The Emperor is still strutting around as though he was fully clothed in the best silk, color and design. Wall Street is still the darling of government and a whole lot of other people, even if it was a little bad these past few years. We’ve been through the part where the swindler’s came to town, where the government officials ashamed of their apparent blindness and ignorance raved about the new derivative innovations, and the parade of foreclosures based upon invisible clothes. But we have not arrived at the part in the story where the little child yells out that the old fool has no clothes on. And we still don’t hear everyone laughing at wall Street and sending them home to lick their own wounds instead of inflicting it on everyone else.

The swindlers are still in town selling invisible clothes to everyone gullible enough to buy nothing and call it something. We are running on vapor since 1983 when derivatives were zero. Now we have credit derivatives with a nominal value of somewhere over $500 Trillion — that is ten times the total money in circulation from government origins. That’s “nominal value” because they don’t exist and they have no value. There is no substance to them to the extent that they are based on secured debt and possibly all other debt. There is no mortgage, there is no note, although there might be an obligation. But if there is an obligation it probably has been extinguished by either set off for predatory “lending” (actually illegal sale of unregistered securities fraudulently masquerading as loan products) or extinguished by payment directly or indirectly from Uncle Sam, more investors or others. In this fairy tale (national nightmare), the swindler’s take over the government instead of sneaking out of town with their hoard of ill-gotten gains.

Think about it. If virtually ALL of the securitized residential mortgages that were originated for the last 10 years are in some sort of trouble, how much brain power does it take to conclude that there was something wrong with them to begin with?

If virtually ALL of the mortgage backed securities that were created and sold in the last 10 years went into default, how much brain power does it take to conclude that there was something wrong with them to begin with?

So if virtually all the transactions originating the source money and all the transactions that were funded from the source money went bad, how much brain power does it take to conclude that there was no substance to the transaction and that the whole thing was a fantasy from Wall Street, who are now strutting around with their pockets bulging with the all the money everyone else (investors and “borrowers”) lost?

I’ve been as gentle as I could, giving everyone a chance to catch up but we are now on the precipice of a cliff far deeper than anything we have seen before including one year ago. And nobody on the side lines is really getting it. We continue our march toward the edge of the cliff, push the ones in front off, in the hope or belief that we won’t ever get there. So here it is, my opinion to be sure, but anyone who has been following my writings since April, 2007 knows that I called the stock market crash, the credit freeze and the collapse of the world economies and why. So it’s not like I don’t have a track record. I wasn’t the only one and people with far more credibility than me spotted the same things and continue to scream bloody murder, “the emperor has no clothes!” See comments by Roubini, Krugman, Volcker et al.

  1. Geithner and Summers have to go. They are the emperor’s closest confidants who don’t want to look stupid even if it destroys the entire country. The current emperor is still on a learning curve so we have to cut him some slack. The prior ones, well….read on.
  2. The recession is real but most of it could be reversed by simply admitting the obvious: those derivatives have no value, the mortgages are mostly invalid, the notes are mostly invalid, and the obligations are mostly extinguished by the swindlers’ own chicanery with Federal bailouts and Credit Default Swaps, which were the cloth of the Emperor’s invisible clothes.
  3. The need for the AIG bailout can be argued. But nobody can argue that the people who benefited from it are the same people who got us into this mess. They took a system that was working and turned it into a system that couldn’t work. They turned mortgage lending on its head: mortgages that were likely to perform were valuable only as cover for most of the illegal activities underneath. The real incentive was to create mortgage pools that would fail and where they could collect on credit default swaps worth as much as 30 times the original nominal value. Vapor on Vapor.
  4. That means they have every motivation to make certain you go into default and no motivation whatsoever to modify, settle, allow short-sale or do anything for the benefit of a homeowner who wants to settle the matter honorably. You can’t do that when you are dealing with dishonorable people with motives that amount to acts of domestic terrorism. There is no talking to them because if they can get you to default on that $300,000 loan they probably are going to get paid $9,000,000 just on your default. How do you like them apples? Check it out. It is true.
  5. Any obligation — whether it is a loan for refinancing a house, buying a house, student loan, auto loan etc. that have the attributes discussed in this blog — does NOT have any security or note that can be enforced and all of them can be extinguished in bankruptcy — probably even including the nondischargeable student loans. (More on that another time).
  6. Therefore, much of the recession, all of the foreclosures and much of the lost wealth that is “missing” is legally, morally and ethically and in actuality and reality, a fantasy. Some 20 million homeowners or more with these residential mortgages securitized through a money laundering scheme are sitting on wealth they have been convinced they don’t have. But they do. Those houses are free and clear — legally, morally and ethically.
  7. All the homes in the MERS database are probably free from any encumbrance legally, ethically and morally. Trillions of dollars of wealth that is claimed as “lost” is still possessed by people who don’t know they have it and the game is on to make sure that if they ever figure it out it will be too late.
  8. Imagine the purchasing power in our consumer economy if the mortgage obligations and other obligations simply vanished. What would happen to the recession? What would happen to unemployment? What would happen to tax revenues without ever raising the rate of taxation? It would all self correct. And speaking of taxes, how about all those trillions of dollars in “fees” and “profits” that were sequestered off shore, never reported and thus never taxed? what would happen to the national and state deficits?
  9. All this is happening because the wrong people are controlling the conversation and most people are listening because the “experts” because they are so smart “must know better.” Consider me the child who yelled “But the Emperor has no clothes.” A million experts with long resumes, PhD’s and persuasive catch words can’t change the fact that the money laundering scheme of the last 10 years was clothed in “Apparent” legality but in substance was simply fraud perpetrated by people who were not any smarter or better than the common swindler. They did, however, have one ace in the hole — the Emperors were in on it. Maybe we have a chance with the current administration, maybe not.
  10. Unless we do something about this, we will suffer the indignity of decline into third world status as the wealthy few squeeze the life out of the rest of the country. Is this too extreme for you? Go to the International Money Fund website or the World Bank website or any other website or book that addresses basic economics. You won’t find anything different there. Just words, like these, with a little more polish and a little more academic tone, with the same message.

13 Responses

  1. Just because we do not see the clothes does not mean that the situation isn’t having an impact, and obviously years later it would seem that nude or not, lots of foreclosures continue to go down.

  2. I understand very little of what you guys are talking about. I am talented in other areas, like turning abstract, complex ideas into messages readers intuitively grasp and understand as important to them.

    My eyes wander or I fail to get a mental picture when I read these posts ‘derivative exposure” and I can easily trust that everything you say is true until such time as I either understand it to be true or not true.

    I already believe in the overall gist of corporate fraud, smoke and mirrors, citizens exploited for the ignorance and kept ignorant from their greed. I don’t trust any of our corporations/ institutions even as I am forced deeper and deeper into reliance upon them (or struggle harder and harder to get out from under their control).

    I am a mortgage holder. I have ‘alot’ of ‘equity. Or do I? I want to get risd of my house, Or should I? my credit debt, and more ignorance. aMost of all, I want to STOP GETTING RIPPED OFF and having it be ‘acceptable” because it is “business.”

    So when I trip over what seems to be a lot of smart people, I read. I am those people you wish would ‘wake up’ and to whom you believe need only to ‘be informed’—but do you think there is any ‘information’ here? When people read this sort of stuff they don’t understand, that goes against what is both familiar and reinforced every day in their day to day lives—of course they think you’re kooks! Because it doesn’t make sense!

    Not ‘sense’ as in not ‘logical’ or evidential’ but SENSE as in: ‘Yes, we are the morons here, but we’re the majority, so it’s what YOU think that’s idiotic sort of sense.

    I also do not see ANY (ok ONE) effort to suggest a real ACTION. Forget big ‘plans’ that never materialize: What ACTIONS are open to me? What can I do that would make a difference, not just expand my knowledge that something terrible is unstoppable? WHERE do you plant the flag?

    Zurenarrh asked for support to take a CONCRETE ACTION and no one responded. Did his request stump everyone? Is this pre-condition to a solution non-existent so Neil et all will ignore it like the naked King? That made me most wary: you can do anything to help the country if you can’t reach out to help each other. “Course, Zurenarrh might be a psycho you guys have been tactically ignoring for months and I don’t know nothing…

    James# is trying, too!

    Is everyone really content with just coming her and sounding smart and getting a little emotional support? Do any one of you highly intelligent individuals who seem to know what you’re talking about going to take the time/energy to explain to those of us who may be able to find creative and meaningful ways to drive change WHAT IS REQUIRED FOR CHANGE? WHAT IS THE NEXT ACTION STEP?

    I’m talking CHILDREN’S BOOK, OK? Big illustrations. But no Prince, ok? This will have to be a citizen’s rescue.

    Sending ‘this post’ will solve nothing. Manure spreads easier than ‘virals’ because in order for something to be ‘viral’ it has to have a contagious QUALITY to it.

    There is nothing here that tells anyone what to DO NEXT. Burn our mortgages like we used to burn our bras? Organize a “don’t send in your Mortgage Payment” month? Forget the ‘change leadership’ or ‘spread the word’ ‘ideas. Those aren’t even ideas, much less good ones! There just frustration and lonliness and knowing if only people would UNDERSTAND!

    And it helps a lot to think like the enemy. What would they do to them if they were you?

    I’ve always said the problem with open-minded people is that they’re too open-minded. They can see so many points, and are uncomfortable taking rigid, unshakable stands. But baby does that narrow perspective really focus the laser beam!

    Thin line, I know. But how much time is left to stroll the wide boulevard?

    Sorry for the long rant. Good luck. Do something great.

  3. John,
    You are absolutely correct! That the facts of the Gulf of Tonkin “incident” were misstated at the time and have been for decades was finally admitted by the NSA in 2005. Specifically, the NSA now admits that:

    “there was no second attack on U.S. ships in Tonkin on August 4, 1964.”

    Likewise, there were no WMD in Iraq. Likewise, the FBI’s “Most Wanted” info on Osama bin Laden does not include the crimes of 9/11. And so on.

    On the surface, it seems that this has nothing to do with foreclosures, but in fact the above-mentioned events and the mortgage meltdown/bailout are all of a piece: there is no “there” there and it’s all complete fakery and enforced/promulgated/enacted by the government against the will of the people. It’s all designed to keep “the system”–which benefits the few at the expense of the many–in place.

    I’m reminded of the remarks of Neal Kashkari a year ago this month in testimony before the House of Representatives:

    “If we went out to each of the people and businesses and communities and helped them directly the $700 billion wouldn’t go far enough. So we’re trying to take the $700 billion and stabilize the system as a whole so that credit can then flow out to everybody around the country who needs it. So it’s very hard–we’re trying to think of every day–if we have finite resources, how do we use those resources to the best possible benefit to the system as a whole, because that will help every American.”

    So a year after this insulting comment and the handout of billions and commitments of trillions, is “the system” stabilized? No–not even close, unless you’re Goldman Sachs. Unemployment is up. Nearly 1 in 10 homeowners is behind on house payments. The dollar continues to fall while inflation rises.

    But “the system” works, right? If you’re Goldman Sachs or AIG, “the system” works great–but if you’re, well, one of us, “the system” is completely broken. As the song says, “they give you this but you pay for that.”

  4. Angry,
    That was a fascinating read about the Arizona lawyer’s case–thanks for bringing it to our attention.

  5. usedcarguy,
    Everybody on this blog, including Niel is considered a KOOK by the majority of Americans who are ignorant of the facts.
    The sinking of the Maine, the Gulf of Tonkin Incident, were LIES that now everybody agrees were just that.

    When the head of the 9/11 commission reports that the government lied to the commission, it is reason enough to call for a new investigation.

    A site you and others should check out.

    The events of 9/11 is a very large part of the meltdown this country is experiencing.
    I use my real name on all my posts. If you or others would like to discuss this subject my e-mail is

  6. The KOOKS are coming out of the closet! Hey John, pick up a copy of Popular Mechanics and you will find out why WTC7 collapsed. I won’t spend a lot of time on this, but, frankly, get your head out of your ass! I agree that the Bush administration may have dropped the ball, however the Democrats are the ones that hamstrung the CIA and the Justice Department. yes, the powers that are in place are corrupt. So go to your State Attorney General, your State Department of Financial Institutions, and plead your case to them. You may find a sympathetic ear. But not here. The Clinton Administration (and Neil will say it started much earlier) and Robert Rubin (maybe Ron Brown’s plane crash was an inside job, devote a little time to that one!) fired up the boiler with the repeal of Glass-Steagal,and turned the tables on mortgage finance.

    The media is ignorant of the facts. I have sent numerous e-mails to my local stations and not one of them want to hear the truth. It is correct that more people need to hear our stories, and the stories of those that can no longer participate (no home, no electricity, no computer). But if you want to rehash 9/11, this ain’t the place. Go to Berkely!

  7. we will never see the truth of “911” or of the “mortgage hocus [poke us ]” with the likes of this decision.

    neil.. this case was in the ariz courts.

    And from what i’ve read as private attorney generals we can all sue the banks / servicers for RICO [ i believe ] mail fraud applies & also sue the accompanying sycophant judiciary as complicit after the fact.

  8. Libra, ask yourself why is this country involved in two wars, three if you count the never ending war on terror?

    It’s not just money or power, it’s control.

    When Bush was elected in 2000 we were allready in a recession. They opened the floodgates for fraudsters in a attempt to prop up our dot com busted stock market.

    09/11/2001 was in my opinion, a inside job. WTC 7 a 47 story steel framed building, that was not hit by a plane, collapsed into its own footprint. It has never been explained. It just so happens that it held the offices of the S.E.C. that had all the files on Enron and Worldcon, stopping all prosecutions of those frauds.

    Wake up America. Demand a new investigation of the events of 9/11, and we can take back our country.

  9. Neil is 100% correct in all of this. The real question remains that, in the bigger picture, who or what is really behind all of this ? What has happened to our economy and to this country is no accident, it was by design and very well planned. Ask yourselves this, where is all the wealth ultimately going ?

  10. Neil, as always I am amazed and delighted by your clarity. My recommendation as a way to “take action” is to forward this page link to everyone you know and spread the truth throughout the Internet virally. We truly have an empty economy with no basis; take a look at the derivative exposure of the 25 top banks at (scroll down to the table in the Goldman Sachs story). If this truth was known, the Dow would hit 200.

  11. Neil,

    You’re seeing the imperial TRUTH.
    The NAKED truth.

  12. This War will not be won one mortgage at a time. The basic story is known, more rescearch is needed but will not help the big picture. The information that we have must be deciminated on a large scale. These issues are very complex and need to be broken down to bullet points that can be marketed to the general public. Look at Moveon. org it is an example of a money-making machine. We need MONEY, MONEY IS POWER, WE NEED MONEY! In the case of Moveon it is all about their email list. They present an issue to be disminated, ask for donations and buy media in all areas: commercial, print, write letters. They get the word out. Agree with them or not, doesn’t matter. They have a simple formula that works. Email on an isssue, ASK for DONATIONS, DISCIMINATE.
    My first suggestion is to put togeter another web site with Neil as Founder that will use the Moveon model to disiminate the fraud that has occured.

  13. I wholeheartedly concur!

    Can anyone give us an idea of how to track down the credit default swaps so that we can use them as evidence in our cases–evidence that our “oblgations” or “indebtedness” has in fact been extinguished many times over?

    I know what a credit default swap is but don’t know where to find one, or how to know who bought/benefitted from them. If we can get access to such info, I think those of us challenging our foreclosures would have even more ammo to help stop this wall street monster dead in its tracks.

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