Thom Hartmann: So for the last week or so I’ve been watching this situation in Dubai with the company that George Bush wanted to sell the ports of the United States to. Saying that they’re going to take a holiday from paying interest payments on the debt that they have. And scratching my head. You know, I’ve read probably a dozen articles in the Financial Times about this, other parts of the financial press, you know, poking around the Internet. I don’t think that I’ve got the whole story and I have a lot of respect for Max Keiser and his ability to ferret these things out. He and his partner in Paris, I’m forgetting her name, Max.

Max Keiser: Stacy!

Thom Hartmann: Stacy! There you go. Max and Stacy. And some great reporting the two of you do. MaxKeiser.com the website. Max is with us on the line from Paris. So Max, what the hell is going on in Dubai?

Max Keiser: Oh yeah, Dubai. Yeah it’s an interesting story Thom. You see, in Dubai they don’t really have any oil reserves. So they decided to try to become the next Disneyland. This guy Sheikh Mohammed, he had a “vision” to turn Dubai into a real estate speculator’s paradise coupled with a theme park. Uh the theme park being Dubai World. They also built the world’s tallest office tower in the world, it’s one mile high in the sky. And unfortunately he got caught up in the credit crunch, as well as all the other creditors around the world, and has come crashing down. You know, I said on my show earlier this week if he wanted to be a real estate speculator in a theme park he could have spent his money more wisely, just buy Florida.

Thom Hartmann: Yeah indeed. And Florida is pretty cheap right now.

Max Keiser: He could have just bought Florida and he could have fulfilled his vision. A speculative playground for speculators and a theme park. But instead he blew a considerable amount of money in Dubai. And now you’ve got Abu Dhabi who’s the most powerful of the seven emirates…

Thom Hartmann: Yeah, now let’s back up just a little bit here and provide a context for our listeners who don’t understand how this all works. Um, Dubai is a city state but it’s also part of a group of states that are, well you describe, I can’t, the best metaphor I can come up with is it’s sort of like the United States was when we operated under the articles of confederacy. Each state was functionally an independent nation but there was a loose confederation. And it didn’t work particularly well, we had to come up with the constitution. But give me your metaphor, I’m sure it’s better than mine.

Max Keiser: Well, you know, it’s just, in the early 70s, United Arab Emirates was put together, it’s basically seven emirates that are run by the Emirs.

Thom Hartmann: Right, and an Emir, which is a fancy word for King.

Max Keiser: Yeah.

Thom Hartmann: Seven kingdoms run by kings.

Max Keiser: That’s right. And Abu Dhabi is really the top of the emirates and it has 10% of the world’s oil and gas supplies, it’s a very wealthy province, it’s a very wealthy part of the United Arab Emirates. And Dubai was always kind of a place that didn’t have the oil reserves so consequently they decided to do like a Lehman Brothers or a Wall Street, you know, finance based growth with real estate speculation and they got caught up just like banks on Wall Street and the banks in United Kingdom. When the real estate market crashed, that was part of phase one of the global crash that started a couple years ago and it climbed, and it was a huge event last year and now we’re starting phase two. Which is really now the next round of these leveraged countries and corporations starting to be unable to pay their debts and you’re gonna start to see more of this. In the Middle East region there’s about a trillion dollars of bad debts. And yeah they have oil but the other thing is that the Ghawar oil field in Saudi Arabia, which is the world’s biggest, last year reported 10% drop in production, which is a number they don’t publish…

Thom Hartmann: Which means they’re on the back end of peak oil.

Max Keiser: Yeah, as is Cantarell in Mexico, as is Burgan in Kuwait. So the globe has hit peak oil, Saudi Arabia has hit peak oil and they’ve got a trillion dollars of bad debts and they’ve got some oil in the ground right now to pay for those debts but the growth period for the Middle East region is behind them and Dubai is just the first of what are going to be many casualties in the region.

Thom Hartmann: Right. My, you know I’ve read a number of articles about how this sheikh or whoever, Mr. Mohammed in Dubai thought that he would be bailed out by the wealthier, oil rich fellow state and fellow king, fellow Emir, and that that fellow Emir has kind of backed off and said it ain’t gonna happen and there’s all this speculation about how this is gonna shake out. But it seems to me…

Max Keiser: It’s all gonna "sheikh" out, to coin a phrase.

Thom Hartmann: Yeah, to coin a phrase, yeah, bad pun. But Max, we’re talking with Max Keiser, MaxKeiser.com, his website. But to me it seems that really we’re looking at the confluence of two events. We’re looking at on the one hand the consequence of peak oil. The reality that these nations since the mid ‘80s, when the World Bank began defining the amount of money that they would loan to Middle Eastern countries on their reserves and all of them, I think it was ’87, I wrote about it in my book “The Last Hours of Ancient Sunlight,” all of them up, increased their stated reserves by about 30% in one week, you know. Without finding any more oil. And all of a sudden they had more oil and thus they qualified for larger loans. That on the one hand we’re seeing the consequence of global peak oil starting to hit the epicenter of oil, which is the Middle East, and on the other hand we’re starting to see the consequence of globalization. This, Thomas Friedman’s insane and stupid idiotic idea of a flat earth, that any company can go to whatever country where the externalities are the cheapest and not necessarily even just the labor, but, you know, they can pollute the cheapest, they can build the factories the cheapest, you know, Bhopal is in fact a great example of this, that the economic theory of the flat earth is beginning to implode as well.

Max Keiser: Well the flat earth was fueled by cheap money. And to go along with peak oil we have now, we are experiencing peak credit.

Thom Hartmann: Right, yeah exactly.

Max Keiser: And so money is hard to come by. We have hit peak credit. And in the Middle East, you know, to drill for oil, you need credit, you need capital and there is very little of it now around because we’ve hit peak credit in the globe, in the global economy. The globalization experiment is not working because there’s no more money to be borrowed. We’ve hit peak credit.

Thom Hartmann: Right. And in fact money is supposed to represent wealth and now that many of the, well now that the US and the UK in particular have, you know, drank the Thatcher / Reagan Kool Aid and for that matter the Bill Clinton Kool Aid, the WTO Kool Aid and moved away from manufacturing economies and moved away from tariff-based economies and things like this and said, 'oh, you know, manufacturing doesn’t count, we can just, we can build an economy based on magic, on moving paper, on finance, on electrons on the Internet'.

Max Keiser: Well to give support to what you’re saying, the biggest loser so far in the Dubai crash are two UK banks, Royal Bank of Scotland and Lloyds because they have the paper. They own the paper of the Dubai bonds that are collapsing. And by the way those two banks are now mostly owned by the UK citizens as part of their restructuring so that the UK citizens are going to end up bailing out for the Dubai’s collapse in the short term.

Thom Hartmann: Yeah, but not in the long term because there ain’t enough money, if my reading of this is right…

Max Keiser: In the long term, well, and here’s another, just to add to your confluence of things coming together. Here’s another interesting angle to kind of focus on the region for a second between Abu Dhabi and Dubai. Dubai has a very close relationship with Iran. And Abu Dhabi is closely aligned with Saudi Arabia. And if all the restrictions that have been put on Iran, all the trade restrictions, a lot of people have gotten around those restrictions by going …

Thom Hartmann: By going through Dubai. Right. And this is part of, part of why Halliburton reincorporated in Dubai, isn’t it?

Max Keiser: Yeah that’s absolutely right. So Abu Dhabi, not only don’t they have an economic interest to help Dubai because why put good money after bad, but they also have a political reason not to help Dubai because they want to rein Dubai’s relationship in that they have with Iran as part of this global, you know, sanctions against Iran.

Thom Hartmann: Right. Max can you stick around for a minute?

Max Keiser: Okay.

Thom Hartmann: We’ve got about a 4 minute break here and I’d like to get into, I’d just like to drill a little bit deeper… haha another terrible pun, I’m sorry. Max Keiser, MaxKeiser.com.

...

Thom Hartmann: Max Keiser with us. MaxKeiser.com his website. It is worth checking out. Get over there and look at some of his video, watch his show, check out some of his writings, Max is doing some really great work. So Max, we were talking a few minutes ago about the nature of the Middle East and how these different loyalties are going in these different directions. As this stuff is fracturing, and you were pointing out Iran and Saudi Arabia, we have now President Obama talking about Afghanistan, we have, everybody’s concerned about Pakistan. The nightmare scenario of course is that India and Pakistan get into some sort of a nuclear war and that triggers World War III. It’s almost beginning to look to me, with all of these interlocking relationships, almost like a World War I situation where Archduke Ferdinand was assassinated in Sarajevo and all of these various countries had to declare war on each other because they all had a deal with the other country that if somebody attacks you then we’ll attack them and nobody, to this day I don’t think anyone can explain why World War I happened. Your thoughts on that and how volatile this region is? Or do you think this is going to be limited to an economic disaster?

Max Keiser: Well, I mean, you talk about the conditions that were there before World War I, I tell you in my opinion is that we are currently involved in World War III and it’s a currency war, it’s fought in the currency pits of the banks and hedge funds around the world. And right now the currency that’s getting beat up is the US dollar. You have China and America’s creditors are selling the dollar short to buy stuff like gold. In other words, just a few years ago the Japanese Yen was the currency that people would sell short and they would use the proceeds from selling the currency to buy things like real estate speculation etc. It becomes what’s known as a funding currency. Now the Yen is appreciating and the new funding currency in the world is the US dollar. Fund managers and bankers and speculators are selling the dollar short and buying gold. They make money on both the short sale of the dollar and buying gold.

Thom Hartmann: Right. Yen is like 88 to the dollar right now, isn’t it? Something like that? I mean it’s really…

Max Keiser: Well the dollar is getting a lot weaker. And this is the catastrophe that is going to destroy the US economy. So when Obama talks about funding troops in Afghanistan, it’s a complete joke. You know, America, this is an interesting statistic, America, troops, the Pentagon spends over 230 million dollars a day on gasoline.

Thom Hartmann: Yeah. Well we’re spending $400 a gallon right now for gasoline in Afghanistan. The single largest user of petroleum products in the United States is the US military.

Max Keiser: Right, and all that money is borrowed. And the creditors are saying 'you know, we’re gonna cut you off'.

Thom Hartmann: And by the way we’re importing most of that petroleum.

Max Keiser: Absolutely. And I, and the US is, sabre-rattling against countries like Iran, meanwhile Iran has a mutual defense pact with China and Russia. So if America attacks Iran that means we’re going to war with both China and Russia. And that’s simply not going to work out and the US simply doesn’t have the money. Obama’s taken the absolute worst policy decisions he possibly could have taken when getting into office. And that’s unfortunately going to destroy the US dollar which means a tremendous economic hardship is yet on the horizon.

Thom Hartmann: Yeah. What’s, your, you’re singing my song. I mean, I’ve been saying this for a long time without any enthusiasm, frankly. The Carlyle group, for example, was just sued by Kuwait over collapse of their public debt fund. It’s you know, George Herbert Walker Bush’s company. It’s like the Tiger Woods Dubai, the real scandal of Tiger Woods frankly I think is the fact that there’s this huge golf course in Dubai, tigerwoodsdubai.com, you can see it. That he has never on the many occasions he’s been invited to, spoken out against the prostitution and child prostitution that Dubai is an epicenter of in the Middle East and the slave labor that is used to build pretty much everything in Dubai. The, it seems like this whole imperial order, the imperial order in the Middle East of the oil sheikhs, the imperial order of the American empire is coming unraveled and China is playing absolute hardball. When I was in Sudan, the Chinese were everywhere in Africa, and in Kenya last year. They’re just everywhere, buying up every resource they can find. It seems like this is going to be the Chinese century.

Max Keiser: Well, you mention Carlyle Group and all of these companies that are owned by both insiders in Washington and Wall Street, the amount of corruption and manipulation and collusion is really astounding. It would make Caligula blush. And if you just look at one thing for example, something that Goldman Sachs is doing, their high frequency trading down on Wall Street. They’re actually, basically, a, if you steal your neighbor’s gas, if you stick a hose in the gas tank and you syphon the gas out. And well Goldman Sachs, what they have is a high frequency trading program which is, they’ve actually parked a computer next to the New York Stock Exchange and it goes in there and it gets in between all the buys and sells and charges all the buyers and all the sellers an extra penny to do their trade. And just like the guy stealing your gas, they’re stealing a hundred million dollars every single day. This is not a number I’m pulling out of thin air. This is a number reported by the Wall Street Journal. Lloyd Blankfein and the guys at Goldman Sachs, they’re siphoning off the cream, they’re siphoning the cream off the New York Stock Exchange, every day a hundred million dollars a day. That’s money that could go to jobs, that's money that could go to food and money that could go to actually feed people in America.

Thom Hartmann: Right and this is one of the reasons why congressman Peter DeFazio, god bless him, has put in, has suggested the STET tax that I wrote an op ed about some months ago. You know, a 1/10 or ¼ of a percent tax on each trade. Max, we have 30 seconds. What’s your most important advice to the average American right now? To our listeners and viewers?

Max Keiser: Gold, you know you’ve got to look at gold as a way to reserve your purchasing power to do exactly what the central banks around the world are doing. China, India…

Thom Hartmann: You think it’s going to continue to rise?

Max Keiser: Yeah, I mean now we’re at a phase where there’s going to be more volatility so it’s not going to be like the last few years where it just steadily went up 20% a year for 8 years. Now we’re in a kind of a phase 2 of the bull market, it’s going to be more volatile. But if you want protection against this crashing dollar and fiat currencies, gold is the only choice.

Thom Hartmann: Yeah. There are no safe currencies in the world in your mind?

Max Keiser: They’re all fiat currencies based on fractional reserve banking with counter party risk and they’re all gonna suffer against gold.

Thom Hartmann: Interesting. Yeah. Well it makes perfect sense. Max Keiser. MaxKeiser.com is the website. Max, thanks for talking with us today.

Max Keiser: Thanks Thom.

Thom Hartmann: Good good good conversation.

Transcribed by Suzanne Roberts, Portland Psychology Clinic.