risk free to risky for us bond holders like central banks and investors all over the world so goes the stability of currency as just one example and so goes the low interest rate the
u.s. pays to borrow money as it is the interest the u.s. pays on its debt is staggering it was one hundred eighty seven billion in two thousand and nine year proposal it increases to eight hundred forty four billion that number would grow exponentially faster with a downgrade because the u.s. would likely have to pay higher interest rates to borrow money meaning less money to spend at home than we have to start cutting really aggressively and for many things there are too important for americans really to to be able to agree to cut them right now drastic cuts in everything from energy to education to the military certainly and in danger is the u.s. position is an empire around the world being able to reach into every corner of the earth yes absolutely whether the u.s. would really be downgraded is up for debate the u.s. has the exorbitant privilege after all of printing dollars the global reserve currency to pay its global credit card bill the scarier scenario maybe if the u.s.
is even reached this point i think much more disturbing are important in my opinion the fact that the u.s. financial situation already. possibly. a situation that once would have been unthinkable perhaps a downgrade for the us whether it happens or not lauren lyster t. washington. and earlier i spoke to mike norman chief economist for john thomas financial he didn't exactly agree with my report we went head to head a bit i asked him if we can avoid a situation where the u.s. top rating is affected by what he had to say. first of all there is absolutely no risk whatsoever of the united states not being able to pay its debts because its debts are denominated in its own currency the u.s. dollar of which it is the issuer so there is no issue of solvency there cannot be an issue of solomon c.
the united states is always going to be able to pay it debts i think a lot of what is going on here is fear mongering and look if you look at to be here you know you have getting more you know graded several times by the rating agencies the ten year yield on the japanese government the equivalent of our ten year treasury is yielding one point five percent so the interest rate will be unaffected however i will say this a lot of people view this i think through sort of a prism of misinformation some of the misinformation in that piece you just relaying that i think really do believe what i think our nation impel nice information in the sense that a downgrade would lead automatically and necessarily to higher or skyrocketing interest rates that just isn't true why why why later they laugh it with a more current that if people were concerned about the i think it would be to pay back what if the u.s. was threatened as the reserve currency the u.s. dollar it because as you said as they said in that package the u.s. has no end of billy d. to pay it back because it is shoes dollars it could print the dollar to make
a payment on the debt i mean there's no way that it's not going to be able to make that payment on the dead why don't they last a day and dollar wasn't the reserve currency anymore a lot of people talk about that event different country negotiate trade then their own current phase the third and that dollar more and more people are talking about i think aereo in which the u.s. dollar wouldn't be there with our currency and our to japan's yen is the reserve currency in their interest rate is one point five percent and they have debt that is two and a half to three times bigger than what the united states has and the reason why they're able to have a low interest rate is because the bank of japan the central bank said. the interest rate low and their debt is denominated in the end just as our debt is denominated in dollars so it's a non issue you know the rating agencies should understand this but i mean they cannot enjoy these how can they come out with warning it is that even politically difficult for them to come out with warnings because i mean anybody in doing that is making a name for themselves if the us that's either paying their political calander stan
the warnings are ridiculous they are in applicable to a sovereign nation that issues its own currency i've had discussions with the rating it look these are the same agencies that rated the toxic sub prime dead aaa so i mean how do we take them with any level of credibility after that the fact of the matter is any country whether it's the united states whether it's japan whether it's any country that issues its own currency never has an issue of solved and see if instead it is the nominated in its own currency it could always make that payment but then let me worry about it to us and with us that what are we worrying about then why can't we just spend spend spend that entered the fourteen fifteen sixteen trillion dollars then continue on to ask what's the problem i fitted today about then well there's no problem the debate is that people have a misunderstanding of this they view the reality in a way which is mired in misconception and myth and this is this is pervasive from
the common person on the street all the way up to the highest levels of policy including our own president who goes out there publicly and says we are out of money that is in possibility the united states of america issues the u.s. dollar it could spend it any amount that it was to the. meanwhile we cannot forget that battles continue overseas and u.s. military intervention appears to be facing some roadblocks and diplomatic meetings appear to be bringing up more questions than answers but we still think they're worth asking envoys from the u.s. france and britain are reaching out to libyan rebels and indirectly in talks with moammar gadhafi his regime and a former u.s. republican congressman is actually in libya meeting with gadhafi himself to persuade him to step down or asking if this is a sign no number of nato airstrikes can drive khadafi out and he is not going anywhere meanwhile the u.s. defense secretary robert gates was holding talks today in saudi arabia meeting with
the king he told reporters they talked about developments in the region and of course iran but we're asking what's really behind the meeting and what we see in the aftermath because we want to take a look back you may recall gates was in the region recently visiting another persian gulf ally bahrain that was back on march eleventh he had a meeting with the king there and just days later look what happened thirty troops tanks they rolled in thousands of troops a thousand troops excuse me rolled into the country to help the monarchy suppress anti-government protesters the bahraini government declared martial law images of violent crackdowns like what you just saw there hit the internet people being shot apparently point blank the u.s. did by and its protesters died in bahrain the u.s. urged humanitarian help in libya analysts pointed out the reality looking at american old. i'm sure you know richer protesters in the room that is where the united states stands on the issue. analysts such as rose off drew the
conclusion gates would have had to know about the saudi intervention and that the u.s. was therefore complicit in it an effort to counter a bronze influence in the region just a reminder bahrain is a sunni ruled but it has a shia majority believed to be sympathetic to iran now reports came out that bahrain needs were concerned to they thought they were becoming the target of a proxy battle between the us and sunni arab countries versus shiite ruled iran so we're waiting to see what comes out of the gates meeting with saudi arabia he told reporters that he has evidence iranians are trying to exploit the situation in bahrain we want to know what's going to happen now meanwhile thousands of protesters have taken to the streets yet another day in yemen against their longtime president the pentagon has spoken out calling for a swift transition of power and makes the protests and violence against protesters by the government but remember the pentagon has also said there are no plans to suspend u.s. military assistance to yemen so we're asking we're asking is this another sign the
u.s. war on terror makes for dubious bedfellows putting the u.s. in a compromising position only now when it comes to u.s. military intervention in the war on terror and now what we're seeing in libya the toll of u.s. airstrikes hits far from home far away from american eyes but one filmmaker highlighted the realities that when unseen by the american public back during the war in iraq and his film the true story of our less ali now this is an animated film about a twelve year old iraqi boy who lost his limbs as a result of u.s. air strikes he became a symbol two of the iraq war here's a snippet of that movie. i'll be the americans have accidentally killed your family. you bastards i'll be. backs to sleep blown your arse off you.
can. see it looking. at the maker of that film william ross joins me now from seattle washington mr ross i want to thank you for joining us here now your film was obviously made years ago very critical of bush policy is critical of american policy in iraq and speired i ride by your personal rage but i'm curious if you feel a resurgence of any of the anger and a resurgence and relevance of your thumb today if you watch the airstrikes in libya you know i actually do it's a totally different situation. in iraq was something that was planned for ten years but do you come into united states and brought. this is so crucial. so your knee jerk reaction to. people who. want to invade libya one of the million toll what about the civilian toll that's
something you're very critical of i mean isn't the same thing happening at the bottom of the air strikes in libya. there's no way you could crawl to freedom and people are killing innocent people are going to sit so there's no doubt about that now in your film that you made on iraq you're very critical of the american media coverage of just that of the iraq invasion not showing the carnage that was on the other side of those bombs of where they were landing i want to play a little snippet of what you did and your short film. here you see it. here strike against targets a. city of five million people you can only imagine how terrified they are now mr ross you know that's kind of like deja vu for me it looks a lot like the coverage we've been saying of the airstrikes in libya a parody of what that would look like do you think the american media is failing in its coverage and of libya to show that side it would in fact after
beijing the. stop consuming corporate media so i actually don't know what's being short right now but i have no doubt that it's the same kind of rate we're hoping. since so is iraq i turned to the american media what is their criticism of the way the mainstream media covers us wars. in iraq certainly it was a review of sorts so as a cheerleader for the bush administration. surely the things that the administration want to show schools to be. silent children going to wouldn't even make it if it was united states think twice about or will there do you see anything different now with afghanistan or with our continued involvement in iraq or involvement in libya but. it's become a lot more cynical of course in the middle east certainly there were a lot of americans very sick and big enough to understand we're sick of still be
going to wrack and we don't there's no desire at all to go into libya so then why do you think these a policy of continued to be advanced by the united states because it doesn't matter what people think it seems that policymakers don't make the same decisions. well. there it is really nice a situation we sort of close it would have gotten out of there sooner oh so we decided to charge a look. at which to me was something that no one could have anticipated and certainly if there's going to take the united states government for more work. but yet it continues and you know i want to ask you i go are an artist but also i saw you are a software engineer you made this film it seems to be like this so inspired you this the horrors of the iraq war which as you mentioned you see is a different situation there were fraudulent claims false pretenses for the war and i think that's i'm.