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Max Keiser

Max Keiser

Posted: July 28, 2009 12:19 PM

The Shadow Banking Pyramid


The current spate of fraud on Wall St., and specifically the front-running and market manipulation scams being committed by Wall St. banks on the floor of the NYSE and other market making venues, is finally getting some coverage This would be good news if it weren't meaningless.

Some background: I first started reporting on the rigged markets scandal in the U.S. and the U.K. five years ago in the pages of The Ecologist magazine in the U.K. I predicted that the unraveling of FannieMae and FreddieMac was all but certain due to explicit accounting fraud. I was one of many pointing out the blindingly obvious, but this information was kept out of view from the main stream America for fear it would frighten the sheep into cutting back on their leveraged speculation and consumption; using their homes like ATM machines. In an economy dictated to by the unholy triangle of GE, CNBC, and Wall St. selling their wares of weapons, propaganda and lottery tickets, delusions (and fiat currencies) must never be questioned.

Talking about crooks on Wall St. has been a staple while co-hosting my radio show in London with Stacy Herbert on ResonanceFM 104.4, "The Truth About Markets." Week after week we forensically describe the workings of Wall St. frauds -- drawing on my experience as a former Wall St. trader and inventor of patented financial engineering technologies used on Wall St. today -- to explain how the scams are done in full view of the SEC and CFTC. ResonanceFM is a musicians cooperative listened to primarily by bong smoking squatters in Shordditch who, by virtue of the fact that mainstream American and British media chose not to cover these crimes left open a niche for us to cover, have become preternaturally knowledgeable about fraudulent Collaterized Debt Obligations, Special Purpose Entity Accounts and High Frequency Trading Arbitrage. Many of these pot heads thank me today because many of them put their meager savings into gold bullion as we have been suggesting since 2002 -- which shot up 40% against the British Pound last year.

In 2006 I started making documentaries for Al Jazeera English. Death of the Dollar, Rigged Markets and Money Geyser explained, respectively, the structural weakness of the dollar, the structural weakness of the New York Stock Exchange, and the structural weakness of the global currency grid and in particular the currency and economy of Iceland. A year later, the Icelandic krona and the economy evaporated in a cloud of currency 'carry trade' ice and dust exactly as we predicted it would.

In 2007 the sup-prime scandal and the controlled demolition of Bear Stearns and Lehman Brothers got under way thanks to the Washington-Wall St. revolving door that gave us the Goldman Sachs-Oval Office axis of insider trading; the S&L crash, the 1987 crash, the Long Term Capital Management (LTCM) crash, the crash of Drexal Burnham, Enron, WorldCom and the dot-com crash. America has become the most corrupt empire in history and since the debts that caused each of these catastrophes was never paid off, but simply put off the balance sheet and traded in what Prime Minister Gordon Brown calls the 'Shadow Banking System' or to be more precise the Shadow Banking Pyramid, Americans can expect to live in the shadow of this debt pyramid in perpetuity.

America's debts are bigger than the entire GDP of the world, so unless the whole world decides to bail out America by gifting America 100 percent of their wages and profits for a year or more America can forget about ever digging out of its debt entombment.

In 2008 I produced and presented a series for BBC World News, The Oracle. For ten weeks I hammered away reporting on the rot that was threatening to take down America; the duplicitous spewings of Hank Paulson, Ben Bernanke, and Tim Geithner, as well as the parasitical machinations of the Fed, so I wasn't surprised when Congress appeased financial terrorists on Wall St. and coughed up 700 billion dollars in ransom at the end of last year to ensure payment of Goldman Sachs' bonus pool for 2008 and 2009.

This is why I do not believe that the main stream media's belated reporting on Wall St. scandals is meaningful. It's too late. Like the New York Times sitting on the Bush wire tap story until after the election of 2004, the story of banking buccaneers and vipers in the New York Times reads more like a requiem than a news story.

The Egyptians had the great pyramids in the Valley of the Kings. We have the great pyramids of debt created in the canyons of Wall St. These are now permanent features of the American and British financial landscape that have effectively turned Americans and Brits into debt slaves.

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05:42 PM on 07/30/2009
HI MAX
CHECK THIS OUT IM SURE YOU HAVE SEEN IT BEFORE

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing
power should be taken from the banks and restored to the people, to whom it properly belongs.

—Thomas Jefferson, 1802
05:26 PM on 07/30/2009
hi max

check this out

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing
power should be taken from the banks and restored to the people, to whom it properly belongs.

—Thomas Jefferson, 1802
WOW WHAT DO YOU MAKE OF THAT MAX

PS
YOU SHOULD BE ON MOUNT RUSHMORE NEXT TO THOMAS JEFFERSON
04:51 PM on 07/30/2009
Max I hope they keep you on here at Huff you will shine a light for some in the USA..

The New York Times reads more like a requiem than a news story.
They will be interrogating us all for posting a comment soon

In the end the Egyptian Royals had to dig up the bodies and bury them in the valley of the queens. Basically hide them in the mountains, all empires come and go. I don't like change HELP !!!
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HUFFPOST SUPER USER
joebhed
Greenback Revolutionist
08:44 AM on 07/29/2009
Max, where ya been?

While recognizing your substantial contribution of speaking truth to power, I must focus on the shortfall of this post.
So what?

We get REALLY pissed off because we realize that there now exists an un-payable, gargantuan pyramid of debt that must remain part of the American landscape.
Or, what?

Max, back to Square One.
If we had a money system that operated on quasi-ecological mechanisms, or at least on scientific mechanisms, then we would not NECESSARILY end up with this debt pyramid.

We turned our sovereign right to create money over to private bankers in 1913.
They conveniently create all money as a debt, repayable with interest that is NEVER CREATED.
We MUST end up with that unscientific debt-pyramid that you describe.

What we really need, Max, is a new movement of folks, with an alternative plan that will eliminate the problem.
One is the New Economics Foundation's scientific money-system reform proposal in "Creating New Money".
http://www.neweconomics.org/gen/uploads/CreatingNewMoney.pdf

Also the American Monetary Institutes money-system reform proposal.
http://www.monetary.org/amacolorpamphlet.pdf

So, my question, Max:
Why are not at the point of "mobilization" around a new "scientific" money system in a new democratically-controlled world to replace the one of the international monied interests that produces the debt-pyramid you describe?
We don't need a lot more anger, Max.
People are looking for answers.

respectfully.
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HUFFPOST BLOGGER
Max Keiser
Hosts "Keiser Report" Inventor Virtual Currencies
11:53 AM on 07/29/2009
One of the points I am trying to make is that even if the paper of record, the NYT refuses to report on financial fraud in real time for obvious political reasons it's impossible to think about reform. There is a 'truth arbitrage' at work here. As soon as the NYT gets around to reporting the scams - 5 to 10 years after they have been up and running - it's because the 'spread' is not that attractive anymore and the banks are preparing to launch a whole new generation of fraud. For example, while the NYT reports on scams like HFT now, a whole new generation of fruadulent financial products in the area of carbon trading is in the wings. Also, as I've reported on before, Cantor Exchange will usher in a new generation of box office futures contracts that, IMO, open up huge opportunities for conflicts of interest.

What to do at the grass-roots? IMO opinion the single most important 'turnkey' issue that reforms the entire crony capitalist kleptocracy is patent-copyright reform. Financial products are patented in ways that patent fraud and theft. This is obviously not in the best interests of society.
04:20 PM on 07/29/2009
Just thinking - seems like most news reported in main stream media comes out only once it's old news already, OR when it's being planned to happen in the future, to get people used to it.
08:51 PM on 07/29/2009
Similar things have been noted about society in general. We never actually solve any problems. We simply wait until the paradigm changes. The Great Depression was "solved" by WWII. The S&L crisis was solved by simply folding its stinking debt into the growing capital economy. Society seems to lack the established procedures of dealing with the inbred nepotistic practices at the top.
03:53 AM on 07/29/2009
Go, Max, Go!!! Go, Max, Go!!!

I LOVE YOU, MAN!!!!!!

I started out with Matt Taibbi, I thought HE was cool (he is). But even Taibbi over on HIS blog admits that he doesn't even hate Goldman as much as YOU do!!!

They're crooks!!! They're financial terrorists!!! YES!!! YES!!!

You are, of course, running into the same problem identified by overstock.com's CEO, and that is that the financial press in NYC is far to close to the people they're reporting on to have even the semblance of objectivity.

I just stuck you in my blogroll. My blog has been shut down for a minute while I did some stuff to the back end, but I think my first post for v1.1 will mention you prominently in some fashion.

GO, MAX, GO!!! AND STACY TOO!!!

-Jay Randall

http://www.econocataclysm.com
10:06 PM on 07/28/2009
From http://edupreneursvkleptobankers.wordpress.com/

"Canonical research findings suggest that American entrepreneurs who establish popular online markets for customized education will catalyze the creation of many good jobs in America, and will end the reign of America’s kleptobankers. Some of the researchers: Clayton Christensen, Paul Romer and Paul Krugman."
09:15 PM on 07/28/2009
I can testify that Max has indeed been forecasting the collapse and pointing out the corruption for more than a year (since I first came across Max). He has been spot on everytime.

My favorite was a year ago, on Al Jeezera, Max said on air that Hank Paulson's head should be bouncing down the steps . . . priceless.
08:16 PM on 07/28/2009
Don't go quietly. Rise Up.
08:13 PM on 07/28/2009
Machiavelli said that a man is likely to forget the death of is father sooner than the loss of his entire fortune. Unfortunately both will come true if the healthcare system doesn't get it's ethics straighted out soon against people like Machiavelli.

And I haven't even started talking about fortune and ethics. It seems to late for that anyways. The MSM isn't on the edge like Max and the alternative media is which is very worrisome. The MSM should realise that if they dear to look the future generation straight in the eyes.
07:40 PM on 07/28/2009
thanx mas for your reporting of the state of the financial markets.

the main stream media may not report the truth, but for those who seek it out. there are people like yourself and stacey, who are talking about it.
your website
www.maxkeiser.com
and
www.zerohedge.com

do a fine job with what i would call honest journalism. you dont get any of that in the main stream media. just commentary and theatre.

its quit a disgrace and i hope rupert murdoch and the other telivision billionaries, all dissappear when people rely on the internet for their news!
06:10 PM on 07/28/2009
BLOOMBERG headline

"Geithner Says U.S., China Agree to Ensure ‘Recovery Is Secured’"

now we can relax! everything's under control

OMG
05:33 PM on 07/28/2009
WELCOME TO THE PLANTATION!

you already have a huge debt when you finish college, which should NEVER cost so much.
soon you'll inherit your parent's debts too, the way the better off inherit wealth.

goodbye social mobility
goodnight america
04:51 PM on 07/28/2009
Look at China, they can't wait to get rid of their dollars.

keep up with the real news on the economy
http://maxkeiser.com/

max keiser's documentaries, in plain english, on youtube
http://www.youtube.com/user/MaxKeiserTV
04:38 PM on 07/28/2009
I agree with Max.
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breakingpoint
War is a Racket - Smedley Butler
03:15 PM on 07/28/2009
I’m not sure if owning anything is the US worth owning anymore. If you have reasonable shelter, food and good health all other things Americans value will have to change.

I don’t think the US will ever pay its debt to China. Americans can only hope to hang onto what’s left of the country’s resources.

In exchange for our debt to China I believe we will step aside without notice to Tibet and Taiwan and any gains China has its eyes on in most of Africa.

US big investors, what’s left of them, will head for the Chinese markets and we will be living with our heads just above water for a long time to come.

If current trend continue the US will become a country of two classes and either corruption or government control will run our lives. We will become more like China was.

However, if Americans can get their heads out of their asses we can settle on a life style closer to Europeans or Canadians and refrain from being the policemen of the world and the Pac Men of Consumerism.