People Who Were Wrong Are the Winners — SO FAR

First of all I don’t think Geithner caused the financial crisis. He certainly contributed to it but it probably would have happened even if he had not undercut Sheila Bair at every opportunity; and yes he should have listened to other people who were saying that the corruption on Wall Street had reached epic proportions.

Second, I think that neither Geithner nor his predecessor, Hank Paulson, as Treasury secretaries, had a real understanding of the crisis at any time up through today. And their bosses, Presidents Bush and Obama were even more clueless. And while they are probably culpable for their negligence and mismanagement of the crisis, the foreclosure madness would have occurred anyway.

Third, it is my belief that the culprits on Wall Street with all their tentacles stretched out across the globe were unstoppable by anyone except a good government with the resources to actually get to the bottom of it. What was missing was the desire to get rid of the problem and the naivete of the leaders in government in failing to notice that the entire banking industry was engaged in faking transactions and documents — and failing to ask why that was necessary.

Fourth my opinion is that the fault lies with the failure of anyone in government to learn anything relevant about the industries they were supposed to be regulating. If they had done so, starting in 1983 when derivatives became adolescent, the adult would have been far more tame and the crises would have been averted entirely.

Homeowners did not create the crisis. Tens of millions of homeowners did not congregate in a room thinking up 450 loan products when there were only 4 or 5. And saying they had bad judgment would absolve almost any perpetrator of economic crime because his victim was too stupid.

The laws were already in place. It was knowledgeable people that were missing. We needed and had faithful servants of the people — but as a society and as a nation each country contributed to the enormous problem that has now been created. And we will keep paying for it as banks take over all commodities we hold dear and “legally” corner the markets with stolen cash and property.

In Nocera’s article on Bankrupt Housing Policy, he points out that ” in the course of perusing another new book about the financial crisis, “Other People’s Houses,” by Jennifer Taub, an associate professor at Vermont Law School, I was reminded of an effort that took place in the spring of 2009 that could have made an enormous difference to homeowners, one that would have required no taxpayer money and might well have become law with a little energetic lobbying from the likes of, well, Tim Geithner. That was an attempt, led by Dick Durbin, the Illinois senator, to change the bankruptcy code so that homeowners who were underwater could modify their mortgages during the bankruptcy process. The moment has been largely forgotten; Taub has done us a favor by putting it back on the table.”

He goes on to say that he had correspondence with Sheila Bair who was undermined and stomped on by the Obama administration for even thinking about relief to homeowners. She was head of the FDIC and prevented from doing her job by a bankrupt policy of save the banks and damn the homeowners. “Because, as Bair told me in an email, “It would have been a powerful bargaining chip for borrowers.” Without the ability to file for bankruptcy, underwater homeowners unable to pay their mortgages were helpless to prevent foreclosures. With it, however, servicers and banks were far more likely to negotiate the debt load. And if they weren’t, a bankruptcy judge would rule on the appropriate debt to be repaid. For all the talk about the need for principal reduction, this change would have been the easiest way to get it.”

According to Adam Levitin, in the same article by Nocera, this should have been a “no-brainer.” I take that too mean that as I have explained above, brains were in short supply during the worst of what we have yet seen of the economic crisis that most of us think is not even half over. Obama may be leaving the crisis as his legacy not because he caused it but because he didn’t do anything about it — or at least anything right.

And I obviously agree with Nocera’s ending comment — “Why is it that the fear of moral hazard only applies to homeowners, and not to the banks?”

Gretchen Morgenson says Geithner admitted he was inept at times. ““We were human.” But this fails to address head-on the possibility that he was a captured regulator, a man locked into the mind-set of the very bankers he was supposed to oversee.”

Gretchen reports without objection from Geithner — “Last week, I asked Sheila C. Bair, the former chairwoman of the Federal Deposit Insurance Corporation, for her recollection of these events. She replied with an email recalling that in 2006, she attended her first Basel Committee meeting, the international negotiations that Mr. Geithner was referring to. While there, she pushed unsuccessfully to raise bank capital levels.

Why was she unsuccessful? “I was actively undermined by the Fed, the New York Fed and the comptroller of the currency,” she said. “I later complained to Tim about the way his representative on the Basel Committee had undermined me. He was unapologetic.”

Gretchen has not been given the resources to prove the corruption on Wall Street, but she knows it is there and as the fourth estate the NY Times should have provided her with a blank check for what would have been a Pulitzer or even a Nobel prize. for now we can only agree with her — “We were the lenders of last resort and should have been paid an enormous premium for the use of our money. We were not.”

There are suddenly a spate of articles on what went wrong because Geithner wrote a book and is selling it enhancing his own fortunes while he presided over the worst hit the middle class has had in our history.

Here is what investigators should have been looking for:

Behind door number 1 were the fools. These are the money managers who for reasons the defy explanation did no due diligence and bought empty mortgage bonds issued by a trust that was never going to receive the money, the loans or the property.

Behind door number 2 were the wolves of Wall Street including all the different brokers, dealers, banks, rating agencies and insurers, all the mortgage brokers, real estate brokers, and closing agents and title companies all in league to take as much money as they could out of the system and the hide it behind shadow money equivalent to ten times all the actual money in the world.

Behind door number 3 are the victims. These are the people who knew nothing about mortgages, derivatives or anything else. In the end they were convinced by super salespeople that they could never understand how they could afford the loan nor could they even understand why they must do it anyway. In Florida alone 10,000 such sales people were convicted felons. And yet when we talk of moral hazard we speak of people, and not banks. Why is that?

Everyone Else Knows: Why Do We Continue To Ignore It?

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Editor’s Comment:

In a short article by Patrick Jenkins in the Financial Times (Doubts Over Lending Push), it seems that everyone in Europe understands the problem well, and that the the consequences are dire but are unsure about what to do about it. Here in the United States housing is the elephant in the living room that nobody really wants to talk about. European leaders don’t like talking about it either but they are doing it anyway. Maybe they actually care what happens next unlike American politicians who seem to enjoy creating catastrophes, then handing power over to the other party and blaming them for the results.

Mitt Romney and Barack Obama are battling it out over economic policies and whether lower taxes and fiscal stimulus will benefit the economy. Mitt wants to cut what is left of federal and state spending thus deepening the depression or recession or whatever it is. Barack wants to stimulate economic growth with more money. How about this: they are both wrong. And the Europeans, for all their chaotic political intrigues, are zooming in on the cure a lot faster than we are because we won’t even talk about it.

Both candidates seem to think that cheaper money and more of it delivered to the banks and large corporations will stimulate borrowing and commerce. But Graeme Leach, chief economist at the Institute of Directors boiled it down to one simple sentence: “Companies alarmed by the euro crisis will not be eager to borrow, regardless of the cost.” It is obviously obvious to anyone with a brain that companies are not going to borrow unless they think they need the money.

And they are not going to think they need the money unless demand is going up. With unemployment topping out near Great Depression levels, why would anyone think that commerce can be revived? Add in the fact that real wages have declined over the last 30 years and you can easily see why companies won’t borrow unless they think they can make money increasing their debt burden. Who does the buying — fairies? It’s consumers, stupid, and they are broke, tapped out on credit, and have very little confidence in their prospects.

The Europeans actually understand that there is a difference between the real economy and the one reported in the newspapers. The real one is where a strong middle class has savings and resources and they buy things. The one in the newspapers is all about paper and trades with companies buying and selling each other and “bets” being made on who is right about bonds, stocks and other crazy financial “innovations.”

Virtually half of the GDP published by Washington is made up of paper trades where the typical citizen is left out of the equation altogether. So here is a repeat of my prediction regarding the stock market: either it will “crash” in a correction that is congruent with actual commerce levels or the financial institutions and rating agencies will continue to rate and recommend securities of companies whose substance is gone —- called zombies in the FI article.

BOA is one such Zombie institution. It’s broke. Everyone knows it’s broke and yet they persist on pretending that it is just fine. Then they want consumers to express confidence in the economy or government. Why should they?

Everyone understands that the problem is housing and the fraudulent printing of “money” by private banks dwarfing any real money supply that is supplied by world governments. $700 TRILLION is traded as cash equivalents while world governments, even with quantitative easing have issued less than $70 TRILLION in real currency. Why would anyone think that taxes or stimulus or quantitative easing (printing money) could even nick the side of this barn. We are being forced to sustain a false tree of money on which thousands of branches are hanging onto a trunk that is not there and never was. Fear is now the dominant word that describes the behavior of world leaders and the leaders of central banks.

Here is the solution and it is the application of justice at the same time: since the mortgage papers contained lies and did not disclose the identity of the lender nor the actual terms of repayment, there is no law in existence that would allow such a transaction to become  an encumbrance on the land.

Add to that the fact that the transaction recited never took place because the borrower was actually doing business with a stranger where money DID exchange hands but was never documented, and you have the answer: the mortgages are invalid, the notes are invalid and the the banks having been already paid several times over for a loss they never incurred but instead foisted upon pension funds and sovereign wealth funds from other nations, let’s call it a day.

I don’t care if people get an unfair advantage or perk for being a victim in this scheme. I don’t care if this interferes with the ideology of personal responsibility (which is being ignorantly applied to this situation). I care about the country, our society and what will happen if our economy can’t come up off the ground. I care that too many people are underemployed or unemployed. I care that average savings are zero and that most Americans have suffered a grievous loss of wealth.

I care that there are not enough people to buy things because they don’t have any money. Rescind the so-called mortgage transactions, let the branches of derivatives and credit default swaps and other bets and enhancements fall to the ground. It’s not as bad as you think. Most of the bets settle out to zero exchanges because with certain exceptions the bets are balanced.

The world will not end if we give homeowners their homes free and clear of any encumbrance. The governments could even prosper if they took an interest in those mortgages they already purchased (or think they purchased) and imposed a fair mortgage with fair terms based upon realistic current market conditions in housing and finance. Then people would be returned to their former status in far less time, the rate of commerce would improve, the real economy would recover and the fake economy and the people who go with it can take a hike or go to jail, if we dare to put them there.

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Arizona Supreme Court Hogan Case Holds that Note is Not required to Start Foreclosure

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the trustee owes the trustor a fiduciary duty, and may be held liable for conducting a trustee’s sale when the trustor is not in default. See Patton v. First Fed. Sav. & Loan Ass’n of Phoenix, 118 Ariz. 473, 476, 578 P.2d 152, 155 (1978).” Hogan Court

Editor’s Comment: Here is another example of lawyers arguing out of a lack of understanding of the securitization process and trying to compress an elephant into a rabbit hole. They lost, unsurprisingly.

If you loaned money to someone, you want the money repaid. You DON’T want to be told that because you don’t have the note you can never enforce the loan repayment. You CAN start enforcement and you must prove why you don’t have the note in a credible way so that the court has footprints leading right up to the point that you don’t have the note. But the point is that you can start without the note. 

The Supreme Court apparently understood this very well and they didn’t address the real issue because nobody brought it up. The issue before them was whether someone without the note could initiate the foreclosure process. Nobody mentioned whether the same party could submit a credit bid at the auction which is what I have been pounding upon for months on end now.

Apparently, right or wrong, the feeling of the courts is that there is a very light burden on the right to initiate a foreclosure whether it is judicial or non-judicial. It is very close to the burden of the party moving to lift stay in a bankruptcy procedure. Practically any colorable right gives the party enough to get the stay — because the theory goes — whether it is a lift stay or starting the ball rolling on a foreclosure there is plenty the borrower can do to  oppose the enforcement procedure. I don’t agree with either standard or burden of proof in the case of securitized mortgages but it is about time we got real about what gets traction in the courtroom and what doesn’t.

In the Hogan case the Court makes a pretty big deal out of the fact that Hogan didn’t allege that WAMU and Deutsch were not entitled to enforce the note. From the court’s perspective, they were saying to the AG and the borrowers, “look, you are admitting the debt and admitting this is the creditor, what do you want from us, a free pass?”

This is why you need real people with real knowledge and real reports that back up and give credibility to deny the debt, deny the default, deny that WAMU and/or Deutsch are creditors, plead payment and force WAMU and Deutsch to come forward with pleadings and proof. Instead WAMU and Deutsch skated by AGAIN because nobody followed the money. They followed the document trail which led them down that rabbit hole I was referencing above.

In order to deny everything without be frivolous, you need to have concrete reasons why you think the debt does not exist, the debt does not exist between the borrower and these pretender lenders, the debt was paid in full, and deny that the loan was NOT secured (i.e. that the mortgage lien was NOT perfected when filed).

For anyone to do that without feeling foolish you must UNDERSTAND how the securitization model AS PRACTICED turned the entire lending model on its head. Then everything makes sense, which is why I wrote the second volume which you can get by pressing the appropriate links shown above. But it isn’t just the book that will get you there. You need to give rise to material, relevant issues of fact that are in dispute. For that you need a credible report from a credible expert with real credentials and real experience and training.

I follow the money. In fact the new book has a section called “Show Me the Money”. To “believe” is taken from an ancient  language that means “to be willing”. I want you to believe that the debt that the “enforcers” doesn’t exist and never did. I want you to believe that the declarations contained in the note, mortgage (deed of trust), substitution of trustee etc. are all lies. But you can’t believe that unless you are willing to consider the the idea it might be true. That I might be right.

At every “Securitized” closing table there were two deals taking place — one perfectly real and the other perfectly unreal, fake and totally obfuscated. The deal everyone is litigating is the second one,  starting with the documents at closing and moving up the chain of securitization. Do you really think that some court is going to declare that everyone gets a free house because some i wasn’t dotted or t crossed on the back of the wrong piece of paper when you admit the debt, the default and the amount due?

It is the first deal that is real because THAT is the one with the money exchanging hands. The declarations contained in the note, mortgage and other documents all refer to money exchanging hands between the named payee and secured party on one side and the borrower on the other. The deal in those documents never happened. The REAL DEAL was that money from investor lenders was poured down a pipe through which the loans were funded. The parties at the closing table with the borrower had nothing to do with funding; acquiring, transferring the receivable, the obligation, note or the mortgage or deed of trust.

Every time you chase them down the rabbit hole of the document trail you miss the point. The REAL DEAL had no documents and couldn’t possibly be secured. And if you read the wording from the Hogan decision below you can see how even they would have considered the matter differently if the simple allegation been made that the borrower denied that WAMU and Deutsch had any right to enforce the note either as principals or as agents. They were not the creditor. But Hogan and its ilk are not over — yet.

There is still a matter to be determined as to whether the party who initiated the foreclosure is in fact a creditor under the statute and can therefore submit a credit bid in lieu of cash. THAT is where the rubber meets the road — where the cash is supposed to exchange hands. And THAT is where nearly all the foreclosures across the country fail. The failure of consideration means the sale did not take place. If the borrower was there or someone for him was there and bid a token amount of money it could be argued in many states that the other bid being ineligible as a credit bid, the only winning bidder is the one who offered cash.

————————————————————

Hogan argues that a deed of trust, like a mortgage, “may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation the mortgage secures.” Restatement (Third) of Prop.: Mortgages § 5.4(c) (1997); see Hill v. Favour, 52 Ariz. 561, 568-69, 84 P.2d 575, 578 (1938).

-6-
We agree. (e.s.) But Hogan has not alleged that WaMu and Deutsche Bank are not entitled to enforce the underlying note; rather, he alleges that they have the burden of demonstrating their rights before a non-judicial foreclosure may proceed. Nothing in the non-judicial foreclosure statutes, however, imposes such an obligation. See Mansour v. Cal-Western Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009) (citing A.R.S. § 33-807 and observing that “Arizona’s [non-]judicial foreclosure statutes . . . do not require presentation of the original note before commencing foreclosure proceedings”); In re Weisband, 427 B.R. 13, 22 (Bankr. D. Ariz. 2010) (stating that non-judicial foreclosures may be conducted under Arizona’s deed of trust statutes without presentation of the original note).

———————AND SPEAKING OF  DEUTSCH BANK: READ THIS AS GRIST FOR THE ABOVE ANALYSIS——-

Disavowal by-DEUTSCHE-BANK-NATIONAL-TRUST-COMPANY-AS-TRUSTEE-NOTICE-TO-CERTIFICATE-HOLDERSForeclosure-Practice-Notice-10-25[1]

Pandemic Lying Admission: Deutsch Bank Up and Down the Fake Securitization Chain

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Editor’s Comment:

One problem with securitization in practice even under the academic model is the effect on potential enforcement of the obligation, even assuming that the “lender” is properly identified in the closing documents with the buyer of the loan product and the closing papers of the buyer of the mortgage bonds (and we’ll assume that the mortgage bonds are real and valid, as well as having been issued by a fully funded REMIC in which loans were properly assigned and transferred —- an assumption, as we have seen that is not true in the real world). Take this quote from the glossary at the back of this book and which in turn was taken from established authoritative sources used by bankers, securities firms and accountants:

cross guarantees and credit default swaps, synthetic collateralized asset obligations and other exotic equity and debt instruments, each of which promises the holder an incomplete interest in the original security instrument and the revenue flow starting with the alleged borrower and ending with various parties who receive said revenue, including but not limited to parties who are obligated to make payments for shortfalls of revenues.

Real Property Lawyers spot the problem immediately.

First question is when do these cross guarantees, CDS, Insurance, and other exotic instruments arise. If they are in existence at the time of the closing with the borrower homeowner then the note and mortgage are not properly drafted as to terms of repayment nor identity of the lender/creditor. This renders the note either unenforceable or requiring the admission of parole evidence in any action to either enforce against the borrower or enforce the cross obligations of the new cross creditors who supposedly are receiving not just rights to the receivable but to the actual note and the actual mortgage.

Hence even a truthful statement that the “Trustee” beings this foreclosure on behalf of the “trust” as creditor (assuming a Trust existed by law and that the Trustee, and beneficiaries and terms were clear) would be insufficient if any of these “credit enhancements” and other synthetic or exotic vehicles were in place. The Trustee on the Deed of Sale would be required to get an accounting from each of the entities that are parties or counterparties whose interest is effected by the foreclosure and who would be entitled to part of the receivable generated either by the foreclosure itself or the payment by counterparties who “bet wrong” on the mortgage pool.

The second question is whether some or any or all of these instruments came into existence or were actualized by a required transaction AFTER the closing with the homeowner borrower. It would seem that while the original note and mortgage (or Deed of Trust) might not be affected directly by these instruments, the enforcement mechanism would still be subject to the same issues as raised above when they were fully actualized and in existence at the time of the closing with the homeowner borrower.

Deutsch Bank was a central player in most of the securitized mortgages in a variety of ways including the exotic instruments referred to above. If there was any doubt about whether there existed pandemic lying and cheating, it was removed when the U.S. Attorney Civil Frauds Unit obtained admissions and a judgment for Deutsch to pay over $200 million resulting from intentional misrepresentations contained in various documents used with numerous entities and people up and down the fictitious securitization chain. Similar claims are brought against Citi (which settled so far for $215 million in February, 2012) Flagstar Bank FSB (which settled so far for $133 million in February 2012, and Allied Home Mortgage Corp, which is still pending. Even the most casual reader can see that the entire securitization model was distorted by fraud from one end (the investor lender) to the other (the homeowner borrower) and back again (the parties and counterparties in insurance, bailouts, credit default swaps, cross guarantees that violated the terms of every promissory note etc.

Manhattan U.S. Attorney Recovers $202.3 Million From Deutsche Bank And Mortgageit In Civil Fraud Case Alleging Reckless Mortgage Lending Practices And False Certifications To HUD

FOR IMMEDIATE RELEASE                  Thursday May 10, 2012

Preet Bharara, the United States Attorney for the Southern District of New York, Stuart F. Delery, the Acting Assistant Attorney General for the Civil Division of the U.S. Department of Justice, Helen Kanovsky, General Counsel of the U.S. Department of Housing and Urban Development (“HUD”), and David A. Montoya, Inspector General of HUD, announced today that the United States has settled a civil fraud lawsuit against DEUTSCHE BANK AG, DB STRUCTURED PRODUCTS, INC., DEUTSCHE BANK SECURITIES, INC. (collectively “DEUTSCHE BANK” or the “DEUTSCHE BANK defendants”) and MORTGAGEIT, INC. (“MORTGAGEIT”). The Government’s lawsuit, filed May 3, 2011, sought damages and civil penalties under the False Claims Act for repeated false certifications to HUD in connection with the residential mortgage origination practices of MORTGAGEIT, a wholly-owned subsidiary of DEUTSCHE BANK AG since 2007. The suit alleges approximately a decade of misconduct in connection with MORTGAGEIT’s participation in the Federal Housing Administration’s (“FHA’s”) Direct Endorsement Lender Program (“DEL program”), which delegates authority to participating private lenders to endorse mortgages for FHA insurance. Among other things, the suit accused the defendants of having submitted false certifications to HUD, including false certifications that MORTGAGEIT was originating mortgages in compliance with HUD rules when in fact it was not. In the settlement announced today, MORTGAGEIT and DEUTSCHE BANK admitted, acknowledged, and accepted responsibility for certain conduct alleged in the Complaint, including that, contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations. MORTGAGEIT also admitted that it submitted certifications to HUD stating that certain loans were eligible for FHA mortgage insurance when in fact they were not; that FHA insured certain loans endorsed by MORTGAGEIT that were not eligible for FHA mortgage insurance; and that HUD consequently incurred losses when some of those MORTGAGEIT loans defaulted. The defendants also agreed to pay $202.3 million to the United States to resolve the Government’s claims for damages and penalties under the False Claims Act. The settlement was approved today by United States District Judge Lewis Kaplan.

Manhattan U.S. Attorney Preet Bharara stated: “MORTGAGEIT and DEUTSCHE BANK treated FHA insurance as free Government money to backstop lending practices that did not follow the rules. Participation in the Direct Endorsement Lender program comes with requirements that are not mere technicalities to be circumvented through subterfuge as these defendants did repeatedly over the course of a decade. Their failure to meet these requirements caused substantial losses to the Government – losses that could have and should have been avoided. In addition to their admissions of responsibility, Deutsche Bank and MortgageIT have agreed to pay damages in an amount that will significantly compensate HUD for the losses it incurred as a result of the defendants’ actions.”

Acting Assistant Attorney General Stuart F. Delery stated: “This is an important settlement for the United States, both in terms of obtaining substantial reimbursement for the FHA insurance fund for wrongfully incurred claims, and in obtaining the defendants’ acceptance of their role in the losses they caused to the taxpayers.”

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www.justice.gov/usao/nys/pressreleases/may12/deutschebankmortgageitsettlement.html                  1/45/16/12                  USDOJ: US Attorney’s Office – Southern District of New York

HUD General Counsel Helen Kanovsky stated: “This case demonstrates that HUD has the ability to identify fraud patterns and work with our partners at the Department of Justice and U.S. Attorney’s Offices to pursue appropriate remedies. HUD would like to commend the work of the United States Attorney for the Southern District of New York in achieving this settlement, which is a substantial recovery for the FHA mortgage insurance fund. We look forward to continuing our joint efforts with the Department of Justice and the SDNY to combat mortgage fraud. The mortgage industry should take notice that we will not sit silently by if we detect abuses in our programs.”

HUD Inspector General David A. Montoya stated: “We expect every Direct Endorsement Lender to adhere to the highest level of integrity and accountability. When the combined efforts and attention of the Department of Justice, HUD, and HUD OIG are focused upon those who fail to exercise such integrity in connection with HUD programs, the end result will be both unpleasant and costly to the offending party.”

The following allegations are based on the Complaint and Amended Complaint (the “Complaint”) filed in Manhattan federal court by the Government in this case:

Between 1999 and 2009, MORTGAGEIT was a participant in the DEL program, a federal program administered by the FHA. As a Direct Endorsement Lender, MORTGAGEIT had the authority to originate, underwrite, and endorse mortgages for FHA insurance. If a Direct Endorsement Lender approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD for the costs associated with the defaulted loan, which HUD must then pay. Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance. Direct Endorsement Lenders are therefore required to follow program rules designed to ensure that they are properly underwriting and endorsing mortgages for FHA insurance and maintaining a quality control program that can prevent and correct any deficiencies in their underwriting. These requirements include maintaining a quality control program, pursuant to which the lender must fully review all loans that go into default within the first six payments, known as “early payment defaults.” Early payment defaults may be signs of problems in the underwriting process, and by reviewing early payment defaults, Direct Endorsement Lenders are able to monitor those problems, correct them, and report them to HUD. MORTGAGEIT failed to comply with these basic requirements.

As the Complaint further alleges, MORTGAGEIT was also required to execute certifications for every mortgage loan that it endorsed for FHA insurance. Since 1999, MORTGAGEIT has endorsed more than 39,000 mortgages for FHA insurance, and FHA paid insurance claims on more than 3,200 mortgages, totaling more than $368 million, for mortgages endorsed for FHA insurance by MORTGAGEIT, including more than $58 million resulting from loans that defaulted after DEUTSCHE BANK AG acquired MORTGAGEIT in 2007.

As alleged in the Complaint, a portion of those losses was caused by the false statements that the defendants made to HUD to obtain FHA insurance on individual loans. Although MORTGAGEIT had certified that each of these loans was eligible for FHA insurance, it repeatedly submitted certifications that were knowingly or recklessly false. MORTGAGEIT failed to perform basic due diligence and repeatedly endorsed mortgage loans that were not eligible for FHA insurance.

The Complaint also alleges that MORTGAGEIT separately certified to HUD, on an annual basis, that it was in compliance with the rules governing its eligibility in the DEL program, including that it conduct a full review of all early payment defaults, as early payment defaults are indicators of mortgage fraud. Contrary to its certifications to HUD, MORTGAGEIT failed to implement a compliant quality control program, and failed to review all early payment defaults as required. In addition, the Complaint alleges that, after DEUTSCHE BANK acquired MORTGAGEIT in January 2007, DEUTSCHE BANK managed the quality control functions of the Direct Endorsement Lender business, and had its employees sign and submit MORTGAGEIT’s Direct Endorsement Lender annual certifications to HUD. Furthermore, by the end of 2007, MORTGAGEIT was not reviewing any early payment defaults on closed FHA-insured loans. Between 1999 and 2009, the FHA paid more than $92 million in FHA insurance claims for loans that defaulted within the first six payments.

***

Pursuant to the settlement, MORTGAGEIT and the DEUTSCHE BANK defendants will pay the United States $202.3 million within 30 days of the settlement.

As part of the settlement, the defendants admitted, acknowledged, and accepted responsibility for certain misconduct. Specifically,

MORTGAGEIT admitted, acknowledged, and accepted responsibility for the following:

www.justice.gov/usao/nys/pressreleases/may12/deutschebankmortgageitsettlement.html                  2/4

5/16/12                  USDOJ: US Attorney’s Office – Southern District of New York

MORTGAGEIT failed to conform fully to HUD-FHA rules requiring Direct Endorsement Lenders to maintain a compliant quality control program;

MORTGAGEIT failed to conduct a full review of all early payment defaults on loans endorsed for FHA insurance;

Contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations;

MORTGAGEIT endorsed for FHA mortgage insurance certain loans that did not meet all underwriting requirements contained in HUD’s handbooks and mortgagee letters, and therefore were not eligible for FHA mortgage insurance under the DEL program; and;

MORTGAGEIT submitted to HUD-FHA certifications stating that certain loans were eligible for FHA mortgage insurance when in fact they were not; FHA insured certain loans endorsed by MORTGAGEIT that were not eligible for FHA mortgage insurance; and HUD consequently incurred losses when some of those MORTGAGEIT loans defaulted.

The DEUTSCHE BANK defendants admitted, acknowledged, and accepted responsibility for the fact that after MORTGAGEIT became a wholly-owned, indirect subsidiary of DB Structured Products, Inc and Deutsche Bank AG in January 2007:

The DEUTSCHE BANK defendants were in a position to know that the operations of MORTGAGEIT did not conform fully to all of HUD-FHA’s regulations, policies, and handbooks;

One or more of the annual certifications was signed by an individual who was also an officer of certain of the DEUTSCHE BANK defendants; and;

Contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations.

***

The case is being handled by the Office’s Civil Frauds Unit. Mr. Bharara established the Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating financial fraud, including mortgage fraud.

To date, the Office’s Civil Frauds Unit has brought four civil fraud lawsuits against major lenders under the False Claims Act alleging reckless residential mortgage lending.

Three of the four cases have settled, and today’s settlement represents the third, and largest, settlement. On February 15, 2012, the Government settled its civil fraud lawsuit against CITIMORTGAGE, INC. for $158.3 million. On February 24, 2012, the Government settled its civil fraud suit against FLAGSTAR BANK, F.S.B. for $132.8 million. The Government’s lawsuit against ALLIED HOME MORTGAGE CORP. and two of its officers remains pending. With today’s settlement, the Government has achieved settlements totaling $493.4 million in the last three months. In each settlement, the defendants have admitted and accepted responsibility for certain conduct alleged in the Government’s Complaint.

The Office’s Civil Frauds Unit is handling all three cases as part of its continuing investigation of reckless lending practices.

The Civil Frauds Unit works in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Mr. Bharara thanked HUD and HUD-OIG for their extraordinary assistance in this case. He also expressed his appreciation for the support of the Commercial Litigation Branch of the U.S. Department of Justice’s Civil Division in Washington, D.C.

www.justice.gov/usao/nys/pressreleases/may12/deutschebankmortgageitsettlement.html                  3/4

5/16/12                  USDOJ: US Attorney’s Office – Southern District of New York

Assistant U.S. Attorneys Lara K. Eshkenazi, Pierre G. Armand, and Christopher B. Harwood are in charge of the case.

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Hello?
Is there anybody in there?
Just nod if you can hear me.
Is there anyone at home?
Come on, now,
I hear you’re feeling down.
Well I can ease your pain
And get you on your feet again.
Relax.
I need some information first.
Just the basic facts
Can you show me where it hurts?

Pink Floyd – Comfortably Numb

As I observe the zombie like reactions of Americans to our catastrophic economic highway to collapse, the continued plundering and pillaging of the national treasury by criminal Wall Street bankers, non-enforcement of existing laws against those who committed the largest crime in history, and reaction to young people across the country getting beaten, bludgeoned, shot with tear gas and pepper sprayed by police, I can’t help but wonder whether there is anyone home. Why are most Americans so passively accepting of these calamitous conditions? How did we become so comfortably numb? I’ve concluded Americans have chosen willful ignorance over thoughtful critical thinking due to their own intellectual laziness and overpowering mind manipulation by the elite through their propaganda emitting media machines. Some people are awaking from their trance, but the vast majority is still slumbering or fuming at erroneous perpetrators.

Both the Tea Party movement and the Occupy Wall Street movement are a reflection of the mood change in the country, which is a result of government overreach, political corruption, dysfunctional economic policies, and a financial system designed to enrich the few while defrauding the many. The common theme is anger, frustration and disillusionment with a system so badly broken it appears unfixable through the existing supposedly democratic methods. The system has been captured by an oligarchy of moneyed interests from the financial industry, mega-corporations, and military industrial complex, protected by their captured puppets in Washington DC and sustained by the propaganda peddling corporate media. The differences in political parties are meaningless as they each advocate big government solutions to all social, economic, foreign relations, and monetary issues.

There is confusion and misunderstanding regarding the culprits in this drama. It was plain to me last week when I read about a small group of concerned citizens in the next town over who decided to support the Occupy movement by holding a nightly peaceful march to protest the criminal syndicate that is Wall Street and a political system designed to protect them. My local paper asked for people’s reaction to this Constitutional exercising of freedom of speech and freedom of assembly. Here is a sampling of the comments:

“What are those Occupy people thinking?! The whole concept is foreign to me. There are always going to be the haves and the have nots. Get over it. Blame yourself for not paying more attention in school or not working hard enough. Just wish people would take responsibility.”

“If they worked half as hard actually working as they do being a pain in everyone else’s ass, they’d be rich! Being born does not guarantee success or wealth. Only hard work does. Maybe we should let them all occupy a jail cell or two.”

“If the goal is to irritate hardworking suburban commuters on their way home, that sounds like the perfect time and location.”

“Let’s hope they don’t pitch tents and trash Lansdale. They need to look for a job, not occupy the streets.”

“I work, and even if I wasn’t working I wouldn’t (march); I would be out looking for a JOB!”

I was dumbfounded at the rage directed towards mostly young people who haven’t even begun their working careers and have played no part in the destruction of our economic system underway for the last 30 years. The people making these statements are middle aged, middle class suburbanites. They seem to be just as livid as the OWS protestors, but their ire is being directed towards the only people who have taken a stand against Wall Street greed and Washington D.C. malfeasance. I’m left scratching my head trying to understand their animosity towards people drawing attention to the enormous debt based ponzi scheme that is our country, versus their silent acquiescence to the transfer of trillions in taxpayer dollars to the criminal bankers that have destroyed the worldwide financial system. I can only come to the conclusion the average American has become so apathetic, willfully ignorant of facts and reality, distracted by the techno-gadgets that run their lives, uninterested in anything beyond next week’s episode of Dancing with the Stars or Jersey Shore, and willing to let the corporate media moguls form their opinions for them through relentless propaganda, the only thing that will get their attention is an absolute collapse of our economic scheme. Uninformed, unconcerned, intellectually vacant Americans will get exactly that in the not too distant future.

Greater Depression Hidden from View

“Look at the orators in our republics; as long as they are poor, both state and people can only praise their uprightness; but once they are fattened on the public funds, they conceive a hatred for justice, plan intrigues against the people and attack the democracy.”Aristophanes, Plutus

 

The anger and vitriol directed at OWS protestors by middle class Americans is a misdirected reaction to a quandary they can’t quite comprehend. They know their lives are getting more difficult but aren’t sure why. They are paying more for energy, food, tuition, and real estate taxes, while the price of their houses decline and their wages stagnate. More than a quarter of all homeowners are underwater on their mortgage and many are drowning in credit card and student loan debt. At the same time, government drones tell them the economy is in its second year of recovery and corporate profits are at all-time highs. Government statistics, false storylines, and entitlement programs are designed to confuse the public and obscure the fact we are in the midst of another Depression. Everyone has seen the pictures of the Great Depression breadlines, farmers forced off their land during the dustbowl, and downtrodden Americans in soup kitchens. The economic conditions today are as bad as or worse than the Great Depression. This Depression is hidden from plain view because there are no unemployment lines, bread lines, or soup lines. We are experiencing an electronic Great Depression, as food stamps, unemployment compensation, Social security payments and welfare benefits are electronically delivered to millions of recipients.

There have been over 12 million foreclosure actions since 2007, with millions of Americans losing their homes. Another 16 million homeowners are underwater on their mortgages as home prices continue to fall and the economy sinks further by the day. The value of household real estate has fallen from $22.7 trillion in 2006 to $16.2 trillion today, a loss of $6.5 trillion concentrated among the middle class. In contrast, mortgage debt has only decreased by $600 billion mostly due to write-offs by the banks that created fraudulent mortgage products to lure Americans into debt.

The unemployment rate in the United States reached 25% during the Great Depression. The government manipulated fictional unemployment rate reported to the public by drones at the BLS is currently 9.0%. They conveniently ignore the millions of people who have given up looking for work and those who have taken jobs as part-time pickle ploppers at McDonalds, when they previously assembled automobiles at GM. The true number of unemployed/underemployed is 23%.

Since 2007, unemployment has officially gone up by 7 million. In reality, the same percentage of the working age population should be employed today as in 2007 (63%). Since only 58.4% of the working age population is employed today (lowest since 1983), another 4 million needs to be added to the official unemployment tally. The fact is there are 240 million working age Americans and only 140 million are employed. This means there are 100 million working age Americans not working, but our government only classifies 14 million of them as unemployed. There is certainly millions of stay at home moms, students, and legitimately disabled among the 86 million people classified as not in the labor force, but you can’t tell me that another 20 to 30 million of these people couldn’t or wouldn’t work if given the opportunity.

The deception in government reported figures is borne out by the most successful government program of the Obama administration, which has been adding participants at an astounding rate. The Food Stamp program has been a smashing success as we’ve added 13.8 million Americans to this fine program since Obama’s inauguration, a mere 43% increase in less than three years. There are now 45.8 million Americans dependent upon food stamps for survival, 14.7% of the U.S. population. This program began in 1969 and enrollment always surges during recessions and declines during recoveries. But a funny thing happened during our current “recovery”. The government reported our recession over in December 2009. It was certainly over for the Wall Street psychopaths as they rewarded themselves with $43 billion of bonuses in 2009/2010. The number of Americans on food stamps has risen by 6.8 million during this government sponsored “recovery”. You’ll be happy to know that Obama’s good buddy – Jamie Dimon – and his well run machine at JP Morgan earns hundreds of millions administering the SNAP program.

Since 2007, Federal government transfer payments have increased from $1.7 trillion annually to $2.3 trillion, a 35% increase in four years. This is surely a sign of a recovering economy. Bernanke’s zero interest rate policy has stolen $400 billion per year from senior citizens and savers and handed it to the very bankers who caused the pain and suffering of millions. Personal interest income has declined from $1.4 trillion to $1.0 trillion, while Wall Street faux profits have soared. The game plan of the oligarchy has been to transfer hundreds of billions from taxpayers to bankers, report profits through accounting entries reducing loan loss reserves, pump up their stock prices and convince clueless lemming investors to buy newly issued shares at inflated valuations. The plan has failed. The zero interest rate policy’s unintended consequences have caused revolutions throughout the Middle East and massive food inflation across the developing world.

The single biggest reason the middle class feel frustrated, angry and like they are falling behind is due to the Federal Reserve and the relentless never ending inflation they produce in order to support their masters on Wall Street and provide cover for the trillions in debt spending by politicians in Washington DC. It is no surprise that beginning in 1980 when government spending began to accelerate much more rapidly than government revenues, the government decided to “tweak” how it measured inflation. The government reports inflation at 3.5% today. The truth is inflation is running in excess of 10% if measured exactly as it was in 1980. That’s right, we have a recession and we have inflation in double digits. No wonder the masses are restless.

  

The reason middle class Americans are being methodically exterminated and driven into poverty is the monetary policies of the Federal Reserve. Since 1971, when Nixon extinguished the last vestiges of the gold standard and unleashed politicians to spend borrowed money without immediate consequence, the U.S. dollar has lost 82% of its purchasing power using the government manipulated CPI. In reality, it has lost over 90% of its purchasing power. The average American, after decades of being dumbed down by government sanctioned education, is incapable of understanding the impact of inflation on their lives. As their wages rise 2% to 3% per year and inflation rises 5% to 10% per year, they get poorer day by day. The Wall Street banks, who own the Federal Reserve, step in and convince the average American to substitute debt for real wealth in order to keep living the modern techno-lifestyle sold to them by mainstream corporate media.

The oligarchy of moneyed interests have done a spectacular job convincing the working middle class they should be angry at 20 year old OWS protestors, illegal immigrants and the inner city welfare class, rather than the true culprits – the Federal Reserve, Wall Street banks and mega-corporations. This is a testament to the power of propaganda and the intellectual slothfulness of the average American. U.S. based mega-corporations fired 864,000 higher wage American workers between 2000 and 2010, while hiring almost 3 million workers in low wage foreign countries, using their billions in cash to buy back their own stocks, and paying corporate executives shamefully excessive compensation. The corporate mainstream media treats corporate CEO’s like rock stars as if they deserve to be compensated at a level 243 times the average worker. The S&P 500 consists of the 500 biggest companies in America and while the executives of these companies have reaped millions in compensation, the stock index for these companies is at the exact level it was on July 9, 1998. Over the last thirteen years workers were fired by the thousands, shareholders earned 0% (negative 39% on an inflation adjusted basis), and executives got fabulously rich.

Man made inflation has stealthily devastated millions of lives over the last four decades. When the weekly wages of the average worker are adjusted for inflation, they are making 12% less than they did in 1971. Using a real non-manipulated measure of inflation, the average worker is making 30% less than they did in 1971. Sadly, our math challenged populace only comprehend their wages have doubled in the last forty years, without understanding the true impact of inflation. Thankfully, the Wall Street debt dealers with a helping hand from Madison Avenue propaganda peddlers stepped up to the plate and imprisoned the middle class with the shackles of $2.5 trillion in consumer debt. So, while real wages have fallen 30% since 1971, consumer debt has increased by 1,700%.

 

Americans have been snookered into renouncing their citizenship and converting to being mindless consumers. Citizenship requires a person to be actively engaged in the community with obligations to fellow citizens and future generations. Consumerism requires people to love things, embrace debt, worry about what others have, and become driven by the accumulation of possessions and the appearance of wealth. The disgusting exhibition that Madison Avenue maggots have coined Black Friday is the ultimate display of consumerism. In a nauseating display of senseless spending driven by retail conglomerates, Americans act like Pavlov’s salivating dogs by lining up for hours to stampede over and pepper spray other consumers to get the ultimate deal on that Chinese made toaster oven, Vietnamese made laptop, Korean made HDTV, or Mexican made tortilla maker. They don’t seem to grasp the irony of going deeper into debt buying cheap crap made in foreign countries by the workers who took their jobs. The mainstream media proclaims a hugely successful Black Friday as millions bought crap they didn’t need with money they don’t have, while millions more ate their Thanksgiving meals in food shelters – unreported by the media.This repulsive manifestation of consumerism is applauded and encouraged by our government, as described by George Monbiot:

“Governments are deemed to succeed or fail by how well they make money go round, regardless of whether it serves any useful purpose. They regard it as a sacred duty to encourage the country’s most revolting spectacle: the annual feeding frenzy in which shoppers queue all night, then stampede into the shops, elbow, trample and sometimes fight to be the first to carry off some designer junk which will go into landfill before the sales next year. The madder the orgy, the greater the triumph of economic management.”

The masses have been brainwashed by those in power into thinking consumer spending utilizing debt is essential for a strong economy, when the exact opposite is the truth. Saving and investment are the essential ingredients to a strong economy. Debt based spending only benefits bankers, mega-corporations, and politicians.

Mass Manipulation through Propaganda

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” – Edward Bernays, Propaganda, 1928 

Edward Bernays, the father of propaganda to control the masses, would be so proud of his disciples running our country today. He clearly believed only an elite few were intellectually capable of running the show. Essentially, he hit upon the concept of the 1% telling the 99% what they should think and believe over eighty years ago. The mechanisms for controlling the thoughts, beliefs, and actions of the population are so much more efficient today. The conditioning begins when we are children, as every child will be bombarded with at least 30,000 hours of propaganda broadcast by media corporations by the time they reach adulthood. Their minds are molded and they are instructed what to believe and what to value. Those in control of society want to keep the masses entertained at an infantile level, with instant gratification and satisfying desires as their only considerations. The elite have achieved their Alpha status through intellectual superiority, control of the money system, and control of the political process. Their power emanates from eliminating choices, while giving the illusion of choice to the masses. People think they are free, when in reality they are slaves to a two party political system, a few Wall Street banks, and whatever our TVs tell us to buy.

Our entire system is designed to control the thoughts and actions of the masses. In many ways it is done subtly, while recently it has become more bold and blatant. It is essential for the ruling elite to keep control of our minds through media messages and the educational system. It is not a surprise that our public education system has methodically deteriorated over the last four decades. The government gained control over education and purposely teaches our children selected historical myths, social engineering gibberish and only the bare essentials of math and science. The government creates the standardized tests and approves the textbooks. We are left with millions of functionally illiterate children that grow into non-critical thinking adults. This is the exact result desired by the 1%. If too many of the 99% were able to ignore the media propaganda and think for themselves, revolution would result. This is why the moneyed interests have circled the wagons, invoked police state thug tactics, and used all the powers of their media machine to squash the OWS movement. It threatens their power and control.

“Experience has shown that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.” – Thomas Jefferson

A highly educated engaged citizenry would be a danger to the existing social order. The 1%, educated at our finest universities, does not want average Americans to obtain a great education for a reasonable price. They want them to get a worthless diploma at an excessively high price tag and become debt slaves to the Wall Street 1%. They want uneducated, indebted consumers, not educated productive citizens. Our republic has been slowly perverted since the time of its inception. The insidious process had been slow and methodical until 1913. The establishment of the Federal Reserve by an elite group of bankers and their politician friends and the establishment of a personal income tax created the conditions that have allowed a small cabal of powerful men to dictate the course of our economic, political, social, and military policies for the last 98 years. Anyone that chooses to open their eyes and awake from the propaganda induced stupor can see the result of allowing a small group of corrupt authoritarian men using their power to pervert our government into tyranny. The majority remains oppressed, buried under trillions of debt, while the shysters reap obscene profits, poison the worldwide economic system, and walk away unscathed in the aftermath of their crimes.

The ruling oligarchy has become so brazen in the last few years that it has attracted the attention of the critical thinking minority. The advent of the internet has allowed these critical thinking few to analyze the un-sanitized facts, discuss the issues, and provide truth amidst a blizzard of lies. The proliferation of truth telling websites (Zero Hedge, Mish, Financial Sense, Naked Capitalism) has allowed truth seekers to bypass the government sanctioned corporate media. The pillaging of society by the politically powerful, corrupt 1% is plain to see in the graphs below.

 

The divergence in household income was not the result of hard work, superior intellectual firepower, or the media touted entrepreneurial spirit of the rich. It was the result of the 1% capturing the economic and political system of the United States and using it to ransack the wealth of the formerly working middle class. The fatal flaw which will ultimately result in a fitting end for the powerful elitists is their egos. They are psychopaths, unable to feel empathy for their fellow man. Enough is never enough. They always want more. Life is a game to them. They truly believe they can pull the right strings and continue to accumulate more riches. But they are wrong. They are blinded by their hubris. There are limits to growth based solely on debt and we’ve reached that limit. The world is crumbling under the weight of crippling debt created by these Wall Street psychopaths, while the corrupted bought off politicians try to shift the losses from the bankers who incurred them to the citizens who have already been fleeced. Nomi Prins captures the essence of our current situation:

“Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrounding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment.  Because investors don’t know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained, rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we’re just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let’s play the ECB inflation game, while the world crumbles.”

Those in power are beginning to lose control. You can sense their desperation. Their propaganda is losing its impact as the pain for millions of Americans has become acute. The outrage and anger flaring across the country on a daily basis, reflected in the OWS movement, is just the beginning of a revolutionary period descending upon this nation. The existing social order will be swept away, but they will not go without a fight. They will use their control of the police, military and media to try and crush the coming rebellion.

 The Dream is Gone

“The more corrupt the state, the more numerous the laws.” – Tacitus, The Annals of Imperial Rome

In addition to controlling the monetary system and brainwashing the inhabitants with relentless propaganda, the ruling class has used their control of the political process to impose thousands of laws, statutes, rules, and regulations upon the citizens. Again, an apathetic, distracted, trusting populace has been easily convinced that more laws will make them safe and secure. They have willingly sacrificed liberty, freedom and self reliance for the façade of safety, security and protection. The overwhelming number of government rules and regulations are designed to control you and insure your compliance and obedience to those in power. In a non-corrupt society inhabited by citizens willing to honor their obligations, government’s function is to insure property rights and defend the country from foreign invaders. Citizens don’t need to be herded like sheep with threats of imprisonment to do what is right. We don’t need 90,000 pages of regulations telling us the difference between right and wrong.

  

There were 400 pages of Federal Tax rules when the 1% personal income tax was implemented in 1913. Did the 18,000% increase in tax rules since 1913 benefit the average American or did they benefit the 1% who hires the lobbyists to write the rules which are passed into law by the politicians who receive their campaign contributions from the 1%? Do you ever wonder why you pay more taxes than a billionaire Wall Street hedge fund manager? Do you think our tax system is designed to benefit billionaires and mega-corporations when corporations with billions of income pay little or no taxes? Complexity and confusion benefits those who can create and take advantage of the complexity and confusion. Corporations and special interests have used their wealth to bribe politicians to design loopholes, credits, and exemptions that benefit their interests. The corruption of the system is terminal.

 

“The mistake you make, don’t you see, is in thinking one can live in a corrupt society without being corrupt oneself. After all, what do you achieve by refusing to make money? You’re trying to behave as though one could stand right outside our economic system. But one can’t. One’s got to change the system, or one changes nothing. One can’t put things right in a hole-and-corner way, if you take my meaning.”George Orwell

The American people are paying the price for allowing a few evil men to gain control of our government. The American people cowered in fear as the 342 page Patriot Act was somehow written in a few weeks after 9/11, introduced in Congress on October 23, passed the House on October 24 with no debate, passed the Senate on October 25 with no debate, and signed into law on October 26 by George Bush. A law passed by the ruling elite that stripped Americans of their freedoms and liberties was passed using fear mongering false patriotism propaganda to squelch dissent and the American people had no say in the matter. The government has used fear to keep the American people under control. We now unquestioningly accept being molested in airports. We shrug as our intelligence agencies eavesdrop on our telephone conversations and emails without the need for a court order. It is now taken for granted that we imprison people without charging them with a crime and assassinate suspected terrorists in foreign countries with predator drones. Invading countries and going to war no longer requires a declaration of war by Congress as required by the Constitution. The State grows ever more powerful.

Therefore, it is no surprise that Americans sit idly by, watching their 52 inch HDTVs,  as young people across the country are beaten, pepper sprayed, shot with rubber bullets and tear gas, and scorned and ridiculed by corporate media pundits for exercising their free speech rights to peacefully protest our corrupt system. The American tradition of civil disobedience is considered domestic terrorism by those in authority. Our beloved protectors in the Orwellian named Department of Homeland Security write reports classifying Ron Paul supporters and returning Iraq veterans as potential terrorists. If the powers that be get their way, the internet will be locked down and controlled, as it poses a huge threat to their thought control endeavors. Freedom to think, learn, question and organize resistance is unacceptable in the eyes of the elite. The country has reached a tipping point. Will enough right thinking Americans stand up and fight to bring down this corrupt system, or will we be herded silently to slaughter. The truth is there is something terribly wrong in this country. We are facing a myriad of problems that will require courage and common sense to overcome. We need only look in the mirror to find the guilty party. It is time to stop letting fear dictate our actions. Conflict is coming to this country due to the evil sanctioned by our corrupt leaders and the upright men and women who will bear the burden of destroying that evil.

Our civilization has adopted the worst aspects of the two most famous dystopian novels in history – Orwell’s 1984 and Huxley’s Brave New World. The question is whether the population of this country is too far gone to recover. The answer to that question will determine whether the country chooses authoritarian dictatorship or a renewal of our founding principles. Aldous Huxley understood the three pillars of Western civilization fifty years ago and that their destruction would result in a collapse of our economic system:

“Armaments, universal debt, and planned obsolescence – those are the three pillars of Western prosperity. If war, waste, and moneylenders were abolished, you’d collapse. And while you people are over-consuming the rest of the world sinks more and more deeply into chronic disaster.”

The three pillars sustaining the American empire edifice of never ending war, ever accumulating debt and excessive consumerism are crumbling. The growing corruption and weight of un-payable debt have weakened the very foundation of our grand experiment. The existing structure will surely collapse. My entire adult life has tracked the decline of the American empire. I had become comfortably numb. I came to my senses and began to question all the Federal government/Wall Street/Corporate Media sponsored truths about eight years ago. Many others have also awoken and begun to challenge the false storylines dictated by those in power.

The young people leading the protests across this land are showing tremendous courage and a tenacity of spirit that has been dormant for decades among the lethargic, distracted, over-medicated public. Despite being subjected to government education conditioning, these young people have zeroed in on the enemy. They may not have all the solutions, but they have correctly identified the corrupt banking system as the central nervous system of this vampire squid sucking the life out of our nation. I will support any effort to shine a light on our crooked system. My three young sons deserve a chance at a better life than they will get under the thumb of this oligarchic criminal enterprise. As a child I caught a fleeting glimpse of the American Dream. I turned to look, but it was gone. I choose not to become comfortably numb. I choose to do whatever it will take to renew the opportunity for my sons to achieve the American Dream.

When I was a child
I caught a fleeting glimpse
Out of the corner of my eye
I turned to look but it was gone
I cannot put my finger on it now
The child is grown,
The dream is gone.
I have become comfortably numb.

Pink Floyd – Comfortably Numb

E

 

Mortgage Meltdown: NAFTA-Gate

NAFTA-GATE

The mortgage meltdown is a by product of many different unsavory things. One of them is the effect of NAFTA and our complete lack of control over our borders which has suddenly sliced into the ability of middle-class to keep their job, get a job or earn enough to pay the mortgage and other expenses, even with multiple incomes. 

NAFTA-GATE is a good thing. It focuses attention on a central problem. When President Clinton signed it, congress loved it, Hillary praised it right up until 2 years ago despite the obvious loss of jobs, and the American public didn’t understand it. Now that we are starting to understand it, and we don’t like it. The more we learn about how it is being executed, the less we like it. Executive ability again comes front and center. 

Canada has its own problems with lower wages and loss of economic power. They have their own interest in seeing changes in NAFTA. It is quite likely that they reached out to find out what specifically the candidates had in mind. 

Obama’s people, according to the latest reports simply repeated what he had said in public. 

Clinton’s people apparently did two things according to the very latest information — [a] reassured Canadian officials that campaign rhetoric is not policy and [b] got someone in Canada to leak an anti-Obama memo that would give Clinton an advantage in Ohio and Texas. Clinton admits that the untruthful NAFTA leak gave her an advantage. This eliminates Obama as a likely player in the creation of this script.

With investigations started in Canada, demands for resignations, accusations of meddling in American politics, apologies and finger-pointing we are once again left with dishonesty on the part of SOMEONE in the Canadian government, SOMEONE in the CLINTON campaign, and at least confusion in the Obama Campaign. It seems obvious that the one with the most likely access to Canadian officials would be Bill Clinton as former President since Obama had very little to do with Canada until now.

Once again we are dealing with a failure of executive leadership on the part of the Prime MInister, who should have had a handle on this if neutrality was the objective and a failure of executive leadership and judgment on the part of Hillary Clinton who was either dishonest or didn’t know what was going on).

Once again we are diverted from the real issues of renegotiating or opting out of NAFTA. In theory it was a great idea. In practice it is killing us. Canada could start with publicly stating its position on NAFTA, what it likes and what it doesn’t like.

The Candidates have started that discourse, but whether Clinton means what she says now or intends to return to her consistent praise of NAFTA and pride in her husband’s achievement in signing NAFTA is anyone’s guess.

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