Max Keiser debating market turmoil, bank runs and interest rate cuts

[kbqr]

Run time: 07:53 https://www.youtube.com/watch?v=0-nDIjPmb9U   Posted on YouTube: September 20, 2007 By YouTube Member: Views on YouTube: 0   Posted on DU: September 23, 2007 By DU Member: kbqr Views on DU: 2845

 

[ClintonTyree]

1. Good old Republican deregulation.....

who needs all of those RULES and REGULATIONS? Let the banking industry, the pharmaceutical companies, the energy companies etc. take care of their OWN regulation. They certainly don't need a bunch of cumbersome government laws reining them in, do they? The free market will handle it all very nicely, thank you, and the HUGE SAVINGS accrued by not having those stifling laws in place will be passed on to the consumer! If we can't trust big business to look out for our best interests who CAN we trust?

As if it's needed...... :sarcasm:

Yet another public bail-out of the banking business. And these people have supposedly been trained to manage finances correctly? :rofl:
The foxes have certainly been given the keys to the hen-house.

[greiner3]

2. If Max is right;

Then the powers that be certainly don't want this to be common knowledge. This would cause a bigger hit than did 1929 did and last longer. My take is that Max IS right!

[redacted]

15. Max is ALWAYS right!

No kidding. I've been a big Max and Stacy fan since I learned here at DU about their first special report, "Death of the Dollar," for AJE back in January. They are both brilliant, incredibly well-informed, and often their podcast commentary is very funny.

In all those months, I can't recall a single prediction of Max's that has not come true. Many times they have covered news stories months ahead of those stories becoming hot issues. Their analysis is consistently spot-on. These days, I check their websites even more often than I check DU, which I usually visit twice a day.

[DemReadingDU]

3. link for more Max Keiser videos

lots of helpful info
http://www.youtube.com/user/maxkeisertv

[maxkeiser]

4. inflation (max comments on his own video)

The fact is; inflation in U.S. is running at around 8% - not 2%.

The 2% number reported by the BLS - is the official inflation number, but it excludes energy and food. If you put energy and food back into the calculation - than you get to the 8% number (at least).

Additionally, America's GDP number - is reported net of the false inflation number. So when the US gov't says that GDP is at 4% - that's the number you have left over after you have subtracted the false inflation number. But what if you were to subtract the true inflation number of 8%? Then you end up with a negative GDP - or recession.

America is in a recession right now. Americans unconsciously know this. They are going into debt more each month. The savings rate in America has been negative for two years; not since the depression has this been true.

This is why foreigners are dumping the U.S. dollar. They do not want to own 'shares' in an enterprise (America) that is declining in value.

Is this a big problem? Historically, America has had an economic policy of 'fake it till you make it.' American ingenuity has done a good job boosting wealth over the post WWII decades. While this wealth has grown so too has the influence of the wealthy on US politics. Up until Bush, the influence of wealth and Big Business in US politics was extremely high, but it had not reached the levels of, let's say, Germany in the early 1940's. This changed. Bush and 9/11 provided the pretext for the capitulation of democracy outright in America and provided the conditions for the rise of a new 'corpocracy;' gov't by and for the corporations.

Is this a big problem? Some may argue that a world dominated by American big business is not that bad. After all, some argue, you can't compare the abuse of power in 1940's Germany with the abuse of markets by Starbucks, Microsoft, Oracle, etc. in the 2000's

But consider this... the ratio of wealth to debt that's been engineered on Wall Street and the City of London to achieve this 'wealth' has put America in a tight spot that exceeds the problems of the 1920's and 1930's in America.

How did this happen? Back in the 1920's you could buy $1 worth of stock for .10 cents - whereas in 2007, you can buy $1 worth of stock for less than 1/100th of a penny (if you finance your purchase using interest rate arbitrage between currencies).

And all this leverage, or debt, requires interest to be paid... And the amount of interest that needs to be paid on America's debt exceeds the roughly 13 trillion dollars in GDP that America will record this year.

In fact, since each new dollar of GDP created in America creates an additional $4 in debt; the American economy is evaporating before her very eyes in a cloud of defaults and foreign acquisitions that will, when the dust settles, result in loss of sovereignty for Americans.

Net, net, it's not a question of whether America is, 'Doing the right thing' as FoxNews would have us believe. Nobody with trillions of dollars to spend (Gulf States, China, etc.) really cares what America is doing - just as the wolf never questions what the sheep is thinking. It only ponders the odds of success in taking down the sheep - second by second; waiting patiently until the odds of success are a virtual dead certainty.

Such is the American economy. The Iraq war - and its 1 billion dollar a day cost - is calculated by these 'sovereign wealth funds.' These financial wolves with their trillions to spend; are circling the parameter, estimating their chance. When they do strike, and they will strike... It will be sure strike with three certainties.

1) America will lose its sovereignty.

2) The ruling Corporacry will do nothing to stop America from being sold to the highest bidder.

3) The politicians responsible for this travesty will have disappeared.

[liberation]

6. The inflation numbers in the US has always being a joke...

... basically the US inflationary index is a composite reflecting the average reality for a person who does not have to eat, does not live in a modern house with normal service, and who does not have to travel ever. This is the inflation index tracks the economic realities of hermits living caves all across this great land of ours. Which I guess the number mus be in the hundreds tops. Whoohhooo, that is representative. There is a reason why most economist and business people should be laughed out of town. In fact if these assholes were to join the ranks of the hermits living in caves, I recon we would be doing much much better.

[ooglymoogly]

5. Its just a good ol' repuke cycle where the private banks go bust and are

beholden to central banks and what is left of the private banking is acquired and consolidated into a few big banks like Citycorp for pennies on the dollar and all the subsequent leveraged failing commercial and private real estate and leveraged cooperations are sold off in blocks to the same monied interests. Just another puke cycle engineered to gain control Uber al-les Just like 1929 was engineered by banker Warberg and like minded ruthless cronies and the 80' banking debacle engineered by the ray-gun crowd who surprise are the same descendant families to say nothing of the many same m.o. recessions in between.

[liberation]

7. The little know fact is that conservatives, as per GOP affiliation, are not that good at business

If you look at the composite performance of "blue" vs. "red" corporation in the DOW, you will see that the blue companies outperform the red, even with a smaller number of members. You will also see that a lot of the "red" companies depend almost entirely on gov contracts, i.e. public money.

Two things that come from this is that "red' companies -- and by extension GOPers -- are not good at either business nor free market. Under this context, it makes perfect sense that recession and economic uncertainty are actually good for GOP business leaders. Workers that do not have benefits, a social network, and who face economic uncertainty are workers which work on the cheap and shut the fuck up. GOP companies use cheap labor as a maximizer of profits, rather than actual corporate and productive efficiency. Both of which are orders of magnitude to achieve and manage than simply forcing people to work more for less pay. Since all these GOP "free markets" get their money from the public tit anyways, they are fairly recession proof. It also makes sense why we almost always see a big recession and erosion of social benefits during GOP administration, as they are just following their MO to help achieve their optimal quotas of cheap labor.

And here is the kicker, these people are losing money because they are stupid to begin with --being greedy as hell does not necessarily means that you are smart, it just means you lack a minimal level of human empathy. The folly of these greedy fucks is that they don't stop to think that if everyone works for peanuts (and that is what they need in order to make a profit under their approach)... their business model is just not sustainable because it means that most people can't afford the cheap shit they produce to begin with. Unless, you have the government buy your shit...

So what we see right now is the culmination of this cycle: Government heavily in debt due to the need to buy the shit these assholes produce, which can not be bought by the people who work for peanuts. Which means the government will never be able to repay the debt, and furthermore if the people working for peanuts can't afford cheap shit... they much less can afford to repay their debt. And the downward spiral continues.

Anyone thinking this is just a "hiccup" is sorely mistaken, we are circling the drain. And all due to a bunch of MBA assholes who thought it was a good idea to spend $200K to learn to buy low and sell high. That should have been the first indication that one should (in most cases) not listen to what these idiots have to say...

How people in this country equated GOP with pro-business and free market is beyond me.

[ooglymoogly]

8. Yes Imo The southern and red state tier with religious , plantation models

depending on slave labor fleecing a lot of the people most of the time. The north west but mainly the north east works all the crooked skeems that have been successful since the beginning of civilization when some religion or other fleeced most of the people most of the time and too the crooks in the northeast are smarter coming out of the far more sophisticated Rothschild model fleecing most of the people all the time by sitting back and watching the economy grow to a real healthy level (as in the Clinton era with a 2-to 4 trillion surplus then put a puke in no matter the cost then work and canive to steal the surplus to bankrupt the system and the final coup de grace pull the illusionary money rug whose woof and warp is a fantasy of credit thereby TURNING WORTHLESS PAPER INTO HARD ASSETS and making hay off the disastrous collapse usually under the second term of a puke administration when the economy is on its knees, as in right now. Those who do not learn from history and all that; and repeating it we are and how soon we will forget when a dem administration pulls the economy back together and starts to fix the infrastructure and the cycle begins all over again....boom and bust, boom and bust and ...BOOM...

[liberation]

12. I was not referring to North vs. South...

more as in "blue" (democratic/liberal leaning) and "red" (conservative) companies.

Some high tech stocks are notoriously liberal and highly profitable.

Most defence contractors are conservative and depend purely on gov. contracts.

Oil companies are highly profitable and conservative, however they do not operate in a "free" market, and pretty much control the government via proxy actors. Therefore I consider them also beneficiaries of direct gov. subsidies --like their low taxation relative to their foot print--

Walmart may be an exception as an ultra conservative profitable business, however again it is very debatable whether or not they would be equally successful under an equally free market (what if they did not have access to China pseudo-slave labour?), and they are the text book example of "low wages" as their corporate MO.

[maxkeiser]

9. max responds to posts -

...let me try to break this down a little bit more. I think that the supposed conflict, politically speaking, in the US between blue and red states does not capture the true underlying conflict. I'm a former stock broker, I know finance, Wall Street the City, and economics and I tend to view issues by applying this black and white 'bottom line' approach that I've used for 25 years.. and I can tell you that the true conflict in America is between workers and savers on one side and borrowers and speculators on the other.

When I read posts that buy into this red/blue divide - I cringe - because it's so completely removed from the main event; and the main event is wealth confiscation. If you think about the issues today in America - that have so many people so outraged - they all point to the common denominator of wealth confiscation. Anyone with a job or savings is considered a target for those who use those jobs and savings as collateral to speculate wildly and recklessly in the global finance markets. Every time a hedge fund or private equity fund makes a mistake and is looking at a 'paper loss' in their portfolio - money has to be made up some how - and this means; to list just three outcomes;

1) interest rates drop - penalize workers and savers to subsidize borrowers and speculators (America's socialist class).
2) wage wars for profit; Iraq, Afghanistan, Palestine are perfect examples of war profiteering as a way to score some quick bucks to meet margin calls before having to realize losses on a quarterly income statement.
3) cronyism; parachute some one like Hank Paulson into the Treasury Secretary job - from Goldman Sachs - who can personally over see the IPO of a huge bank in China - from inside the US gov't - scoring the biggest payday in Goldman Sach's history...

Smart people; drop the blue state/red state trap - and just follow the money...

...there are ways to de-fang the interlopers in Washington; the vampires who are sucking the capital life blood out of the economy and stashing it offshore... But it requires some tenacity and focus.

I've been watching this nightmare of American banks going to war with American citizens during the Bush admin. and I am pretty amazed at how easy it's been for the banks in the US to; for example, engage in the most devastating confiscation of wealth from America's black community since slave says - thanks to sub-prime predatory lending - that has turned a whole generation of black Americans into what Warren Buffet has called, 'america's share cropper society.'

...when the housing market drops another 20% plus as Alan Greenspan has indicated in his new book and the hedge funds and private equity funds vacuum up what they can out or people's pension accounts and social security - so as to not miss a single yacht payment; we'll see whites, blacks; red states and blue states all together on the new bread lines.

[liberation]

13. Couple of clarifications...

My red/blue divide is not partisan in political or geographic nature, but between business that produce actual goods and manage to have profits AND maintain the good of its workers vs. companies that don't produce competitive goods and whose profit driven culture allows them to take the easiest short cut to maximizing profits: reduced wages. Thus economic adversity and not economic prosperity is in the interest of the former type of companies (GOP backers in their majority), and as such economic meltdowns like the one we are witnessing should be expected when GOP administrations are in power (for the most part the US has been ruled by the GOP for the past 40 yrs, I don't particularly consider Clinton that much different, and Carter did not have enough time to make much of a difference). That was the point I was trying to make.

In any case, it is my opinion that the current fiat-based economic system which is responsible for the current cluster fuck that any more of the reasons you pointed in your post (and most of your reasons are derived from the fiat-nature of our monetary system).When a bank can simply make money out of thin air, there is just no incentive for people to waste time making real goods. What is the point of losing your sleep, hair, and youth working to produce something... when in 5 minutes you can create the same wealth in paper, as long as some idiot is willing to sing up for a loan on your bank?

And that is why we saw all these hordes of MBAs figuring out, why having an industrial base when we can just make our own money? They simply did not take into account that there were people out there who were as greedy as they are and they want their money back. America does however have the big guns to say "I am not giving your money back, so what are you going to do about it." It is my opinion that such an approach is not sustainable, and it may be a bumpy ride. Interesting and fascinating none the less...

I don't think there will be bread lines, as that would seriously damage the ability to keep control for the people on top. There will be gradual squeezes though, like the ones you have described. Think of it as the people being the tree and the lenders/speculators/elites the people harvesting the fruits... they will transfer as much fruit as they can. Giving enough time to recover so they can transfer more wealth in the future... but they are not stupid enough to chop the tree. But who knows, maybe they are stupid enough to do so... and maybe that will be the best thing to happen to this country.

Anyhow, I am just a physicist not an economist... so what the heck do I know? :-)

PS. It was great to read your feedback.

[DemReadingDU]

10. Follow the money

9/20/07 Goldman Sachs Group Inc. reported the third-best profit in its 138-year history after betting against the mortgage bonds that roiled credit markets and left Bear Stearns Cos. with its biggest earnings decline in more than a decade.
The world's largest securities firm said net income rose 79 percent in the third quarter to $2.85 billion, or $6.13 a share, beating the highest analyst estimate by more than 20 percent. Earnings at Bear Stearns fell 61 percent to $171 million, or $1.16 a share.
http://www.bloomberg.com/apps/news?pid=20601103&sid=adsw_9VLsAV4&refer=news

Thankfully, my house is paid for, but am worried that my pension is going to be stolen from me

:(

[liberation]

14. If your pension depends on speculation...

... then just take it as a fact that it has been stolen from you.

On the bright side of things, you know that we will not be bored having to work until the day we die... could you imagine how bored we may have gotten after 20+ yr of vacation after decades of hard work? Just be glad that these people look out for our mental well being, you know, idle hands...

[maxkeiser]

11. in case you missed these films exposing US financial corruption I made for AJE

in case you missed these films I made for Al Jazeera English (starting during the time when Bush was killing AJ journalists i might add).

Death of the dollar
http://uk.youtube.com/watch?v=zmyvEhU-gmw

money geyser part 1
http://uk.youtube.com/watch?v=JjglR2KYz5o

money geyser part 2
http://uk.youtube.com/watch?v=MPRoQ7OxZAQ

rigged markets part1
http://uk.youtube.com/watch?v=8z66kmPRl5Y

rigged markets part2
http://uk.youtube.com/watch?v=_3H6uEyR66M