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tv   Keiser Report  RT  August 1, 2013 3:29am-4:01am EDT

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the future covered. welcome to the kaiser report imax kaiser. just sipping some kool-aid it's a technique called method reporting i'm trying to get into the minds of those in today's headlines you see nine out of ten called members prefer to drink kool-aid before partaking in a mass suicide or want to tempting to assassinate a public figure. you don't hear much these days of cult leaders and their crazy followers but we've got some in our headlines. last more max they used to make the news more often but i think now it's just part of the fabric of our society they were all cult members and if you look at this first headline this is an editorial
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from the financial times by adam posen a former member of monetary policy committee of the bank of england the cult of home ownership is dangerous and damaging so in the us in the u.k. we have homeownership rates of sixty five to seventy percent and we're told over and over that we need to have more more greater percentage of ownership because seventy percent is enough we need one hundred percent and this will grow the economy but if you look at economies he points out like japan germany and france their home ownership rates are only thirty to forty percent and yet we can all agree that these economies are strong and populations have high incomes so he says start with the distortion to savings behavior that mortgage subsidies and high loan to value ratios encourage for many american and british households their home equity is their primary financial asset in other words we incentivize middle class households to leverage the bulk of their savings into
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a highly volatile difficult to price asset which is subject to disaster risk both idiosyncratic fire tree falling on the roof and general flood local industry closure and which based on the economic fundamentals should return av best the average rate of local wage of population growth. while i'm like the jim jones. cult i think there was one of the first in the really the best example of drinking the kool-aid and jim jones could easily be the new federal reserve chairman you know they're considering john yellin or larry summers they need a jim jones. like character to step in there put on those sunglasses passed out the kool-aid and get everyone to just speculate crazily in the real estate market more than they are all ready we know that a crash is baked into the kool-aid ridden cake we know that they'll be
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a huge wipe out in equity for example in america there was thanks to the last real estate crash in a vis aeration of wealth across the land the bankers are made out great and the speculators did ok but the average person got wiped out not as badly as are about to get wiped out in the u.k. in america thanks to this next kool-aid driven cold like housing bubble well first of all can you pour me a little bit of that while i get to the next that because i need to really understand this koolaid drinking our housing bubble mentality so he looks at the fact that the propaganda all over the u.k. all over the us is about you have to get on the property ladder this is a great middle class way to build equity in homes that become a wealthy you know sort of class person average individuals however cannot calculate let alone reasonably project the running costs and financial risks of their housing investment as opposed to renting and putting their savings a more stable liquid assets but they constantly hear the misleading mantra that
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renting is throwing money away while incurring mortgage debt builds equity well there are wider economic ramifications to support this real estate colt's it means keeping interest rates artificially low which means that the u.k. economy for example has pushed away any attempt at creating a manufacturing base because a manufacturing base would require capital and investment but that all that capital is being used as a massive george osborne ponzi scheme so there won't wall being high paying manufacturing jobs in this economy there's only by. well this is exactly what adam posen points out here is that all of the middle class savings is going into housing instead of putting it to more productive uses such as investing in new businesses infrastructure or research and development and so ironically all the research shows
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that in fact the more housing ownership you have in a community a state or local municipality. always following the house price rises and the home ownership increase you find unemployment also increase right well because economics is a wonderful science that can bring some simple mathematics to the day to day activities of one's household and one's economy and if you dump all of your money into speculating and you crowd out the actual manufacturing jobs that would create labor and create wages and create capital that would form the basis of capitalism the results are predictable you see it in this economy wages are growing at less than one percent housing bubble is growing at a considerably rate higher and the average house price is down at a record high of multiple to wages that will only increase because i was born has redirected the a flow of cash in this economy so that or only goes toward speculation in housing and because there are so many middle class the voter the typical voter has
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a huge is how hugely leveraged to increases in house prices he points out that the mass movement of voters savings into an inherently risky asset also creates demands on policymakers to provide capital gains on housing that their constituents otherwise would not receive right so completely transforms the political landscape so the economy is mismanaged by osborne and it bleeds into mismanagement of the general economy the general policies the country at large if fosters all kinds of corrupt foreign policies and domestic policies everything is just like a jim jones in guyana they all gather together they all drink the kool-aid and they're all it's on suicide watch there's sixty million people in britain are being given the kool-aid of a real estate bubble and they're all going to suffer a massive crash which occurred darwin one of the famous citizens of the u.k. might say that's great because we're getting rid of the overpopulation of druids ok
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that would be doan's opinion but for other time i say i might not be a. to run an economy so because all these voters are so leveraged they also as a result we get a combination of regulatory measures local stimulus plans subsidies to property lending a bias towards inflation that promote housing bubbles so of course this is obviously what we see in the u.k. in the us the economies are recovering because of the housing bust but bubble not being reengineered in the us that i was just reading that how is house prices are up twelve and a half percent in the last year well let's put this in context any number you put on the house price appreciation that there is another number that's greater that is the increase in debt the g.d.p. in the u.k. we just reported that point six percent the amount of debt was triple that the growth in debt the amount of wages however is completely stagnant the amount of debt in the u.k. is now projected to double to over four trillion pounds in debt over the next three
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years so yes you can create a a little lesion of wealth by pumping a ponzi scheme is born is doing at the expense of taking the bank of england balance sheet and making it into a four to five trillion pound debt black hole so then we he's saying here that this alters government policy and bloomberg provides a headline showing exactly that american dream erased as home ownership an eighteen year low with ownership at sixty five percent and home values rising housing industry and consumer groups are pressing lawmakers to make the american dream more inclusive by ensuring new mortgage standards designed to prevent another crash are flexible enough that more families can benefit from the recovery regulators are close to proposing a softened reversion of a rule requiring banks to keep
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a stake in risky mortgages they securitized well this year the joke is that you've got so mike senator elizabeth. warren he wants to bring in glass steagall reintroduced glass steagall going back to the reforms of f.d.r. after the last crash or the biggest crash of twenty nine meanwhile on wall street they're working to reduce the requirements for capital on their balance sheets are looking to increase their loan to reserve ratios they're constantly nibbling on the edges to completely transform the system so that there is more speculation less equity and then the lows but the war is trotted out saying well we're going to bring back glass steagall maybe that's never going to happen and if it does it'll have been mitigated into total ineffectiveness by the all these other married of policies engineered by bankers for bankers at the expense of everyone else well it's even more than that because this is the fraud these are the collateralized debt obligations what they're saying is they should be able to package those more because right now they can't they can't push fraud on to the pension schemes and therefore they're trying to they're going to congress and they're using those
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american dream due to the middle class family you want your house price to go up twelve percent we can make it happen by pushing fraud on the other end into your pension scheme but they also point out here i want to say that you know it's down at an eighteen year low where it's now sixty five percent of u.s. population has is homeowners or mortgage holders anyway that peak was at sixty nine percent in two thousand and four but so they want to get above sixty five percent they say it's going to bottom at sixty four percent this is important to put into the context of needing an economy in manufacturing and wealth creation because the average for thirty years before nine hundred ninety five in the u.s. was sixty four percent that was the average for the percentage of the population that own the home well nine hundred ninety four is when nafta kamen so post nafta we don't have jobs we don't have manufacturing all our real wealth creating jobs are sent overseas to all we have left is this one trick pony this constant housing
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bubbles that wipe out banking systems wipe out of the. and savings right so the banks want the rule change so they can resell mortgages again then they've already resold the mortgage and their mortgage derivatives to collateralized debt obligations they want to resell the same mortgage over and over and over again so so many takes out a mortgage on a house the bank then resells out into what's called a wholesale market they want the ability then to take that mortgage and resell it again and resell the third and resell the fourth time here in the u.k. that's called re hypothecation there's no law against selling in an infinite number of times in the u.k. they merica wants that law changed in that way that they can instantly re hypothecate the same morgues i have a suggestion you take a banker like jamie diamond who's got mortgages that he's retired papa cater to resole dozens of times i think wherever he's living up there on the upper east side let six or seven dozen families move in with jamie to represent the number of times
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he's resold that mortgage so i think jamie should have sixty or seventy people living in his living room those are the people that he's profited from reselling that mortgage sixty times so why aren't those sixty people then living with jamie living with lloyd blankfein living with warren buffett why are they living in houses that don't have sixty or seventy or eighty people living there the number of times they've resold that mortgage and profited each and every time and put the system a complete risk and of course when it crashes as of course it will they'll get a bill oh well let's talk about this because we talk about economic suicide we're talking about political societal suicide because it's important to address this if this is the final headline here regarding this kool-aid policy the drinking the kool-aid it's just not jamie dimon it's not just warren buffett that's the important thing though is a cult leaders the population are the people drinking the kool-aid they're the ones that want to drink. they're drinking at the final headline the cult of home
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ownership promotes disastrous politics so this is matt yglesias and he looks at the fact that a house is actually very similar to a car it's a both a consumer durable and it needs gasoline a commodity to run but even though both automobiles and tanks of gasoline are widely owned in the united states politicians don't run around trying to promote expensive cars and gasoline because we rightly recognize that this would reduce living standards not raise them so the equivalent is because so many americans because of the housing bust because of the banking collapse now live in their cars the equivalent would be for barack obama the congress the republican party everybody and all the participants all the formerly middle class now living in cars seeking policies that will restrict the supply of cars so that their cars while they are living in a car park will increase in value so that they can that slip it to another person and become wealthy. like sesame street station is actually less ring on the guys report thank you max stage of the second half well more.
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the main competitor girl on the market is mother nature. may customers struggle with. for each drop from a dirty supply. let people think their prices purer what. they use is there in a war. and flush their toilets with the same. this series is selling spring water. so we leave that maybe. by the same. party years ago.
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no one is asking with the guests that you deserve from. politics only to. play mission free accreditation free in-store chargers free to make amends three risk free studio time free. download free broadcast quality video for your media projects free media r.t.
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dot com. welcome back to the kaiser report imax keyser time now to turn to dominic frisby dominic welcome back to the kaiser report thank you very much thank you very much much slower to be here i want to just point out that you are the resident gold bug at money week survive publication in the u.k. are also the author of the crowd funded life after the state yes absolutely right and it's coming out in about a month's time all right dominic frisby let's talk about the u.k. economy g.d.p. is up is it up for the wrong reasons however as some are suggesting just tied to housing your thoughts well the housing market is enjoying a run the economy's too dependent on housing and finance this is a few recoveries few by debts and money printing and so on and so forth the bottom
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line is we don't make enough stuff i think something like ten percent of our industry ten percent of g.d.p. is manufacturing once upon a time it was over fifty percent so prior to the two thousand and seven two thousand and crash the u.k. economy was over reliant on finance and housing so the after the crash george osborne decided to reinflate the housing and finance bubble that i think that's about right yeah so the g.d.p. numbers reflect a new bubble i would say so and but when it pops is the big question if if it will have a poll who knows ok so less than ten percent or less of the economy is actually export driven but for the most part it's all speculative excess again driven by a ponzi scheme george osborne's help to buy scheme which is a part of his part as his housing scheme everyone from the kaiser report here to mervyn king to the i.m.f.'s called mervyn king this game
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a ponzi scheme now the participants in this game love it but your thoughts well. i've yet to. find somebody speak positively about it there it is is met with only criticism but i think i know what's behind it because. early. early in this in this government's term i had quite a few meetings with policymakers and people were true the the there was this mean doing the rounds that what made thatcher popular wasn't all the things that we read about it was the fact it was there was a thing called right to buy and it gave people who lived in council houses and social housing the right to buy their flats and suddenly. this turned this created a new kind of demographic if you like of homeowners and it was this that made thatcher popular amongst certain quarters of the working classes and it was that that made the tories so popular and what made the tories unpopular unelectable for
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maybe half a generation wasn't tony blair and what a wonderful guy he was it was the fact that so many people lost their homes in the real estate crash of the late eighty's early ninety's because of spiraling interest rates people couldn't make their payments and homes were repossessed so the tories have got this idea that one we cannot let people lose their homes under our watch which is one of the reasons you're seeing such suppressed interest rates and to they're trying to find a magic bullet a bit like what right to buy was and that's i think what's behind this helped by the trying to turn people into homeowners another interesting fact check for you is the fact that people who own their homes are more likely to vote than people who don't so it's an entirely politically motivated policy and it's it's not because they're so desperate to house people if they were desperate to house people they'd change all the crazy regulations about the housing market in this country it's simply a vote winning exercise in my opinion ok so let's talk about the other side of the
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policy is that our engineer ticks. create a housing bubble to create favorable voting conditions low interest rates you mentioned already but when you artificially come in and you supersede the market and you artificially press interest rates down using quantitative easing for example to boost your votes as the tories are obviously doing and trying to resurrect the ghost of maggie thatcher trying to engineer a boom in time for the next election but it causes some shortcomings in other areas of the economy for example savers people who have money in the bank who have saved who have worked all their lives instead of getting five percent interest on their savings that they would normally they're getting one percent or one and a half percent right salute the it creates a culture of spending and speculation and saving and investment so capitalism then you're a capitalist absolutely ok but in the true sense of the word on and on to the madness is a more cruel capitalist fair enough so capitalism relies on capital absolutely capital
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all comes from savings and then savings comes from working absolutely and spending less than you in. so here you have an economy in the u.k. that's not capitalist in that sense so when people say for example these protest groups like mean there are some in the u.k. u.k. uncut or even the green group for things they also tack capitalism yet but they're really attacking the wrong target because. it's not actually funny so this is an issue i feel very strongly about actually is one of the things that motivated my book and i talk about it at great length the the the the huge kind of movement of anger the occupy movement and everything else i'm entirely in agreement with with the motivation behind it but the target is wrong that they think capitalism is bad they think capitalism creates inequality it doesn't it's actually the most equal a fair system but what they're railing against has somehow got the name capitalism
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it isn't it's like i said crony capitalism so i have made that statement or posited that. when i'm wagering is to for labor what interest rates are for speculators in other words if you are the bankers keeping rates down to artificially low rates of one percent half a percent here in the u.k. to favor speculators as you're pointing out it's anticapitalist it's prospect elating it's creating bubbles and it's creating economic duress on this side of the question are saying less than ten percent economy's export well well if by increasing that export you're talking about increasing jobs you're talking about increasing manufacturing which would mean you'd have to pay people something that's commensurate with the skill that they are giving into the economy to manufacture stuff to export so that organized labor factory know that the trade union congress these people that have been disenfranchised these are the union people that has to represent itself but not the way that they've been representing themselves up until
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now is there room if you were advising tea you see which is an unlikely scenario but if you were would you say to them look don't argue that you want fairer necessarily fairer wages when you want wages that are tied to the free money that the bank of england is giving why can't the bank of england go and three trillion pounds into debt to finance wages to create exports why are they only going into debt to finance speculation to create bubbles well that's a very good point it would be i think that's one of the criticisms of quantitative easing an artificially low interest rates and all the rest of it is that the money hasn't made its way into the real economy it's ok i want to stick on housing adam posen who writing in the financial times he said quote the cult of housing is an economically disastrous one and we've scammed the middle class and placing highly leveraged bets on a volatile asset on the promise of building equity i saw it come around back to
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housing and it's a bubble and adam posen in the f.t. i mean you can't argue with this sentiments no our guy couldn't agree more we're just so reliant on how. and it's absolutely crazy and the housing market in this country is insane let me just give you a couple of steps is a very good book by a gentleman called kevin cahill called who owns britain and ireland and did you know for example that less than eight percent of this country is built on in other words the entire population of this country live on less than eight percent of the land seventy percent of british land is owned by less than one percent of the population the crown large institutions are socratic families almost fifty percent of the land in the in britain is entirely unregistered and there are sixty million acres of land in the u.k. there are roughly sixty million britons we could have an acre of land each but the average briton lives on three hundred forty square yards sixty million people live
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in twenty four million homes which occupies a seven point seven percent of the land four point four million acres and the average density of people on one residential acre of british land is twelve to thirteen so. it all works out as about zero point zero zero point zero seven acres per person it's such a distorted. way of such a distorted way of distributing the wealth it's just incredible this one percent seventy percent well look the cult of housing people want to get in on that in other words that are open the floodgates and said you too can be our money to do houses that are they want to get in that they they they have you laid the royal family they emulate the monarchy the royal baby popped out of the worm and suddenly you know the whole world is we want to be moderate and risto still yeah well that feeds into b.b.c. as a state of the titian they support this idea of the cult of ours and it's crazy and i mean we have the expression an englishman's home is his castle and there is this
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obsession with only what is natural to want to own land everyone wants to do it it's the you know it's an obvious form of wealth but they're on their same interest . allow people to get on the so-called ladder is in exchange for other policies that are highly detrimental foreign policies that are that their mental domestic work policies that are detrimental so people are training their civil rights all the c.c.t.v. cameras in britain this most surveyed country in the world you just mentioned land for a citizen how many c.c.t.v. cameras for citizens something like we are more in london than anywhere else in the world yet for every time there's at least one or two cameras it is growing exponentially so they give that up in exchange for lower rates and a housing bubble that's always always without fail crashes well one of the biggest the biggest most economic crashes the crash of two thousand and eight was driven by a real estate bubble its real estate bubbles create more problems than they cure the other problem we have is planning restrictions nobody can build anything in this country i mean they can it's not as simple but it's just so onerous to try and
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buy land and get planning permission despite the fact the most land isn't built on it again it means that everyone's trying to buy this this tiny pool of land you know there's a tiny pool of houses and everyone's trying to buy those houses rather than you know the market being freed up the actually what we need is a land tax to give you no land tax that doesn't sound very tory friendly. i don't know we need a land tax so that unused land passes to people who are not using it to people who will use it and it will make for a much more fair and efficient distribution of well all right well we can talk about that next time down there is be rather time thanks so much for being on the kaiser report and my pleasure max thank you very much all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert our thank my guest dominic frisby author of the crowd funded life after the state if you'd like to get in touch with us you can do so on twitter tweet kaiser report
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until next time ask either saying but you know. victims multiply here each day. it's very profitable to invest in colombia with that every profit out of them is a very high return on investment. you'll know me and he said that i've been working in this area for thirty years and i've always had to pay the armed groups that i may have needed betis i needed not a manager is a change their name a strategy but just feel the same murderous. high ranking suspects give no comment what you have to say about that mr president zuma. to president clinton. both to me and. i won't give an interview i'm sorry but no.
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investigation is a dead. end up he says sick and can't stop it and keep quiet or else you'll suffer the consequences. believe it or not and your bodyguards to watch themselves too because the same goes for them. blood returns from st i've never heard of such a case as ours where so much money and gold has spoken for so many years. for all the gold in colombia on r.t.e. . that judges assess on son. killed on the streets. that women kidnapped and converted to islam by force will there be another layer of motives for the coakley christians of egypt to the cross touches muslims future victims. the way of the cross.
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old. golden. i think. the let's be. misleading.
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i mean very little. snooping on fresh revelations shed light on the u.s. intelligence. the can endlessly mind your private e-mails and all the people online footprints. still no decision from the e.u. on shipments to syria with mounting fears the lifting of it was not such a good idea the conflict in the war torn country fuels extremism on european soil. and online protests are expected to rock the russian web with a new law allowing websites that break copyrights to be blocked it's now in place look at the pros and cons comparing it to similar regulations in other countries.

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