[KR52] Ready! Fire! Aim! Keiser Report on Economic Warfare 101

We look at the latest scandals of filling black holes of debt with austerity plans and imperial plans. In the second half of the show, Max talks to Cedric de Serigny of the School of Economic Warfare in Paris about rating agencies and financial terrorism.

46 comments on “[KR52] Ready! Fire! Aim! Keiser Report on Economic Warfare 101
  1. Majestic says:

    checking it out now!

  2. Mini US says:

    Sorry, can you please cover more subjects in this show!

    What the….

    Max has to speak really fast to fit all this in.
    Good job folks.

  3. Bonn says:

    We are a Stockholm Syndrome Society
    - Bonn
    We are real funny as Human Societys
    We Elect a Govt.
    We pay taxes
    We get our ass’s whopped by the Govt’s ( stockholm syndrome society )
    We pay the Govt’s to whoop our asses
    Govt’s mis-manage Environment issues, Banking issues etc etc
    along with big fat Govt Lies & they have bankrupted themselves as well

  4. Mini US says:

    Hey, isn’t it options expiry this week?

    Isn’t gold meant to drop about now?

    Oh, its not playing by the rules now?

  5. Mini US says:

    Why on earth do the US congress bother bringing these crooks before them if they can just say “I can’t recall” and nothing more is done.

    The congressman/woman runs out of questioning time and usually feels pretty good about making his/her point.

    Thats where it ends. Complete waste of time.

  6. Old English Spangles says:

    If governments created their own credit, as Michael Hudson suggests, then they wouldn’t need to worry about rating agencies because they wouldn’t need to ask anyone else for loans and they wouldn’t need to worry about interest rates as there would be no parasites charging them interest.

  7. stacyherbert says:

    @OE Spangles – exactly!

  8. Majestic says:

    @ Old English Spangles

    I tried to bring this up previously (in another blog entry suggesting a possible future guest) — I’m not saying I buy into it, but I *do* believe it’s a perspective worthy of consideration/discussion.
    (i.e.: Chartilism, http://en.wikipedia.org/wiki/Chartalism ; eg: Aust. Prof Bill Mitchell via: his economic blog: http://bilbo.economicoutlook.net/blog/?cat=11 )

    (I have more to say about the show, later)

  9. Wahrheit says:

    Edward James Olmos is on the ground in Louisiana interviewing regular people:

    http://www.youtube.com/watch?v=xRl6-o8CpXA&feature=popular

  10. FranSix says:

    Options exiry in precious metals on options exchanges tomorrow, COMEX settles on Tuesday:

    http://www.optionsclearing.com/about/publications/expiration-calendar-2010.jsp

  11. Mother Earth says:

    This young man was completely in the pocket of Wallstreet..

    Ban GS? How ?

    Rating agencies of our own? We would need laws! (to dictated adherence centralized rating?).. It has to do with forced sharing of inside information, which is a coveted monopoly..

    But interesting..

  12. Gordo says:

    I wondered about that seeming lack of non-US based ratings agencies for a while now. Always thought there must have been equivalent European based companies.

  13. Mother Earth says:

    @Gordo

    All banks have analysts. My uncle determined the credit ratings of countries for a big dutch bank (a patsy job if you ask me). Every transaction is a preceded by an valuation. The system howeve has turned around, the ratings are made based on ‘deniability’ of collusion with banks and plausibility of market moves. That is why it is complex(tm) to do anything similar here. You would need to force banks to comply, only Wall street can do that.

  14. Wahrheit says:

    Tuition for the Ecole de Guerre Economique is 10k Euros.

    http://www.ege.fr/download/presentationege2010.pdf

  15. micerl says:

    @Bonn

    Stockholm Syndrome, well, yes, but…
    It’s not that easy to argue with a S.W.A.T. team protecting the Government.
    Am I right?

  16. velobabe says:

    O H M A X
    light blue and light purple
    such a turn on
    you are so

    H O T

    § §

    ®

    ˆˆˆ îiˆˆˆ

  17. Poko says:

    Really great show, thanks – keep it up…

  18. Poko says:

    PS. and no, that wasn’t spam, I really mean it :)

    Why don’t the beep report this idea more ? (re economic warfare)

  19. sam says:

    Perhaps the better thing to do is ban Naked shorting, and have a tax on every transaction.

    Banning goldman wouldn’t work. they’ll just get a patsy to do it.

    personally, I think secret police and spys should just take out a few of goldmans’ people at the top to bring down the whole company. would save us from the pain and grief of national conflicts that we’re heading for.

    S.

  20. Wonder what these bankers would do if every nation on this rock brought back their own versions of Lincoln’s Greenback, including the U.S., but AT THE SAME TIME.

    Every nation should be printing its own money from scratch this very moment, as I believe these bankers have long declared war on every human being on the planet (How much more obvious does it have to get?).

    Then perhaps News Years Eve could be the last day of Economic WWIII.

  21. Youri Carma says:

    @Majestic

    We don’t need alternative theories and we don’t need new rules.

    What we need are the old rules and a body who actually act on these old rules. You can have as many rules as you want but if you don’t enforce them there worthless like now.

  22. Mary Rose says:

    Great Keiser Report! I’ve posted it on my forum with the title “The system itself is inherently insane.”

  23. Youri Carma says:

    Like said Ol News therefore Propaganda Stunt.

    See: https://www.cia.gov/library/publications/the-world-factbook/geos/af.html

    And: http://www-rohan.sdsu.edu/faculty/rwinslow/asia_pacific/afghanistan.html

    Afghanistan is endowed with a wealth of natural resources, including extensive deposits of natural gas, petroleum, coal, copper, chromite, talc, barites, sulfur, lead, zinc, iron ore, salt, and precious and semiprecious stones. In the 1970s the Soviets estimated Afghanistan had as much as five trillion cubic feet (tcf) of natural gas, 95 million barrels of oil and condensate reserves, and 400 million tons of coal. Unfortunately, ongoing instability in certain areas of the country, remote and rugged terrain, and inadequate infrastructure and transportation network have made mining these resources difficult, and there have been few serious attempts to further explore or exploit them.

    Markets shrug off Afghan minerals ‘discovery’ – Afghanistan’s vast resources not news 14 june 2010, by Nick Godt (MarketWatch) http://www.marketwatch.com/story/markets-shrug-off-afghan-minerals-discovery-2010-06-14

  24. F. Beard says:

    “The simplest case of a purely financial bubble can be found in real estate. The trend that precipitates it is the availability of credit; the misconception that continues to recur in various forms is that the value of the collateral is independent of the availability of credit. As a matter of fact, the relationship is reflexive. When credit becomes cheaper, activity picks up and real estate values rise. There are fewer defaults, credit performance improves, and lending standards are relaxed. So at the height of the boom, the amount of credit outstanding is at its peak, and a reversal precipitates false liquidation, depressing real estate values.” George Soros

    Come on Max. Reflexivity is not based on human psychology but on the ability of banks to create credit from thin air and create bubbles with it. A 100% reserve requirement would eliminate that possibility.

  25. Youri Carma says:

    Soros Says ‘We Have Just Entered Act II’ of Crisis (Update2) 10 June 2010, by Zoe Schneeweiss and Andrew MacAskill (Bloomberg) http://www.bloomberg.com/apps/news?pid=20601087&sid=aSewDrZuj1Vg

  26. Youri Carma says:

    École de guerre économique (google trans from French) http://tinyurl.com/2al7kh7

  27. F. Beard says:

    Oh, yeah. Just admit we’re in Afghanistan to steal their resources and the American people will change their mind about the war. NOT!

    Let’s get out, YESTERDAY!

  28. Youri Carma says:

    One thing is sure that if you are on l’École de guerre économique right now you must be in heaven cause everything learned there is happening right in front of your eager learning nose.

  29. Crumpet Muncher says:

    That show was a bit blatant.

  30. harry_w says:

    @ Max,

    I pointed out that the BIS have not ‘jumped the shark’, perhaps it was after you’d scripted and recorded this episode.

    The BIS do not say “a currency collapse around the Eurozone and around the world is ‘a good thing’, [and] this will bring in all kinds of benefits to countries experiencing currency collapse.” (@14:10), or that ”that currency collapse is a good thing”, as Stacy has suggested.

    The paper says “Our estimations are based on the evolution of output and the exchange rate, but ignore many other factors that determine the welfare costs of a currency collapse.”

    The argument made in the BIS Quarterly Review paper ‘Currency collapses and output dynamics: a long-run perspective‘ about currency collapse and output is that:

    “Currency collapses, defined as large nominal depreciations or devaluations, are associated with permanent output losses on the order of 6% of GDP on average. … we argue that the fact that these losses tend to materialise before a drop in the value of the currency indicates that it is not the large depreciation as such that is costly but the factors leading to the currency collapse. Taken on its own, the drop in the exchange rate actually has a positive effect on output.

    So currency collapses are associated with a permanent loss of GDP of around 6% (in the language of 1066 And All That — ‘a bad thing’), but the losses tend to be prior to the collapse, which taken alone actually has a positive effect on output (that is what you and Stacy have taken to be ‘a good thing’).

    They quantify the positive effect as over 4%, so compared to a permanent output losses on the order of 6% of GDP, the BIS paper would still suggest that having a currency collapse is ‘a bad thing’ overall. I’d say once your economy has hit the wall (a bad thing), finding the reverse gear (such as currency devaluation) might be a necessary (in the absence of debt destruction) if you want to resume progress going forward in the near future (a good thing), not just keeping a foot on the accelerator (compounding the bad thing).

    The BIS argument based on historical statistical data, and reflected in three recent currency collapses:

    … currency collapses in the absence of other events, ie ceteris paribus, induce a positive adjustment in the level of output. In particular, these estimates indicate that such output gains exceed 4% and fully materialise within five years after the shock…

    … contractionary transmission mechanisms such as balance sheet
    effects, which arise when firms’ debts are denominated in dollars and revenues are denominated in local currency, are outweighed by expansionary expenditure-switching effects – ie domestically produced goods become cheaper in relative terms than foreign produced goods. As a result, following a devaluation output ends up expanding…

    … looking at three particular episodes: Mexico in 1994–95, Korea in 1980 and Korea in 1997. The domestic currency depreciated by 89% in the case of Mexico, and by 25% and 51% in the case of Korea in 1980 and 1998, respectively. The evolution of output around these three currency collapses matches the average pattern surprisingly well … output losses materialised prior to the currency collapse, and the episodes were associated with permanent output losses relative to trend in the medium run.”

    The ‘welfare costs’ of a currency collapse (taken alone) are material to considering whether such a collapse is ‘a good thing’ in the circumstances, but the ‘welfare costs’ are not equal for all. For most wage earners and savers it leads to a substantial decline in their standard of living (along with associated import inflation), but for large numbers of unemployed, an increase in output may lead to employment that actually improves their standard of living.

  31. harry_w says:

    @ Max,

    The other significant point is that with output declining prior to currency collapse, and that decline being arrested and partially reversed shortly after collapse, “it is not the large depreciation as such that is costly but the factors leading to the currency collapse.”

    I’d suggest it’s the collapse in what Marx would term ‘fictitious capital’, or in the language of this ‘credit crunch’ the revelation that the value of banks’ capital assets (debt, derivatives and real estate) had been vapourised, becoming ‘toxic assets’ on their balance sheets.

    You only answer your own question by insinuation, misrepresenting the BIS paper’s argument on currency collapses and output: “Is the BIS an agent of financial terrorism itself? Because clearly death and destruction for an economy can’t be considered ‘a good thing’, unless of course you’re working for those forces that are encouraging death and destruction. Is that what the BIS up to?

    The BIS paper doesn’t argue what you suggest, and they’ve actually been speaking out against the forces you insinuate they’re agents of: I presume you mean TBTF banks and other large private financial institutions since you go on to identify Goldman Sachs and derivative trading between Wall St banks. The BIS is arguing for tighter regulation of those banks, their capital base and balance sheet manipulation (Basel III):

    Bank Of International Settlements Warns To Ignore Banker “Doomsday Scenario” Fearmongering And Racketeering
    Submitted by Tyler Durden on 05/31/2010
    …As the FT reports, according to a soon to be released report by the bank’s Chief Economic Advisors Stephen Cecchetti, “Banks are exaggerating the economic effects of the regulations they are likely to face in the coming years.” While his focus is on the implications of the passage of the Basel III treaty, and to preempt counter lobbying by the bank themselves, his argument can be extended to every instance in which banks present scenarios of collapse should they not get their way: as Cecchetti points out: “the banks’ “doomsday scenarios” were based on their assuming “the maximum impact of the maximum change with the minimum behavioural change.” This is a huge point, as it means that even the failure of the TBTF banks could have been mitigated in the context of a controlled (and even uncontrolled) bankruptcy, and the only reason they were bailed out was to preserve the equity interests and the existing management team, period. This also means that the Fed and Treasury are nothing but vehicles for perpetuating Wall Street’s status quo, as we have claimed from the very beginning.

    Isn’t that a point made repeatedly in TAM etc? So I think if “Goldman Sachs … create oil-goop collateralised obligations … and sell them on Wall St. … and sell it on an exchange, sell it to another bank and that bank sells it to another bank and on and on it goes.”, the BIS would tend to frown upon those being counted as part of the capital base on those banks’ balance sheets. I think Marx would probably count them among the ‘fictitious capital’ circulating within an economy, whose value is likely to vapourise at the turn of a business cycle.

  32. GGees says:

    There will be a European ratings agency established by October of this year. The EU led by Germany understand there is a financial highlighting war against the Euro led by Wall St and the City of London. The Anglo Saxon Media lead the troops into battle by trumpeting the death of the Euro, highlighting Greece this time or Spain another etc. The EU has now broken free of Wall St and the City and you will see the war intensify with Germany leading Europe down the austerity path to re balance its books. This will force the US to follow suit or face its bond markets getting savaged—tighten you seat belts folks the 2nd half of 2010 is going to be extremely ugly

  33. GGees says:

    Germany has banned naked short selling–they understand that this is a weaponised financial instrument

  34. Majestic says:

    @ Youri

    I think we *do* need new theories — because the present system we have is unsustainable. (And hasn’t really ‘worked’ so far in history anyway).
    We may not need new rules, I can grant you that. Enforcement of the present ones might be a better starting point at the very least.

  35. Kaks says:

    Cedric was out of his depth.

  36. Marc Authier says:

    Europe is game over. The war is already lost. What has Europe to offer anyways ? Less than USA. Half of Europe is a USA colony anyways. Europe was a nice concept. But from the start the place was swirming with CIA agents. Still is. Want an example of a traitor ? Nicholas Sarkozy and he is not alone. Aznar in Spain was CIA douch bag too. Europe has no future. Like the euro.

  37. ehswan says:

    To educate our youth, this “economic warfare” thing should be turned into a video game, don’t ya think? Also regarding Afghanistan, do our rulers think that we are so innumerate as to think that spending a trillion to get a trillion is a good deal? Besides a mere trillion is no longer real money, Just ask anyone in the nation of trillionairs, Zimbabwe!

  38. gussy says:

    Well blow me over with a feather, the US in Afghanistan for the resources, yer ‘avin’ a giraffe.
    Great show.
    Cedric, wouldn’t you be pleased if yer daughter brought him home, nice chap, took a little bit to get him relaxed slightly in awe of MAX but then who isn’t. I’m on Cedric’s side the Euro will survive, that’s why we’re all grinning and bearing it over here, for the common good.

  39. Marc Authier says:

    Ah shoot !!!!!!!!

    Espagna already out of EU and IMF cash.

    It’s like a big BP this country without the black goooooo.

    I see Espagna politically exploding in 3 countries after the bankruptcy. The Basks and the Catalans should refuse paying and leave the hell to the spanish federal government. It’s going to happen.

    http://boombustblog.com/reggie-middleton/2010/06/16/why-does-everyone-believe-spain-is-about-to-run-to-the-euimf-for-help-its-math-not-speculation/

    Tooorrrrrrro ! Tooooooorrrrrrrooooooo ! Torrrooooooo !

  40. gussy says:

    @Marc, What has Europe to offer anyways

    eh, well how about being the centre of civilization for a start.

  41. Cesare Bonventre says:

    The USA destroys with economic sanctions & embargoes that impoverish nations. The Americans have the blood of economic genocide in supporting their banks that impoverish the former 4th largest economic power in the world – Argentina, et al

    Now those same bankers, having run out of third world countries to impoverish, finally have bankrupted the American people!

  42. kk says:

    it was well known since the 1970s that Afghanistan has plenty of ressources.

  43. Marc Authier says:

    Reflexitivity is inspired by Quantum physics.Amusing theory and pseudo-science.

    It says that you cannot have an objective view of the markets because the fact of observing and interpretating what you see about the markets changes and influences the reality. In sum the only way of winning, is fraud and insider trading. That’s about it.

  44. Palantír says:

    The first part with the headlines were good, I enjoyed it. The second part was disappointing, Max babbled a lot and it seemed to me that he out-babbled his guest by far. I also expected to get a 101 introduction into economic warfare which were the part I was really looked too but got little of value from it as it seemed to be watered out with babble. Maybe my expectations were too high this time…or that I simply didn’t understand the 101 lessons…for the birds.

  45. Sylvia Rogier says:

    Hey,what happened to my comment? I’m sure I wrote quite a long one after watching the show.
    Maybe we need a show called “Fighting Back 101″. I’d be interested in hearing from a banking or state official from North Dakota, a state which owns its own bank. Apparently, they have escaped a lot of the difficulties facing other states.
    I often hear on the show that the euro, sovereign bonds, etc are under attack. For me, it would be interesting to hear someone explain that process – the hows and the whys. Who decides when it happens, what motivates those decisions – is it political/geopolitical? is it just to make a quick buck. It would be interesting to have it broken down, step by step.

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