Saturday, October 30, 2010

Need Meds?

By JoNel Aleccia
Health writer MSNBC

Cancer patient Bob Dierker had just finished eight of 12 chemotherapy sessions when technicians broke the news.

Next time, they said, he'd get no leucovorin, the generic medication long used to battle his type of aggressive Stage 3 colorectal cancer. The drug was in short supply across the nation and he'd have to go without.

“It was like getting shot in the stomach,” said Dierker, 64, a lawyer from Fairfax, Va. “My odds just dropped dramatically because I can’t get this drug.”

Exactly how Dierker’s chances of beating the cancer will be affected is unclear, said his oncologist, Dr. Alexander Spira. Leucovorin has been used to boost the effectiveness of cancer drugs for decades, so no one knows how badly patients will fare without it. But Dierker is not alone.

Across the United States, life-saving or medically necessary drugs are running low — or running out — endangering care and increasing the odds of medication mistakes for a broad swath of patients.

Health officials say drug shortages pose a growing public health crisis, fueled in large part by financial motives of drugmakers who’ve watched low-cost generics erode their profits.

Numerous drugmakers contacted by either refused to comment on the shortages or confirmed only that they exist. None would discuss financial considerations.

Unprecedented numbers
“It’s disaster management, daily,” said Erin Fox, manager of the Drug Information Service at the University of Utah Health Care, who has tracked drug shortages for a decade. “The numbers are unprecedented.”

In 2005, Fox recorded 74 drug shortages in the U.S. By 2009, the number had jumped to 166. As of Sept. 10 this year, Fox had logged 150 new shortages — in addition to 30 drug shortages still unresolved and more being reported every week.

Worse, the drugs that are in short supply are often the ones needed most. This year has seen shortages of common drugs used for basic treatments: morphine for pain relief, propofol for sedation, Bactrim injections for infections.

Sterile injectables, including the pre-filled epinephrine syringes used in emergencies for heart attacks and allergic reactions, have been particularly hard to get.

“Our usual, everyday workhorse drugs are no longer available,” said Fox. “It’s just the unavailability of everything that we need every day.”

About 40 percent of the shortages are caused by manufacturing problems, including safety issues, said Valerie Jensen, associate director of the Food and Drug Administration's drug shortage program. Nearly 20 percent are caused when firms simply stop making drugs and another 20 percent are due to production delays. The rest are chalked up to raw material shortages, increased demand, site issues and problems with parts such as syringes or vials.

But underlying them all is the profitability problem, said Jensen.

“Normally, it’s a business decision. That does lead to shortages,” said Jensen. "These are just not usually money-makers."

FDA can't require drug production
Despite the concerns of doctors and pharmacists — and the distress of patients — no one can force the drugmakers to address the problem.

The FDA has no authority to compel drugmakers to continue producing a certain drug, or to require them to make a drug that’s in short supply, Jensen confirmed. And companies aren’t required to inform the agency about impending shortages unless the drugs don't have an alternative. Even then, there are no sanctions if they don’t.

When firms do tell FDA about a problem, the agency can’t publicly divulge proprietary information, Jensen said. Shortages on the FDA’s website are often chalked up to mysterious “manufacturing delays,” or frequently, no reason at all.

That has created a system in which pharmacists, doctors and patients may not know that a shortage exists until a drug is needed — and even then they don’t know how long it will last.

“There has been a lot of 11th hour scrambling,” said Dr. Richard L. Schilsky, a professor of medicine and chief of hematology/oncology at the University of Chicago. “We literally don’t know from week to week who’s going to be able to be treated.”

The problem has reached such a peak that four leading groups representing cancer doctors, anesthesiologists, pharmacists and safety advocates have convened an invitation-only meeting in Bethesda, Md., on Nov. 5. They’re asking drugmakers and supply chain representatives to join health experts and observers from the FDA to hammer out solutions.

“I’m going to give these folks the benefit of the doubt and assume they don’t know the impact at the patient care level,” said Bona Benjamin, director of medication-use quality improvement at the American Society of Health System Pharmacists.

Friday, October 29, 2010

Happy Halloween

Zombie America vs. China’s Zombie-Eaters 2020
by Paul B. Farrell - MarketWatch

"Zombie Economics: How Dead Ideas Still Walk Among Us," could easily have been entitled "Zombie Capitalism." Why? The book is all about undead Reaganomics zombie-isms like "trickle-down" that nearly destroyed the American economy in 2008.

Now that same Zombie Capitalism is being resurrected by the Goldman Conspiracy of Wall Street Banksters and their new partner, the GOP Tea Party of No-No. Yes, folks, America’s self-destructive Zombie Capitalism has once again returned from the mausoleum of toxic undead ideas.

But this was so predictable. As Naomi Klein, author of "Shock Doctrine: The Rise of Disaster Capitalism," warned: "Free-market ideology will come roaring back when the bailouts are done, and the massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis."

Get it? The Zombie Capitalism of Reaganomics couldn’t kill us during the dot-com crash or subprime credit collapse, but now Zombie Wall Street is shooting for the "Third Meltdown of the 21st Century."

Wait, an even better title would be, "Zombie America." Why? America is not only enjoying Halloween, the great celebration of the undead, but in our election madness we also created a historic trick-or-treat, with invisible monster billionaire backers, ghoulish politicians and blood-sucking vampires emerging from graves in foreign sovereign nations to poison our souls from within.

But the scariest monsters this Halloween are the China Zombie Eaters who are devouring the dying jobs of Zombie Americans. China’s Zombie Eaters are infinitely more dangerous than all the spooky foreign nations funneling megabucks into the Chamber of Commerce’s Supreme Court-sanctioned lobby.

Here are 8 demonic reasons why China’s aggressive "economic warfare" is also a secret long-term defensive military strategy:

1. Zombie-eating China has a long-range plan to conquer America
Listen closely, because the nuttiest theories are so often revealed later as hidden truths. Remember Delaware Tea Party Senate candidate "I’m no witch" Christine O’Donnell. You may question her credibility about secret classified documents revealing that China has a "carefully thought out and strategic plan to take over America."

But still, the facts are that the China Zombie Eaters are destroying and devouring millions of American jobs.

We also know China is stealing U.S. state secrets, stealing proprietary patents, stealing our technology. We know China is hacking away, aggressively engaged in a not-so-secret cyber war against America. We also know China has forged alliances with America’s enemies, including Iran, Venezuela and North Korea.

So while you’ll chuckle at a non-witch’s "classified" plans, the fact is China Zombie Eaters are our worst nightmare, aggressively engaged in wars against America on multiple fronts.

As Ross Terrill, a China expert at Harvard, put it in the Wilson Quarterly: "The Chinese Communists are very aware of this contest with the United States, though Americans (beyond the Pentagon) are not."

Yes, Zombie America is clueless about the threat. And, Terrill warns, our lack of awareness will destroy us: "By being a shrinking violet, the United States would simply hand over the future to China."

2. Zombie-eating China ‘buys’ Australia with surplus U.S. dollars
Want more proof? Read Malcolm Knox’s recent piece in Bloomberg-BusinessWeek: "The Deal is Simple. Australia Gets Money. China Gets Australia." Wake up Americans. While our Zombie Politicians are fighting selfish turf wars this election cycle, China is using its foreign currency reserves (U.S. dollars) to buy rights to Australia’s commodities and natural resources, giving China Zombie Eaters long-term access to natural gas, minerals, iron ore and more.

A lot of those resources are found in Queensland, Australia, the home of John Quiggin, the economics professor who wrote the book "Zombie Economics." Quiggin also summarizes the five main undead ideas of "Zombie Capitalism" in Foreign Policy magazine.

3. China Zombie Eaters easily bully Japan into submission
In a recent New York Times column Nobel Economist Paul Krugman warned: "Last month a Chinese trawler operating in Japanese-controlled waters collided with two vessels of Japan’s Coast Guard. Japan detained the trawler’s captain; China responded by cutting off Japan’s access to crucial raw materials."

Bad news: Like a wounded tiger, China’s Zombie Eaters will turn against anyone. China controls 97% of "the world’s supply of rare earths, minerals that play an essential role in many high-technology products, including military equipment. Sure enough, Japan soon let the captain go."

4. China Zombie Eaters are aware of Pentagon war strategies
That trawler incident got me thinking of the Pentagon study from Fortune back during the Bush/Cheney years: "By 2020 there is little doubt something drastic is happening." The Pentagon warned that "as the planet’s carrying capacity shrinks, an ancient pattern of desperate, all-out wars over food, water, and energy supplies would emerge ... warfare is defining human life." You can bet China’s generals have the same strategic playbook.

Krugman fears the Zombie Eaters long-range plans: "I don’t know about you, but I find this story deeply disturbing, both for what it says about China and what it says about us. On one side, the affair highlights the fecklessness of U.S. policy makers, who did nothing while an unreliable regime acquired a stranglehold on key materials. On the other side, the incident shows a Chinese government that is dangerously trigger-happy, willing to wage economic warfare on the slightest provocation." Maybe even military action?

5. Zombie-eating China way ahead of Pentagon’s war planners
Krugman calls this "economic warfare." But the Marine Corps veteran in me sees a long-range strategy of out-flanking a complacent Zombie America.

It’s well-known the China Zombie Eaters are making deals all over the world — in Africa, South America, Russia and Asia — tying up long-term natural resources, using their surplus credits of U.S. dollar reserves to lock up essential global commodity futures. Meanwhile America’s Zombie Politicians waste time in myopic election turf wars for personal gain, failing to see that America’s consumers and taxpayers are financing China’s war plans. Wake up. Admit it.

So to echo Krugman: I don’t know about you, but on so many fronts China’s behavior smells like their leaders are doing lots more than expanding China’s economy (the Foreign Policy Journal predicts China will explode from 11% to 40% of the global GDP by 2040, creating a $123 trillion economy that will dwarf America’s GDP).

But even more deeply disturbing, China’s behavior tells us they are obviously engaged in long-term defensive military strategies as well as economic planning, and that in the future, another trawler incident may well provoke dangerously trigger-happy Chinese leaders into escalating from defensive military strategies to a preemptive strike protecting China’s economic power.

6. Zombie-eating China aided by the Goldman Conspiracy vampires
The Wall Street Journal reports that Goldman Sachs CEO Lloyd Blankfein (obviously supported by the ghost of former CEO Hank Paulson who left the American Treasury buried in a graveyard of trillions of debt) "is trying to rehabilitate its public reputation with an ad campaign." Yes, that undead Wall Street zombie will try "to show how it helps create jobs, is planning to make changes in the way it reports its finances and how it relates to clients, investors and analysts."

Warning: Goldman’s no passive zombie. They’ll always be the textbook bloodsucking Wall Street vampire for all future Halloweens, what Rolling Stone’s Matt Taibbi called a "giant vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

That image forever defines Goldman as an enemy of America, especially now for using its conspiracy of anti-capitalists to aid and abet China Zombie Eaters in their economic war to bury America for all eternity.

7. Zombie AARP retirees vs. American under-40 taxpayers
Unfortunately the coming domestic class war will further drain America’s global power. Soon America will resemble France. Total chaos today. President Sarkozy’s under siege for raising the retirement age from 60 to 62.

French bankers are still getting rich, like Wall Street. But they control government, budget cuts, austerity. Result? Class wars: Students stormed the French Senate. Trade unions blocked airports. Oil refineries forced closure of 3,000 French gas stations. Cost: $100 million a day.

French voters are not zombies, they’re role models. Soon Zombie Americans will revolt, arising as the undead. France has 62 million, America’s five times bigger. Imagine an American class war when Zombie AARP’s 40 million members react after our Zombie Congress raises the Social Security retirement age (or cuts benefits, or raises taxes).

Bet on a nationwide revolution of young voters, unions, unemployed and poor, as in France.

8. Warning: Zombies can’t vote … but zombies will revolt!
Remember "The Night of the Living Dead?" Their time is on the horizon. In the full moon, cemeteries will empty of the undead. Revolting, they will fulfill their destiny. They will take back America from the eternally greedy Zombie Bankers and feckless Zombie Politicians.

Happy Halloween all you zombies, ghouls, vampires, witches and devilish monsters sucking the blood out of America’s soul … your time is coming soon, the end of your evil ways, when a new "night of the living dead" revives our great nation.


Thursday, October 28, 2010

By Tim Egan, a noted cartoonist in Santa Cruz, California whose work can be seen here every two weeks,

Friday, October 22, 2010

The Benefits of Globalization

Mortgage Mess Redux

If you still don't underastand the mortgage mess try this essay. The big banks are operated as though they were Mafia loan shark operations. Why are the French in the streets protesting and the US is at home watching TV?


Posted on October 19, 2010 by Neil Garfield

The essential component of every loan that was never revealed to either the lenders (investors) nor the borrowers (homeowner/investors) was the addition of co-obligors and terms that neither the investor nor the borrower knew anything about. The “insurance” and other enhancements were actually cover for the intermediaries who had no money at risk in the loans, but for the potential liability for having defrauded the lenders and borrowers.

After centuries of lending money and preparing loan documents it seems that the least likely suspect for screwing up the paperwork on tens of millions of “loans” would be the Banks themselves. Yet that is what occurred. The purpose of this article is to show that it was not sloppy, it was intentional. And I will tell you why it was intentional.

The much expected announcement that after a thorough review they have determined the paperwork is in order is a last-ditch desperate effort to block inquiries into the mortgage creation process and the sale of “mortgage bonds” to investors. They attempted to emulate the government’s PR stunt last year with the “stress test” forgetting that they are private companies in litigation subject to discovery. They have now opened the door to discovery, which is the last thing they wanted. Litigants can now question who was involved in this “review”, what they did, from they received information and assurances, and what documents they looked at. They can ask what was the basis upon which they concluded that they could proceed with foreclosures?

The documents were not sloppy and they were not processed sloppily. They were created and treated exactly as planned. They did it because they thought they could get away with it. They had enough money to buy off any legislator or Judge, or so they thought. But it isn’t working out that way. It’s not the first time these mega-banks have stepped on a land mine and it won’t be the last, as long as we allow them to grow into such behemoths such that that ascribe to themselves the qualities of government or God.

The game was to move money under a scheme of deceit and fraud. First sell the bonds and collect the money into a pool. Second take your fees, third take what’s left and get it committed into “loans” (which were in actuality securities) sold to homeowners under the same false pretenses as the bonds were sold to investors. By controlling the flow of funds and documentation, the middlemen were able to sell, pledge and otherwise trade off the flow of receivables several times over — a necessary complexity not only for the profit it generated, but to make it far more difficult for anyone to track the footprints in the sand.

If the loans had actually been securitized, the issue would not arise. They were not securitized. This was a mass illusion or hallucination induced by Wall Street spiking the punch bowl. The gap (second tier yield spread premium) created between the amount of money funded by investors and the amount of money actually deployed into “loans” was so large that it could not be justified as fees. It was profit on sale from the aggregator to the “trust” (special purpose vehicle). It was undisclosed, deceitful and fraudulent.

Thus the “credit enhancement” scenario with tranches, credit default swaps and insurance had to be created so that it appeared that the gap was covered. But that could only work if the parties to those contracts claimed to have the loans. And since multiple parties were making the same claim in these side contracts and guarantees, counter-party agreements etc. the actual documents could not be allowed to appear nor even be created unless and until it was the end of the road in an evidential hearing in court. They used when necessary “copies” that were in fact fabricated (counterfeited) as needed to suit the occasion. You end up with lawyers arriving in court with the “original” note signed in blue (for the desired effect on the Judge) when it was signed in black — but the lawyer didn’t know that. The actual original is either destroyed (see Katherine Porter’s 2007 study) or “lost.” In this case “lost” doesn’t mean really lost. It means that if they really must come up with something they will call an original they will do so.

So the reason why the paperwork is all out of order is that there was no paperwork. There only entries on databases and spreadsheets. The loans were not in actuality assigned to any one particular trust or any one particular bond or any one particular individual or group of investors. They were “allocated” as receivables multiple times to multiple parties usually to an extent in excess of the nominal receivable itself. This is why the servicers keep paying on loans that are being declared in default. The essential component of every loan that was never revealed to either the lenders (investors) nor the borrowers (homeowner/investors) was the addition of co-obligors and terms that neither the investor nor the borrower knew anything about. The “insurance” and other enhancements were actually cover for the intermediaries who had no money at risk in the loans, but for the potential liability for defrauding the lenders and borrowers.

The result, as anyone can plainly see, is that the typical Ponzi outcome — heads I win, tails you lose. With that, Wall Street was allowed to suck trillions out of an economy that could not afford it. That $5 trillion surplus left when Clinton was in office was just too darn tempting for Wall Street. They just had to have it. And they got it. So the paperwork was carefully created and crafted to cover the tracks of theft. Most of the securitization paperwork remains buried such that it takes search services to reach any of them. The documents that were needed to record title and encumbrances was finessed so that they could keep their options open when someone made demand for actual proof. The documents were not messed up and neither was the processing. They were just keeping their options open, so like the salad oil scandal, they could fill the tank that someone wanted to look into.

The Obama administration is making a giant error in relying on the existing finance infrastructure to fix itself. This fraud runs so deep that practically everyone at their kitchen table feels it. The loss should fall on those who created it and the victims should be made whole, not because it is a reward but because that is what we do in a nation laws — take people who were victims of wrong behavior and get as much restitution as can be reasonably accomplished. Quantitative easing is only going to encourage Wall Street, creating yet another pool of cash that they will not be able to resist. Then what?

Thursday, October 21, 2010

Rocket Science

From The Hill Newspaper

CDC finds stark regional disparities in teen-pregnancy rates
By Mike Lillis - 10/20/10 03:05 PM ET

Although national teen-pregnancy rates are on the decline, the disparities between states are often dramatic, the Centers for Disease Control and Prevention (CDC) reported Wednesday.

Some women's health advocates say the discrepancies are indication that comprehensive sex-education programs are producing results for states that offer them, while states emphasizing abstinence-only programs aren't faring as well.

Whatever the reason, the regional disparities are stark. In Connecticut, Massachusetts, New Hampshire and Vermont, for instance, 2008 birth rates were less than 25 per 1,000 teens aged 15 to 19, CDC found. In the same year, Arkansas, Mississippi, New Mexico, Oklahoma and Texas all had rates topping 60 per 1,000 teens.

Mississippi had the country's highest rate (65.7), CDC says, while New Hampshire had the lowest (19.8).

Leslie Kantor, national education director of the Planned Parenthood Federation of America, said the report "makes it crystal clear that the teen birthrate is lower in states that provide students with comprehensive, evidence-based sex education."

"The report demonstrates that the surest way to reduce teenage pregnancy is to provide young people with comprehensive, medically accurate sex education, and doing so is especially urgent for African-Americans and Latino teens, who are getting pregnant more frequently than other young people," Kantor said in a statement.

A recent report from the Guttmacher Institute, a women's reproductive health group, bolsters those claims. All five states with the highest teen birth rates have adopted policies requiring that abstinence be stressed when taught as part of sex education, HIV education or both, the group found. Only one of the five states (New Mexico) mandates that sex education be a part of students' curriculum.

Of the four states with the lowest teen birth rates, none requires that abstinence be stressed to students, according to Guttmacher.

The issue is also one of public health. Children born to teenagers are at higher risk of being born prematurely, having low birth weight and dying during infancy, CDC notes.

Last month, the Obama administration announced $155 million in grants for non-profits, local school districts, universities and other groups sponsoring sex-ed programs "that have been shown to be effective through rigorous research."

"Teen pregnancy is a serious national problem, and we need to use the best science of what works to address it," HHS Secretary Kathleen Sebelius said at the time.

Kantor says the focus on evidence-based reproductive health education marks "a radical change from the Bush administration, which favored and funded abstinence-only sex education."

The new focus, she said, "represents a true turning point in the history of sex education in the United States."

Wednesday, October 20, 2010

Foreclosure And The Banks

From the Naked Capitalism blog this commentary on the illegality of the banks and their greed. I find it interesting that blatant fraud by the banks merits a cover up and protection from the people in power. It is perhaps the definition, the true definition of fascism, the bringing together or corporate and political interests at the expense of the people.

By Russ, aka Attempter, a sustainability activist trying to help figure out solutions to America’s crisis, who blogs at Volatility.

As Foreclosuregate, the legal crisis, looms ever larger and becomes a major political issue, the banks and government have scrambled to mount a counteroffensive against the consequences of their crimes. We can see how flat-footed they were caught. They seem to have become so comfortable with cutting every legal corner and evading every requirement which was even mildly inconvenient that they’re truly surprised this has escalated with such abruptness and violence. Their plan is to try to bluster and bully their way through by any means possible. They expect lies and lawlessness to prevail as always.

The first line of defense is the propaganda line that this is just a technical glitch, not a fundamental problem with the loan or the security, or any kind of systematic intentional fraud. So far this has been the preferred PR line for the administration and the mainstream media. But the banks are also working the line that no matter what the flaw, it can simply be legalized by legislative brute force.

Rather than deal with the considerable consequences of these abuses, the banks are prepared to bulldoze well settled state laws to give them an easy way out. And I’m not basing my view on this story alone; I had a conversation yesterday with a Congressional staffer who matter-of-factly said (but with little understanding of the underlying issues) that Congress would intervene on behalf of the industry, via its authority over national banks.

Congress took one step in this direction by frantically grabbing and unanimously passing a pre-existing bill which would require all states to accept the weakest state-authorized electronic notarizations. This would be only a minor fix of one of the technical issues, and isn’t very important in itself. But it probably foreshadows the far more expansive legislation we can expect to see after the election. Bolstering all of this, the banks are making extortionate threats against the real economy. They promise to wreck it even further if they aren’t given a clear path on this.

At the same time a concurrent propaganda line, seeming to somewhat contradict the other, is a hectic emphasis on speed.

Federal regulators sought Wednesday to prevent the growing furor over improper foreclosures from escalating, pressing mortgage lenders to replace flawed and fraudulent court documents while insisting that foreclosures continue apace.

It’s unclear why they’re simultaneously trying to downplay the significance of all this but also to drum up a sense of crisis which requires a stampede. You’d think they’d at least pretend to want to slow things down in order to make sure all those alleged “technical glitches” are properly fixed.

Demonstrating that the banks understand the significance of how the blogosphere has driven this story, the PR offensive has descended to the comment thread level, as we’re seeing the biggest surge yet of pro-bank commenters, many repeating the same talking points with suspicious discipline.

As Yves Smith at Naked Capitalism observed,

One regular reader has noticed that every time I put up a foreclosure post, the first comment, suspiciously close to the post time, is always a version of “deadbeat borrower”. He reads enough blogs that he is pretty convinced that NC is being targeted for this sort of message.

Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price. More importantly, the main cause of inability to keep up the mortgage is losing one’s job or suffering a medical disaster. It’s the banks themselves who have presided over the destruction of America’s jobs, especially over the last two years. And it’s the government which refuses to counteract the banks’ campaign of socioeconomic scorched earth. (That’s the same government which also pointedly refused to reform the health care system, choosing instead to further entrench the existing larcenous dysfunction under a facade of lies and misdirection.)

So it’s the banks and government themselves who are overwhelmingly responsible for the wave of defaults. The defaults are the knock-on effects of the bank crimes, and now the banks want to seize the homes by further criminal means. Even after all this, few people fight foreclosures if they can’t afford to pay. The great majority of them say they can pay if they get a promised modification, or claim to be the victims of servicer error. So by any measure – moral, rational, or legal – the “deadbeat borrower” talking point is a sham.

But it’s no surprise, given the scurrilous character of the banks and their functionaries. A good indication of the kind of “legal” recourse they assume they can take are the kangaroo courts of Florida. These are not really courts of law but dedicated foreclosure machines manned by judges pulled out of retirement, apparently selected specifically for their bank-friendliness and/or ignorance of mortgage law and existing programs like the HAMP. These were given the mandate to process foreclosures as fast and lawlessly as possible. That puts the administration rhetoric about the need for speed in a new light. Evidently Florida’s rocket docket is the federal government’s dream solution as well.

But even this is failing to work for them. Political scrutiny and demands for legality are becoming more insistent, and the rocket docket has had to slow down and at least pretend to respect the law.

Underlying all of this, the foreclosures continue in spite of the vaunted moratoria. Perhaps they think they can still fool the judges this way: “We announced our moratorium, so obviously we’re only going ahead with fully legit foreclosures. Here’s the lost note affidavit on this one…” Now that this scam has been exposed, they’re spouting a reprise of the original lies – it’s a mistake, it’s miscommunication, we don’t know what’s happening with those bad apples….(Anyone who actually took anything they said seriously would have to wonder how it’s possible to be such a Master of the Universe, and warrant such a “bonus”, and yet make so many self-admitted mistakes and be so ignorant of everything all the time.)

This preference for lawlessness, this knee-jerk recourse to lies and crimes, is however no joke. At the lower levels, outside the regular media eye, the banks have repeatedly demonstrated their comfort with pure brutality. The examples proliferate of thugs threatening people, breaking and entering, bashing in doors, terrorizing occupants. So long as government at every level is the waterboy of the banks while people on the ground remain unorganized, atomized, and vulnerable, this will only get worse. We hear rhetoric, “joking” of course, about how they need to start burning houses down.

“The question to me is not do you foreclose or do you not foreclose. The question is when and with what philosophy you foreclose,” the man on the bank restructuring team said. “If you want to reduce the amount of leveraged homeowners you have, you need to ultimately kick them out of their homes.” A colleague walked up: His recommendation was to burn houses. It would lower the supply.

Even if that’s still a joke at the moment, how long can it remain so? It’s certainly in the mainstream of the logic.

Look, our hope is is that this moves rapidly and that this gets unwound very, very quickly and that if they can go back, reconstruct their paperwork and what we’ve stressed to them is that they need to expedite that process and work very, very quickly to get it done. we’re going to continue to push for that.

That’s Obama factotum Axelrod. And more from the firebugs:

“The first thing that needs to happen, I think, is to get these people out of their homes,” a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said recently. “Correct! I’ll explain,” the veteran member of a bank restructuring and advisory team said.

Right here at Naked Capitalism we may have seen the pro-bank handiwork, a shot across the bow. Yves was the target of a Denial of Service attack. Now that’s taking trolling to a whole new level. If it was organized on behalf of the banks, it’s part of the logic.

All of this, from the original predatory lending, to flippancy about conveying the titles and legally securing the trusts, to the Bailout dedicated to propping up those toxic MBS, which we now know are probably nothing but unsecured loans, to the government-led propaganda campaign and legislative hankering to cover up and eventually “legalize” this latest revelation, down to the brutish violence and dirty tricks of the gutter, is one coherent whole, one simple train of logic. It’s simply the logic of might makes right, feudal greed, and total nihilism vis the law and democracy. The mortgage debacle reveals so many abdications of the system, and this abdication of the rule of law is one of the most thorough.

Tuesday, October 19, 2010

Sharron Angle's Racial Empathy

Nevada's Republican Senate candidate recently told a group of Hispanic students that they "looked a little more Asian" to her and that she herself had been referred to as Asian before. This comes just after she had to defend her controversial ad featuring an image of dark-skinned men over Mexico who she later said "wasn't sure" were Hispanic.

Income Inequality

From the Economist's View which should be read keeping in mind the enormous and growing inequality in the US. The theory that everyone does better when everyone does better needs to come back into vogue:

Robert Frank says rising inequality is "a bad thng," and that economists shouldn't be so reluctant to say so:

Income Inequality: Too Big to Ignore, by Robert Frank, Commentary, NY Times: ...During the ... last three decades..., all significant income growth has been concentrated at the top of the scale... Yet many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers. But that disclaimer rings hollow. Economics, after all, was founded by moral philosophers...
Adam Smith, the father of modern economics, was a professor of moral philosophy... “Wealth of Nations,”... was ... peppered with trenchant moral analysis. Some moral philosophers address inequality by invoking principles of justice and fairness. But because they have been unable to forge broad agreement about what these abstract principles mean in practice, they’ve made little progress. The more pragmatic cost-benefit approach favored by Smith has proved more fruitful, for it turns out that rising inequality has created enormous losses and few gains, even for its ostensible beneficiaries. ...
The rich have been spending more simply because they have so much extra money. Their spending shifts the frame of reference that shapes the demands of those ... below them... These cascades have made it substantially more expensive for middle-class families to achieve basic financial goals.
In a recent working paper based on census data for the 100 most populous counties in the United States, Adam Seth Levine..., Oege Dijk ... and I found that the counties where income inequality grew fastest also showed the biggest increases in symptoms of financial distress. ...
The middle-class squeeze has also reduced voters’ willingness to support even basic public services. Rich and poor alike endure crumbling roads, weak bridges, an unreliable rail system, and ... poorly maintained dams that could collapse at any moment.
Economists who say we should relegate questions about inequality to philosophers often advocate policies, like tax cuts for the wealthy, that increase inequality substantially. That greater inequality causes real harm is beyond doubt.
But are there offsetting benefits? There is no persuasive evidence that greater inequality bolsters economic growth or enhances anyone’s well-being. Yes, the rich can now buy bigger mansions... But this appears to have made them no happier. ...
In short, the economist’s cost-benefit approach — itself long an important arrow in the moral philosopher’s quiver — has much to say about the effects of rising inequality. We need not reach agreement on all philosophical principles of fairness to recognize that it has imposed considerable harm ... without generating significant offsetting benefits.
No one dares to argue that rising inequality is required in the name of fairness. So maybe we should just agree that it’s a bad thing — and try to do something about it.
According to this research, the political consequencs of widening inequality will make it more difficult to "do something about it":

A “one dollar, one vote” explanation of the welfare state, by Loukas Karabarbounis, Vox EU: Why do Europe and the US, both affluent regions, differ so much in the size of their welfare state? To answer this question, this column examines OECD countries between 1975 and 2001, finding that countries with wealthier rich- and middle-classes are associated with a smaller welfare state while those with a richer poor class are associated with a larger one – supporting the “one dollar, one vote” explanation. ...
In the one dollar, one vote equilibrium, when a group of voters becomes richer (relative to the mean), redistributive policies tilt closer to its most preferred size of redistribution. Thus, for instance, when the rich become even richer, redistribution decreases which is line with the preference of the rich because with a progressive system of taxes the rich are the ones who pay more taxes. On the other hand, when the poor become richer, redistribution increases which is in line with the preference of the poor because the poor are the ones who are more likely to benefit from increased social transfers like unemployment insurance and pensions.
The one dollar, one vote theory of the welfare state contrasts sharply with the widely used ‘‘one person, one vote’’ institution (where the median class is the decisive voter) and the ‘‘utilitarian’’ model of redistribution (where the government chooses redistribution to maximize a weighted average of citizen’s welfare). A natural explanation for the one dollar, one vote result is that political influence is not uniform across groups of voters and that political participation is increasing in income. Indeed,... I show that in all countries of the sample income is strongly correlated with various indices of political participation ranging from signing petitions to discussing politics with friends and from participating in demonstrations to becoming affiliated with political parties. Since money is associated with more power, income inequality has sharply different implications for redistribution than postulated by the median voter theory and the utilitarian model.
The one dollar, one vote result provides an explanation for the increasing difference in the size of the welfare state in Europe and the US. From 1980 to 2001, the growth of European redistribution exceeded the US by approximately 2.7%. According to my estimates, this may be because the European poor did not become relatively as poor as the American poor while the US increased redistribution relative to Europe because the American median voter became poorer. These two opposing effects cancelled each other off. However, the growth of the rich’s income relative to the mean in the US exceeded the growth of rich’s income relative to the mean in Europe. According to the one dollar, one vote theory of the welfare state, the faster growth of the rich's income in the US allowed the rich to increase its political influence and tilt policy closer to its most preferred redistribution which involves a smaller welfare state. As a result, the growth of redistribution in the US lagged Europe’s.

Monday, October 18, 2010

The Foreclosure Mess Explained

This essay from David Kotok of the Big Picture explains in the simplest possible terms why the Foreclosure news is a) critical and b) not properly explained or discussed by the mainstream media. Until you understand this essay you don't understand the foreclosure problems this country faces. Legal title to land has been the under pinning of Anglo Saxon jurisprudence- think of all the investors who won't buy land abroad for fear of not getting proper title. "The Mexican government could steal it back at any time" people thinking about buying condos on a Baja beach might have said a decade ago. The same now goes for US real estate. Banks sold home loans to people they expected to fail. they insured themselves against the loss, they failed to properly transfer title, all in the name of insane greed. Now they want someone else to restore sanity to the real estate market. And the pundits blame weak borrowers for defaulting!

Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper—only the note-holder has legal standing to ask a court to foreclose and evict. Not the mortgage, [but] the note , which is the actual IOU that people sign, promising to pay back the mortgage loan.

Before mortgage-backed securities, most mortgage loans were issued by the local savings & loan. So the note usually didn’t go anywhere: it stayed in the offices of the S&L down the street. But once mortgage loan securitization happened, things got sloppy—they got sloppy by the very nature of mortgage-backed securities.
The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.

Therefore, as everyone knows, the loans were "bundled" into REMIC’s (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then "sliced & diced"—split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.

This slicing and dicing created "senior tranches," where the loans would likely be paid in full, if the past history of mortgage loan statistics was to be believed. And it also created "junior tranches," where the loans might well default, again according to past history and statistics. (A whole range of tranches was created, of course, but for the purposes of this discussion we can ignore all those countless other variations.)

These various tranches were sold to different investors, according to their risk appetite. That’s why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.

But here’s the key issue: When an MBS was first created, all the mortgages were pristine—none had defaulted yet, because they were all brand-new loans. Statistically, some would default and some others would be paid back in full—but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads—but what will the result be of, say, the 723rd toss? No one knows.

Same with mortgages. So in fact, it wasn’t that the riskier loans were in junior tranches and the safer ones were in senior tranches: rather, all the loans were in the REMIC, and if and when a mortgage in a given bundle of mortgages defaulted, the junior tranche holders would take the losses first, and the senior tranche holder last.

But who were the owners of the junior-tranche bond and the senior-tranche bonds? Two different people. Therefore, the mortgage note was not actually signed over to the bond holder. In fact, it couldn’t be signed over. Because, again, since no one knew which mortgage would default first, it was impossible to assign a specific mortgage to a specific bond.

Enter stage right the famed MERS—the Mortgage Electronic Registration System.

MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac (yes, those two again —I know, I know: like the chlamydia and the gonorrhea of the financial world—you cure ‘em, but they just keep coming back).

The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds. MERS was essentially where the digitized mortgage notes were sliced and diced and rearranged so as to create the mortgage-backed securities. Think of MERS as Dr. Frankenstein’s operating table, where the beast got put together.

However, legally—and this is the important part—MERS didn’t hold any mortgage notes: the true owner of the mortgage notes should have been the REMICs. But the REMICs didn’t own the notes either, because of a fluke of the ratings agencies: the REMICs had to be "bankruptcy remote," in order to get the precious ratings needed to peddle mortgage-backed Securities to institutional investors. So somewhere between the REMICs and MERS, the chain of title was broken.

Now, what does "broken chain of title" mean? Simple: when a homebuyer signs a mortgage, the key document is the note. As I said before, it’s the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a mortgage-backed security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the "chain of title."

You can endorse the note as many times as you please—but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically, on the note, one after the other.

If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.

Read that last sentence again, please. Don’t worry, I’ll wait. You read it again? Good: Now you see the can of worms that’s opening up.

The broken chain of title might not have been an issue if there hadn’t been
an unusual number of foreclosures. Before the housing bubble collapse, the
people who defaulted on their mortgages wouldn’t have bothered to check to
see that the paperwork was in order.

But as everyone knows, following the housing collapse of 2007-’10-andcounting,
there has been a boatload of foreclosures—and foreclosures on a
lot of people who weren’t sloppy bums who skipped out on their mortgage
payments, but smart and cautious people who got squeezed by

These people started contesting their foreclosures and evictions, and so
started looking into the chain-of-title issue, and that’s when the paperwork
became important. So the chain of title became crucial and the botched
paperwork became a nontrivial issue.

Now, the banks had hired “foreclosure mills”—law firms that specialized in
foreclosures—in order to handle the massive volume of foreclosures and
evictions that occurred because of the housing crisis. The foreclosure mills,
as one would expect, were the first to spot the broken chain of titles.

Well, what do you know, it turns out that these foreclosure mills might have
faked and falsified documentation, so as to fraudulently repair the chain-oftitle
issue, thereby “proving” that the banks had judicial standing to
foreclose on delinquent mortgages. These foreclosure mills might have even
forged the loan note itself—

Wait, why am I hedging? The foreclosure mills did actually, deliberately,
and categorically fake and falsify documents, in order to expedite these
foreclosures and evictions. Yves Smith at Naked Capitalism, who has been
all over this story, put up a price list for this “service” from a company
called DocX—yes, a price list for forged documents. Talk about your onestop

So in other words, a massive fraud was carried out, with the inevitable
innocent bystanders getting caught up in the fraud: the guy who got
foreclosed and evicted from his home in Florida, even though he didn’t
actually have a mortgage, and in fact owned his house free –and clear. The
family that was foreclosed and evicted, even though they had a perfect
mortgage payment record. Et cetera, depressing et cetera.

Now, the reason this all came to light is not because too many people were
getting screwed by the banks or the government or someone with some
power saw what was going on and decided to put a stop to it—that would
have been nice, to see a shining knight in armor, riding on a white horse.

But that’s not how America works nowadays.

No, alarm bells started going off when the title insurance companies started
to refuse to insure the titles.

In every sale, a title insurance company insures that the title is free –and
clear —that the prospective buyer is in fact buying a properly vetted house,
with its title issues all in order. Title insurance companies stopped providing
their service because—of course—they didn’t want to expose themselves to
the risk that the chain –of title had been broken, and that the bank had
illegally foreclosed on the previous owner.

That’s when things started getting interesting: that’s when the attorneys
general of various states started snooping around and making noises
(elections are coming up, after all).

The fact that Ally Financial (formerly GMAC), JP Morgan Chase, and now
Bank of America have suspended foreclosures signals that this is a serious
problem—obviously. Banks that size, with that much exposure to foreclosed
properties, don’t suspend foreclosures just because they’re good corporate
citizens who want to do the right thing, and who have all their paperwork in
strict order—they’re halting their foreclosures for a reason.

The move by the United States Congress last week, to sneak by the Interstate
Recognition of Notarizations Act? That was all the banking lobby. They
wanted to shove down that law, so that their foreclosure mills’ forged and
fraudulent documents would not be scrutinized by out-of-state judges. (The
spineless cowards in the Senate carried out their master’s will by a voice
vote—so that there would be no registry of who had voted for it, and
therefore no accountability.)

And President Obama’s pocket veto of the measure? He had to veto it—if
he’d signed it, there would have been political hell to pay, plus it would have
been challenged almost immediately, and likely overturned as
unconstitutional in short order. (But he didn’t have the gumption to come
right out and veto it—he pocket vetoed it.)

As soon as the White House announced the pocket veto—the very next
day!—Bank of America halted all foreclosures, nationwide.

Why do you think that happened? Because the banks are in trouble—again.
Over the same thing as last time—the damned mortgage-backed securities!

The reason the banks are in the tank again is, if they’ve been foreclosing on
people they didn’t have the legal right to foreclose on, then those people
have the right to get their houses back. And the people who bought those
foreclosed houses from the bank might not actually own the houses they
paid for.

And it won’t matter if a particular case—or even most cases—were on the
up –and up: It won’t matter if most of the foreclosures and evictions were
truly due to the homeowner failing to pay his mortgage. The fraud
committed by the foreclosure mills casts enough doubt that, now, all
foreclosures come into question. Not only that, all mortgages come into

People still haven’t figured out what all this means. But I’ll tell you: if
enough mortgage-paying homeowners realize that they may be able to get
out of their mortgage loans and keep their houses, scott-free? That’s
basically a license to halt payments right now, thank you. That’s basically a
license to tell the banks to take a hike.

What are the banks going to do—try to foreclose and then evict you? Show
me the paper, Mr. Banker, will be all you need to say.

This is a major, major crisis. The Lehman bankruptcy could be a spring rain
compared to this hurricane. And if this isn’t handled right—and handled
right quick, in the next couple of weeks at the outside—this crisis could also
spell the end of the mortgage business altogether. Of banking altogether.
Hell, of civil society. What do you think happens in a country when the
citizens realize they don’t need to pay their debts?

David R. Kotok, Chairman and Chief Investment Officer, Cumberland Investments.

A Nominal World

By Dan Weintraub from The Automatic Earth

I am a nominal man living in a real world. Yesterday, I spent $16 on a bag of whole-grain rice, a bag of beans and a hunk of cheese.

One goal of the Federal Reserve’s quantitative easing policies is debasement of the dollar. It is often argued that a weak dollar – relative to other currencies – promotes our supposed export-based economy. Lest we forget, however, our $14-trillion-plus economy is 70-percent consumer-dependent. The most productive capital in the U.S. was shipped overseas long ago. Economic growth over the past three decades has been predicated not on the creation of productive capital, but on access to cheap credit, and thus on consumer spending. The United States, despite beliefs to the contrary, is no longer an export-driven economy. And I remain a nominal man living in a real world.

While the world operates on numbers, I subsist on the relative value of those numbers. For several months now, commodity prices have been rising – and not just those of precious metals. The price of wheat, of cotton, of coffee, of cocoa: all rising sharply. But why would the price of commodities rise when a contracting global economy should equate to a decrease in overall demand (and thus to falling prices)? Commodity prices are rising because investors increasingly believe that the relative value of their financial assets is no longer assured. In a global financial system rife with fraud, in a system teetering precariously close to the brink of an all-out currency conflagration, investors and speculators are abandoning financial assets in lieu of commodities because these same investors believe that the world’s central banks are bent upon destroying the purchasing power of their money. And still I remain a nominal man living in a real world.

I am a middle-class citizen. I make a modest wage teaching history at a local independent school. Like many in the middle class, my nominal monthly income purchases less of the real goods and services that I need in order to get by. I understand that the federal government ultimately must increase its tax revenues in order to subsidize its growing debt-service obligations and to pay for an ever-expanding pool of necessary social services (unemployment insurance, food stamps, etc.), but the real impact of these tax burdens hits those of us in the middle class the hardest. For members of the shrinking American middle class, a seemingly modest nominal tax increase of perhaps $100 a month is, in real terms, far more expensive than the numbers convey.

I understand why economists like Paul Krugman are calling for trillions more in government spending. Fiscal austerity disproportionately hurts the middle class and working poor, and political extremists and opportunists are famous for promoting their nativistic and self-aggrandizing agendas while skyrocketing unemployment hurls millions of citizens toward the abyss. But in our credit- and debt-subsidized economy, virtually all stimulus monies are created, either directly or indirectly, by the Federal Reserve through its open-market operations – in this case, through the monthly purchase of billions of dollars in government securities.

And while such actions may increase systemic liquidity in the near term, these policies of debt monetization also further destabilize the world’s already shaky currency markets. As more people lose trust in the long-term viability of the world’s currencies, more people “buy” commodities. In other words, you may not be able to trust the value of the dollar from one day to the next, but you can always rely upon the hard value of such assets as food and energy. And so, one by one, investors abandon financial assets and move toward commodities, and as they do the price of commodities goes vertical. In nominal terms, this is disastrous for the majority of Americans who subsist on fixed incomes. In real terms, it is far worse. This is but one of the unspoken impacts of our government’s stimulus policies.

I am a nominal man living in a real world. In the real world, trillions more in government stimulus has no substantively positive impact upon my life. In the real world, a 2-percent cost-of-living (wage) increase for someone earning $40,000 per year, in terms of cost inflation, more closely resembles a 2-percent reduction in pay than it does a “raise.” In the real world, the majority of government stimulus monies are used by the largest and most powerful financial institutions to drive up the cost of those very commodities that the majority of us find increasingly difficult to afford. In the real world, as access to credit contracts (real deflation) and as the prices of food and energy increase, austerity arrives regardless of the Federal Reserve’s policy decisions.
I am a nominal man living in a real world, and in my world the numbers just don’t add up.

Friday, October 15, 2010

The American Tapeworm Part III

From the German Chaos Theory website, by Catherine Austin Fitts, , I have broken her 2003 essay into three parts over three consecutive days. Today Part III.
The Tapeworm Ransacking of Iraq

The economic desperation that lead up to the invasion of Iraq has been eloquently described by Chris Sanders of Sanders Research Associates and fits the patterns that SRA colleague, John Laughland and his colleagues at the British Helskinki Human Rights Group, have documented in Eastern Europe. Assuming the patterns that we have seen throughout the world apply, that tapeworm’s economic desperation will feed on Iraq as follows:

- The first meal to be harvested on Iraq is the profits of invasion -- from government contracts and arms trafficking to media coverage.

- The second meal to be harvested on Iraq is the resulting control of assets, including gold, oil, bank accounts and antiquities. Iraq will be stripped, shipped, or otherwise switched to new ownership. Occupiers will use Iraqi assets to leverage more debt that generates more contracts and business for the inside companies. The antiquities in Iraq and this area of the world have a special meaning and attraction for the American and British leadership networks so don't underestimate the value of these. The gold bugs at LeMetropole Café reported that the Americans have captured $1 billion of gold which was quite relevant as the NY Fed Banks particularly JP Morgan, Goldman, Citibank, are running significant short positions to suppress the gold price. Such a replenishment of their stocks (or the US Treasury who they may be trading on the account of -- they usually simply move the shorts over to the taxpayers on all these types of situations) will be quite refreshing.

- The third meal on Iraq to be harvested will be occupation management. If Eastern Europe is representative, America will partner with local and global organized crime and other intelligence agencies to significantly increase organized crime profits from the place. Attractive children will be culled from the population for shipment to Europe and other areas for sex slavery and pedophilia. Narcotics trafficking will increase as it has in Afghanistan. The award to CSC DynCorp of a $500 million sole source contract to run police, courts and judiciary in Iraq is an important signal. My question after years of research is whether CSC DynCorp’s core competencies relates to enforcement infrastructure designed for places with growing financial fraud, narcotics trafficking, sex slavery and control of leadership through "control files.” These are the talents that America needs to strip mine the assets to feed its economic desperation.

- The fourth meal to be harvested on Iraq will be fixing it and declaring victory. This will involve significant government contracts to bring Western Civilization as defined by building those things that ensure the assets that the private corporations and investors have now acquired have the largest increase in value at no expense to themselves. A careful analysis will show expenditure rations in the soviet style—that is we will spend much more than necessary to get anything done. The banks will acquire an entirely new market. Critical to the fixing it phase is the financing of the occupation with the requirement that Iraq use the US dollar. We will print dollars and the Iraqi’s will use them. This is free financing for us. Next will come the payback for the not for profit groups. Because Christianity is an essential political support base for legitimizing the de-population of the Moslem territories, a flow of resources to the right church groups to support an expansion of their missionary ministries is likely. Progressive groups will bid for contracts to bring the rule of law and economic development and things like “the rights of women.” There will be a flow of money from foundations and universities to study how to help Iraq and to justify what we are doing.

As the corporations and banks are digesting Iraq, the American tapeworm will be setting its sights for the next meal. The money will be flowing to the right think tanks, academia and media apparatus for the preparation of the next injection into the body politic.

The lethal combination of a debt based financial system, falling productivity and the absence of meaningful feedback systems means that the magic of compound interest will dictate that the American tapeworm’s hunger for more capital is accelerating.

Where is the Tapeworm’s Brain?

The great mystery in all of this is who is really in charge. On one hand, we are watching an official action of the American governmental apparatus. On the other hand, that governmental apparatus is now run by the private companies and banks that operate the apparatus accounts and systems and finance its ever-growing debts. The investors behind these entities are global, not American. This is not a picture of a sovereign government or leaders loyal to the American people. A review of global insurance risk positions, debt and capital markets would show more about who is managing what than American politics. Indeed, Greg Palast of the BBC has proved beyond a shadow of a doubt that Bush lost the election – something of no practical consequence thanks to the Supreme Court and the corporate media.

The tapeworm is in control and eating into the people of America as it is eating into the people of Iraq. Federal accounts are missing $3.3 trillion, pension funds have been stripped by pump and dump stock fraud and neighborhoods are overrun with narcotics trafficking. There are increasingly numbers of American citizens who have more in common with the people of Iraq than with the leadership of Wall Street and Washington.

With the takeover of American digital data by defense contractors and banks managing governmental functions, economic warfare takes on a whole new meaning. What is supposed to be private is not as those in the know have total access. What is supposed to be transparent is private, except for those in the know who are free to use it to advantage. With total defense contractor information awareness, people can be adjusted to ensure that markets do not have to adjust.

The American tapeworm is a symptom that the central banking-warfare model that has created the supremacy of the English-speaking people since the time of Queen Elizabeth I is dying. It is dying not because it is wrong but because it is weak. It is dying because --- like a tapeworm – it has begun to create a rapidly weaker system. Hence it is incumbent upon the English-speaking people to reinvent themselves by engaging globally to invent a new model.

Yet, the opportunity to move to a new model requires the ability to see where we are and to outline a vision to those in the system that there is hope. Doing so becomes progressively more important as who is in charge is less important than how many of us are dependent for our bread and butter on a negative return on investment economy as it tapeworms its way towards planetary extinction --- and all of us with it.

In short, the primary problem is not that the folks in charge are centralizing wealth in a destructive way or that some have too much money. That’s a problem – but a secondary one. The problem is that from the point of view of the dolphins, the plants and the trees, the planet is worse off for the presence of humans.

All solutions are found when we realize that this is something you and I can correct without wasting more time trying to find someone in charge of the tapeworm to persuade them to change its ways. It can’t change --- its too busy finding food to feed all of us.

Thursday, October 14, 2010

The American Tapeworm, Part II

From the German Chaos Theory website, by Catherine Austin Fitts, , I have broken her 2003 essay into three parts over three consecutive days. Today Part II.
The “Break It-Fix It” Subsidy of a Negative Return on Investment Economy

For several years, I have been studying and writing on the corporate and banking economic warfare model of globalization. Just from a case study of one private investor, Pug Winokur, and his investments in and with DynCorp, Enron and Harvard, examples abound.

- US neighborhoods are overrun with narcotics trafficking and HUD financial fraud while systematically worked by enforcement, seizure and War on Drugs teams supported by DynCorp and generating profits for the Harvard Endowment;

- Latin American pipelines, water and other assets are sold for significant discounts to market value to Enron and other multinational investors while DynCorp helps War on Drugs military teams move peasants off the lands;

- Russian banks and pension funds are emptied out by organized crime and laundered through NY Fed member banks while Harvard as financial advisor helps privatize Russian oil companies over to their endowment investment network;

- DynCorp personnel supplying police and aircraft maintenance are active with local mafia in Eastern Europe and practice buying and selling children as slaves which they use for sex;

- $3.3 trillion is missing from the Department of Defense and the Department of Housing Development where Lockheed, DynCorp & AMS are active managing computer systems and Harvard supplies appointees and contract services.

- Manipulation of the gold markets by the US Treasury and NY Fed member banks are led by Larry Summers, Secretary of the Treasury, and now President of Harvard and his predecessor Robert Rubin, Secretary of Treasury, and now member of the Harvard Corporation Board.

These shenanigans are well documented by a series of courageous reporters and market commentators, including Anne Williamson, Greg Palast, Kelly O’Meara, William Murphy and Chris Sanders.

This tapeworm operates globally. It has been winning at economic warfare because those opposed to it cannot see it clearly and are not yet networked globally to move people, places and capital out of its reach. My pastor, Bishop Alfred Owens, says, “If we can face it, God can fix it.” Indeed, divine authority is hamstrung-- waiting for the necessary global networks to align around a common map of the real deal about global consolidation of economic and political power --- and the resulting liquidation of wealth.

This tapeworm is managed tightly by the cartels that syndicate around central banking and warfare and it has four phases:

- Phase One--Break It: Private syndicates make money destroying a place through organized crime, covert operations, warfare or a variety of both;

- Phase Two- Buy It: The profit generated from breaking it is used to buy or seize “legal control” at a discount;

- Phase Three- Fix It: Government funding, credit and subsidies are then used to “fix it” while harvesting remaining assets, including with narcotics trafficking, sex slavery and any other form of liquidating the human, intellectual, environmental and physical capital in a place:

- Phase Four—Declare Victory: Victory is then declared and a flow of foundation and academic grants funded by the “break it-fix it” profits generate awards, photo opportunities and official archives and documentation for the perpetrators to be admired for their bringing of advanced civilization to the natives.

What emerges from an investment banker’s analysis of billions of transactions involved in situation after situation, in place after place, in year after year, is surprisingly simple.

We are watching a global first world economy that has a negative return on investment.

For example, in 1997 I lead an analysis of US federal expenditures and credit activities in the Philadelphia area for a group of US pension fund leaders. After analysis of the detailed data resulting from $10 billion of government reengineering and $400 billion of federal credit portfolio strategy managed by my company, the evidence was overwhelming ---the federal investment in Philadelphia had a negative return on investment. In short, government budgets were rigging profits and income for companies and people in the area. After each year of government investment, Philadelphia spent more time doing things that were fundamentally not productive and so had been paid to grow “stupider.”

The deterioration in environment, culture, infrastructure and quality of life in Philadelphia that was obvious from walking around the city matched the numbers rather than the spin in the corporate news that the economy was doing well. Equity yields were falling steadily and only cooked government and corporate books could make it look otherwise. The primary thing on the rise was the smugness of the leaders of Philadelphia institutions as their success at covert management and personal “personnel benefits” grew ever stronger.

The Giant Sucking Sound as the Tapeworm Consumes Global Capital

Another way of saying this is that the banking and corporate model as currently constituted does not work. Banks and corporations are entirely dependent on rigged government budgets, government contracts, federal credit arbitrage and corrupt regulation in way that generates a negative return on investment for taxpayers. In addition, as corporations and banks become dependent on such government intervention they become progressively less able to function in a free market. Their culture becomes progressively soviet.

The combination of negative returns to taxpayers and increasingly non-market worthy private organizations is steadily lowering productivity. Add to this the increasingly power of organized crime as a % of GNP and a determinant of who sits in power on Wall Street and Washington, and fundamental productivity does not have a chance.

This state of affairs can go on as long as it can be financed. Hence, as long as America can continue to export dollars, export Treasury bills and mortgage backed and other federally supported credit, and lead in global organized crime and warfare, a negative return economy can continue.

Another way to say this is that rather than let markets adjust in a manner that would hold banks and corporations accountable, the central banks and military and enforcement machinery will guarantee markets by offsetting ever less productivity with ever greater amounts of debt and the liquidation of planetary assets – people, places, and all living things.

Which leads us to Iraq.

Tomorrow Part III

Wednesday, October 13, 2010

The American Tapeworm-Part I

From the German Chaos Theory website, by Catherine Austin Fitts, , I have broken her 2003 essay into three parts over three consecutive days.

Catherine Austin Fitts in the United States, has worked both on Wall Street and in the U.S. Government. In her view, a large portion of our problems is the result of “the strategy used by a tapeworm to prosper.” The following essay by Fitts was published under the headline “A Tapeworm’s Triumph” in April 2003.

The Tapeworm Economics

“And the serpent's food shall be earth.”

- Isaiah 65:25 -

The other day, a natural healing practitioner explained the strategy used by a tapeworm to prosper. A tapeworm, she said, injected a chemical into its host that triggered a craving by the host for what the tapeworm wished for its dinner. By managing it’s hosts desire, a tapeworm manipulated its host to set aside self-interest and please its parasite. And so the tapeworm proceeded to consume its host’s energy and health, with the host doing most of the work.

The story of how a tapeworm parasitically eats away at its ecosystem came at a moment when the math lover in me was having an adverse reaction to the description of America as the new Roman Empire that seems to be inspired by the recent occupation of Iraq. The investment economics of American imperial conquest work more along the lines of the tapeworm than of the Romans.

If my rudimentary understanding of the rise and fall of ancient empires is useful, the Roman Empire brought an advancement of science, infrastructure, technology and material progress to many of the poorer lands that it conquered. In essence, Rome’s territory grew in part from its ability to increase the ‘return on investment” of many of the places it conquered.

While those who believe in self-determination may not approve of the Romans right to do so, or their methods, those of us who appreciate roads, bridges and infrastructure understand the positive investment yields that the introduction of intellectual capital to a place can generate. From one point of view, Rome financed its conquests not just by ransacking them --- but by making places smarter in the material sense.

The tapeworm -- a parasite that over time eats its host ---can more accurately describe the demonic patterns of stripping places of intellectual capital that come with American imperial conquest. The “dumbing down” so often complained about within America’s borders is a phenomenon that our military appears to be implementing globally. We seem intent on removing spiritual power and intellectual IQ as we depopulate globally, moving out the honest and competent and putting the corrupt and bureaucratic in charge.

One of the things that is most disturbing about the American tapeworm is that it has organized its leadership around private banks and defense contractors and its governance and intellectual air cover around think tanks and private universities and their tax-exempt endowments.

In so doing it has done a marvelous job of getting the intellectual resources of the nation disengaged from dealing with what is happening and engaged –if not financially dependent on--- producing chemicals for injection into the body politic through a highly centralized corporate media that will feed the tapeworm's desire.

The Harvard Watch reports description of Harvard academics creating the public policy justifications for Enron's frauds while the Harvard endowment fed at the trough illuminated a perfect example of how the tapeworm gets the host to act against its own self-interest.

Tomorrow Part II.

Tuesday, October 12, 2010

Banks Over People

From The Automatic Earth by Ilargi. As pessimistic a commentary as any one might have read. That what she says is so far outside the mainstream speaks to the absence of dialogue about our collective future. That non-dialogue means whatever does come next will come as ahuge surprise to the mainstream still looking for and expecting the recovery of our economic system.
It's not the first time, guys, and it won’t be the last by the looks of it. But I do apparently have to repeat it from time to time: we're still having the wrong conversations. And I'm increasingly losing hope that we’ll switch to the right ones before it no longer matters what we talk about.

I was thinking about this the past few days looking at the gold price situation being discussed everywhere, including in the Automatic Earth comment sections. People feel smart for buying gold at the right time, and gold is at a record high (well, in US dollars; not in euro’s, it’s not), we've all seen it.

Still, the reason why The Automatic Earth doesn't focus on gold or its price is very simple: it's not the right conversation to have at this point in time. When we're done, as a society, as a national and global economy, with this round of real life Jeopardy behind us, 90-something percent of those who today see themselves as investors will no longer be that, and will have had to sell their gold and silver and most of their other possessions just to keep their families clothed, warm and fed. Unfortunately, that realization hasn't seeped through at all. First off, we're not smart enough to do the math, and second, we wish to wish it all away.

When our financial systems began to shake in 2007 and large chunks started to fall off in Jericho fashion in 2008, we were not witnessing yet another cyclical economic move, not another run of the mill thirteen in a dozen recession. We were watching the end of the financial system as we had come to know it.

And we still are. We're watching Wile E. Coyote on a broken reel.

The foundation of it all is US (un)employment and the housing market. Well, home prices have not stabilized, in the same sense that Wile E. Coyote does not stabilize in his infamous mid air moments, but is stuck in a temporary state of suspension. He only stabilizes once he hits the ground below. Physics 101, and economics 101, though you wouldn't know the latter from those who ply the trade. Wonder who’ll get the Economics Fauxbel one of these days. It’ll be hard to beat the thickness of handing the thing to Krugman last year.

Like Wile. E., US home prices today are suspended in mid air, and barely at that (they’re actually down 30%). The chances that they’ll go up from here are exceedingly small. And that is very bad news for the financial system, for the government and for all Americans, not just because everyone homeowner stands to lose another $100,000 or so in equity, but also because of the tens if not hundreds of trillions in derivatives written on the values of these homes and the mortgages they were "financed" with.

Nobody expects Wile E. to rise up once he's run off the cliff, or even linger at the same altitude for too long; yet, bizarrely and unfortunately, many do expect the US housing market, and indeed the American economy, to do just that.

It's time to stop fooling yourselves. For the US economy, housing market and labor market, like for Wile E., there’s only one way to go from here, and that is down. It's not going to come back for a very long time, if ever. And that, if nothing else, means our decisions, as a society and as individuals, will have to be radically different from what they would be if there were a chance of a recovery.

It has been entertaining to read about the foreclosure scandals lately; turns out, they were based all along on paperwork as fabricated as the mortgages that gave birth to them, and that keep on giving.

But when I see people expressing hope that this will finally stick it to the banks, and teach 'em a lesson, I despair. Look, all Washington has done over the past 2-3 years (or even 20-30 years) has been to protect the banks on Wall Street. Why would you think that will stop now? US banks as a whole are broke, broker, broken, and they wouldn't survive any major change that would imperil their revenues. In the end, they won't survive, period, but for now they're still just zombies stuck in a Wile E. moment, seemingly alive.

Yet, even as I see people applaud Obama for not signing a legal document that would make it easier for banks to throw Americans out of their homes, the overall policy direction remains the same: save the banks at all costs, wherein “all costs" means costs to taxpayers. This has been the policy all along, and it's been the wrong one all along too. And that is, once again, because we are still having the wrong conversations.

Everybody and their pet armadillos keep saying the same thing, even if it is from different viewpoints: it's either something or other will "hurt the recovery", or the opposite will. But there is no recovery, and never has been other than in funny fuzzy government stats, and despite the silly GDP data all politicians love, there won't be, not for a very long time, if ever. We need to stop seeing the world through these rosy glasses that are starting to look seriously ridiculous on our faces.

Then again, from where I’m sitting, it’s already way too late to repair the damage done by the myopic policies we've witnessed ever since the walls started crumbling.

Saving the banking system was always the wrong priority. At least from the point of view of the average American. Or Brit, or German. The crucial idea in all this that makes it all go awry is growth.

We need to get back to growth as soon as we possibly can, or we're all screwed. So screwed indeed that the very thought of a possible non-growth period has been banned from all national political and media centers. Like, to reiterate it once more, Tim Geithner telling the US Senate in 2009 that there was no need for a Plan B if his great plan, which has since failed spectacularly, might fail.

And there's something to be said for this way of looking at things, at least if you're Geithner or Obama or Jamie Dimon or any of their equivalents abroad. If these people would give up the fight for (economic) growth, and say there won't be any for years to come, they'd lose their powerful positions in an instant, only to be replaced by the next in line boyo willing to declare straight-faced that recovery is just around the corner.

There are two things that have kept up the appearance of something resembling normality, or recovery, name it what you will, so far. One is the trillions of dollars, euros, what have you, in clueless citizens' -future- tax revenues that have been thrown down the pit of financial losses -wagers- in the banking system. The second is the suspension in mid-air (Hello, Wile E.!) of accounting standards across the board.

An asset bought for $1000 that couldn't today be sold for $10, can remain on a balance sheet for the full paper value. In fact, billions of such assets do across the globe. Why? The prospect of future growth, of course. One day, they’ll be worth $1000 again, nay, $5000, and so why would we mark them to market?

That's where we get back to housing: banks, pension funds, market funds, let’s not forget the Fed, are loaded with such "assets". All, or nearly all, on balance sheets for 100 cents on the buck, and all verging on worthlessness.

Washington will try very hard, and likely succeed, to find a way to not let the banks pay for their own crimes, which is what the automated foreclosure proceedings add up to.

According to the official mantra, letting the main banks go belly-up would kill the entire system. Letting millions of Americans go belly-up, not so much. It's all a matter of priorities, don't you know, and you, yeah you, are not the priority.

But these same banks still have vaults overflowing with worthless and useless assets, and nothing has been done about that other than the Fed buying $1-2 trillion worth of them with taxpayer funds, and Mother-of-God only knows how much "money" being spilled by now between TARP and other stimuli on the one side, and on the other banks borrowing at 0% from the Fed to buy Treasuries which can be parked at 3-4% at the same Fed the same day.

They are labeled "systemically important", or Too Big to Fail, these banks. But the only system they're important for is the one that says recovery is always just around the corner, the one that controls Washington, and all politicians that reside there.

And that is simply the wrong conversation. We -pretty- desperately need to figure out what we'll do if we in fact need that Plan B. But there's nothing out there. Even George Soros talks about avoiding things that "will hurt the recovery".

In the end, the math is simple. If home prices keep falling, unemployment numbers keep rising. That correlation has been proven time and again. And if this happens (make that when), mortgage-backed securities will continue to fall in whatever "value" they still might have. That in turn means banks will need to be restructured, re-financed, re-Frankensteined.

It also means Fannie Mae and Freddie Mac become a multi-trillion dollar liability on the American people, many of whom will, the horror, the horror, by then just happen to have lost that $100,000 plus in equity on their American Dream property.

This will lead to an explosion in unemployment, since ever fewer people will have any discretionary income needed to keep stores and factories open, which will then hammer home prices even more. Consequently, tax revenues at all levels will scrape the gutters, forcing governments at all levels to lay off more workers, and so on: you can by now finish the story pourself and color the pictures. It's called debt deflation, people, and once you’re in debt way over your head as a society or as an individual there's nothing you can do but to lay low and let it run its course.

The Bureau of Labor Statistics September U3 unemployment just came in at 9.6%, unchanged from August. Curious, since Gallup put it at 10.1%. The BLS U6 number, the wider, more realistic gauge, jumped from 16.7% to 17.1%. John Williams' SGS alternate number is closing in at 23%. Only Spain resembles that in the western world.

If you can accept that 90-odd% of US banks are zombie banks (toxic assets!), that nothing has changed despite the money that was transferred from you to them, that their losses on toxic paper are far worse than anything you could ever afford, then you will have tp accept that you are zombies too, zombies, not investors, and that it's immaterial whether you make a nickel or two on gold purchases, that those matter only in Wile E. Coyote's suspended cartoon reality, not in yours.

One last thing to take with you:

If time is money, we're living on borrowed time.

Monday, October 11, 2010

Mortgage Transfer Fraud

Exerpted from an article by Jim Willie

The lengthy article discusses a wide range of criticism of the US economy. The part that interests me is the discussion of home mortgage fraud that is sweeping the banking industry and not being properly reported in the main stream. Whether or not one believes systemic failure is about to sweep the United States the events surrounding home mortgages are real and are a sign of corruption beyond belief within the banks recently underwritten by public monies in the US.

Some significant events are in progress, extremely important developments in the grand pathogenesis that reflects the deep decay and deterioration in the US financial structure. The most recent events pertaining to mortgage loans, home foreclosures, and disclosed fraud carry great potential to open extremely wide cracks in the American social order. Revealed systemic fraud is slowly coming into the open. Civil disobedience has already entered the arena of popular protest. However, the recent events surrounding illegal home foreclosure seizure of properties elevates the exposed fraud to a very clear high new level. This is a boil ready to break open, releasing financial puss. The cases where people have been removed from their homes, even when no bank loan exists (as in owned free & clear), by means of fraudulent, forged, and counterfeited documents, has finally provoked RICO law provisions. Witness organized crime extended from Wall Street, whose roots lie most likely in Fannie Mae itself. The legal industry has finally joined the fray in class action lawsuits. Defense citing errors made have been met with accusations of fraud, quite a different game.

The Racketing Racketeer Influenced & Corrupt Organizations Act of 1970 was designed to fight organized crime. RICO has been invoked in class action lawsuits in at least two states in the past month, each related to mortgage fraud, securities fraud, and illegal property seizures. At the center of the firestorm lie JPMorgan Chase, Bank of America, and GMAC (now called Ally). Little did the USCongress realize that RICO laws might be used to fight profoundly deep criminal fraud on Wall Street. When the criminal activity is tracked with some forensic analysis, the roots are found with REMICs, those perverse financial instruments that functioned as umbilical cords to Fannie Mae in past years, acting like powerful centrifuges. They fed the housing bubble and mortgage finance bubble, each valued over $10 trillion in size. Bear in mind that RICO has been used primarily against mafias and crime organizations dealing with gambling, drugs, and prostitution, where property seizures are routinely carried out. Abuses have been seen in states like Florida, where motorboat owners guilty of owning small bags of marijuana have lost their boats in legal seizure. It seems that selective enforcement is obvious. The target within the crosshairs has moved to Wall Street banks and Fannie Mae under the USGovt protective wing. These are dangerous times.

Recent cases threaten to encourage the Strategic Defaults and highly charged Civil Disobedience which could actually contribute in powerful ways to commercial chaos, popular disorder, public disruptions, creeping distrust, and even systemic failure. Hundreds of thousands of people are not making their mortgage payments, intentionally stopping payments, many when they do have the ability. Over 250 thousand Bank of American mortgage holders have stopped making monthly payments, in open defiance and some financial distress. The topic of Strategic Default, together with challenges (even with attorneys) to the banks to produce legal property titles, has grown sharply in practice. The RICO cases underway threaten to toss an accelerant on that fire. Henry David Thoreau would certainly be observing closely, perhaps smiling, at the current developments of citizen action against corrupt bank practices, mortgage bond fraud, and forgery of securities as well as critical legal documents. His essay had a profound effect on me when young, when cruel abuses were observed within my catholic school locally and the Vietnam War globally. Of course, the Jackass does not sponsor, endorse, or encourage any such action, believing that the highest level bankers should receive their due. The question is what is due? Objective reporting of the news, such as the viral news of the fraudulent home foreclosures, seems to have escaped the mainstream news, a consistent theme that hints of syndicate sympathy or culpability. The last thing a network news systems wants is to encourage civil disobedience. They prefer to promote vast herds of docile sheep.

For four years, the Jackass has claimed that Fannie Mae lies at the core of a grand criminal fraud enterprise, serving as the central clearing house for USGovt agency sponsors of magnificent fraud. Their tools are mortgage loans, mortgage bonds, REMICs, and more recently the MERS title database. Real Estate Mortgage Investment Conduits were a necessary piece to the housing and mortgage bubble, from which extends colossal fraud. The REMIC acted like a mortgage futures contract, clear of any supervision or regulatory oversight and thus permitting an open door government green light signal to systemic fraud. Imagine a leveraged futures contract on twin bubbles where unbridled fraud was common. Recall that $1500 billion went missing from 1988 to 2000 in two HUD regional offices. One was Houston and the other was Oklahoma City, the home grounds for sitting presidents. The missing funds have fed black bag funds and diverse illicit financial operations. Few connect any association between the pyrotechnic events in April 1995 by Timothy McVeigh to big rooted branches and critical data records, an open question. The entire set of prima facie and secunda facie and tertia facie aspects of the mushrooming story are to be covered in the October Hat Trick Letter reports. But honestly, this is a huge moving target, whose capture is better described as herding cats on an open field.


The mushroom has a primary point of vulnerability that has received very little attention. The Mortgage Electronic Registration Systems (MERS) was originally an innovative process that simplified the way mortgage ownership and servicing rights were originated, sold, and tracked. MERS is a property title database, intended by Wall Street and Fannie Mae to serve as a repository that kept order when mortgage bonds were traded fast and furious. In recent court cases in at least three states, the MERS database failed to attain legal standing in mortgage foreclosure challenges. The holder of the note (home loan) could not combine with the MERS database (title holder) to win property seizure. The system began to unravel. Now in at least one state, the MERS database is directly cited in a criminal fraud class action lawsuit that invokes the RICO statutes. MERS is the financial system's Achilles Heel. Maybe a big bank like Bank of America might collapse, fall into ruin, and dissolve from proof of racketeering, its assets confiscated by aggrieved parties to fraud. Obviously, Bank of America along with several other big banks have been dead for a long time, since October 2008 in my estimation. If not for the lax and complicit accounting rules by the Financial Accounting Standards Board, which permit banks to declare their own fictitious value for their balance sheet assets, imposed in April 2009, the big banks would undergo liquidation. They cling to control of the USGovt financial purse, its USDollar printing press, its conduits to financial centers, and its extended arm to legal prosecution control. Big bank liquidation is tantamount to liquidation of the entire US financial structure, its power and privilege, in plain words.

MERS has gained unwanted damaging attention in the legal arenas, and it will not go away. The class action lawsuits will establish the high ground, grow in number, and gain attention. The proof of the malfeasance, fraud, and forgery will be incredibly easy, breathtaking in implications, and shocking to the sleepy public. The risk of civil disobedience is acute. The directly associated risk of commercial degradation from contract law moving toward a field of abandonment is also acute. The domino effect carries risk to the business and thus the social fabric of the American society. The United States is on the verge of events leading to potential systemic failure. Few attribute causality to the Fascist Business Model broad implementation and secretive endorsement, but it lies at the center. The permitted criminal activity, not just with bond fraud, mortgage fraud, and property theft, extends far beyond white collar crimes. Take for instance the suspicious suicide of Freddy Mac CFO David Kellermann, found hanging by the neck in his Virginia living room in April 2009. He knew too much and wanted out, some believe. His suicide probably had assistance. My sources tell of a wave of middle level murders, where bankers have been systematically eliminated. The victims knew too much about the money trails, but lacked a critical level of protective support from rank. They are the dead mules. They were high enough to have knowledge, but not high enough to avoid being expendable. MERS is the errant tool. RICO is the thick cloud. Fannie Mae (FNM) is the grand sewage pit laced with fraud. The news is rarely reported unless they must since it is already widely known. The mainstream news finds itself competing desperately with the competent intrepid internet sources. In a strange attempt to force an equation from a disorderly situation, let it be simply stated that



One is left to wonder if it is possible that foreign creditors can invoke RICO laws and take over USGovt assets as part of a USTreasury default process? They might do so agency by agency, but start with the helm on Wall Street. By next year, national parks and lands will be sold off to creditors. The deep fraud is easy to prove. Identification of the participants is much more difficult. The movement of prosecution and perhaps restitution will begin with private homeowners, the vassals in the lost field of dreams. A crucial connection on legal obligation is the formal USGovt guarantee of USAgency Mortgage Bonds, which make them full blood brothers to USTreasury Bonds. They just pay a different yield, although we are witnessing a convergence between mortgage rates and USTreasury yields. The Fannie Mae cesspool is certain to drag down the global confidence and prestige of the USTreasury Bond itself, a process underway. Perhaps the USCongress can hastily include a rider on some war appropriation bill or jobless insurance bill or some other bill that is approved but not examined, which exempts USGovt agencies and Wall Street firms from RICO prosecution, even ex-post facto to cover past pecadillos. Harken back to Hank Paulson as USTreasury Secretary, trying to explain Wall Street bond fraud as errors of judgment. The ploy did gain some traction, but the recent lawsuits over mortgage fraud, forged foreclosure documents, and more, run the risk of opening the RICO window to the organized crime that is central to the US financial system. Its three loci of activity are the USFed, Goldman Sachs, and JPMorgan. This is just the financial wing of the syndicate. Apart from that is the war wing, with a common conduit in the USFed.

At great risk is ruin of the threads, tissue, and fiber of the nation. Many have called it the moral hazard in countless citations. The USDollar rests on the faith and trust of the USGovt. Enter systemic fraud and organized criminal activity, demonstrated in open court cases, and POOF, the faith and trust vanish. The USGovt might block some cases for national security reasons, the standard blanket to cover prevalent criminal behavior, a precedent started by Nixon. The same trust and faith underpin the USTreasury Bond complex, the debt securities for the USGovt debt. When the Fannie Mae failed toxic pool was adopted hookline & sinker in September 2008, the USTreasurys took on added risk, infecgted by the spread of toxic tissue and corrupted threads and absent moral fibers.