Money Talks: Max Keiser

The Occupied Times: So Max, what on earth is going on?

Max Keiser: Well, the global problem of predatory banks has engendered a global response. But unlike the anti-globalization movement of the past decade, this one is rightly targeting banks.

MK: Here’s what’s happening – the basic plumbing of the global banking system is broken and it’s gushing cash. One or two houses are being flooded with cash pouring straight from the central bank, cash that can be immediately converted into hard assets. If you live anywhere else you’re getting the runoff and barely surviving.

MK: The 30 year bull market in financials came to an end (for the bottom 99%). Until recently, falling interest rates fuelled a speculative housing bubble that allowed people to ‘extract’ cash by borrowing against their ever appreciating house. This ended in 2007. Four years later, the consequences finally hit home and we’ve seen riots followed by ‘occupylondon.’ The top 1% have hedged themselves, and even profited from the crash.

MK: The financial ‘Jim Crow’ laws. If you’re at the top of the tree you can borrow money at close to zero, and in some cases below zero percent. For everyone else, interest costs are considerably higher, reaching annualized rates of over 300% for ‘payday’ loans. Keep in mind that those who borrow at zero percent (Wall Street banks and top clients) have a horrible track record paying back their loans. Which is why we need successive rounds of bailouts, to bailout the deadbeats on Wall Street and the City of London. Meanwhile, we know from micro-lending shops like Kiva that lend to the poorest of the poor, the rate of paying back loans is over 97%. It’s just like in the US during the Jim Crow days. It’s discrimination: using interest rates to perpetuate poverty. It’s financial apartheid.

MK: We started the ‘Global Insurrection Against Banker Occupation’ five years ago, and I really think the occupy movements will begin to embrace the ideas we’ve been suggesting on how to take down banksters, using what I call ‘reverse capitalism.’ This basically means recognizing that the protesters have a big enough global economic footprint to change the dynamic of how the global economy works, by simply applying some intelligence, tactics and economies of scale.

MK: They’re not bailouts in the sense of one credit worthy institution lending money to another. The IMF, World Bank and others are also bankrupt. When they say ‘bailout’ what they mean is that they are changing the laws so that they can keep less cash on their books to lend against, and take a huge fee. The people doing the bailing out know that they are on a suicide mission, but they want to grab as much cash as they can before the system implodes.

MK: Raise the ‘margin rate’ charged to speculators to borrow and speculate with until the global derivatives outstanding is reduced by 90%. This is actually the only thing you have to do to fix the system. The speculators would have to reduce their speculative positions and the threat of collapse and bailouts goes away. The Bank of England and the Federal Reserve both have the power to do this, they don’t because they are at the service of the speculators.

MK: Look to yourselves, your strength is in your numbers. Organize campaigns tied to decapitalizing banks and corporations by levering dissent and leveraging vulnerabilities in the system that #occupy can exploit for its gain.

MK: It’s not anti-capitalist, it’s reverse-capitalist. Reversing the past 30 years of bank fraud is job number one. From there, other reforms can take place. The problem is not capitalism, the problem is bankers. Capitalism, the Adam Smith kind, grew out of the Enlightenment which gave birth to the ideals shared by all #occupy participants. Keep in mind that in 1776, we have the birth of America, but also the publication of Wealth of Nations.

MK: The question is how to monetize dissent and change how the economy works with lethal non-violent economic tactics directed toward offending banks and corporations. Narrow the list of vulnerabilities down to one or two, and match that up with the strength of a global movement, and victory is assured.

Here’s an example: Gandhi figured out the vulnerability of the British in India was the monopoly on the salt trade. He simply convinced them all to make their own salt. Victory followed. Think of a global consumer product like Coca-Cola. It’s a 160 billion dollar. company with Warren Buffett as its largest shareholder. Simply by boycotting Coke you begin to topple this huge company and all its banker affiliates – and you attract the attention of hedge funds, who will sell-short Coke’s shares to oblivion. Coke is the most vulnerable company in the world to a global boycott and the goal should simply be to take the stock price to zero as a show of strength.

MK: Rest assured, if Coke went out of business, several new companies would take its place and for every job lost at Coke, at least two would take its place; the market would be much more competitive and everybody wins, except the monopolists at Coke and their bankster supporters.

MK: Egg.