Thursday, October 18, 2012

Terrorist Threat Worse Now than Before 9/11: Massive Policy Failure

This article comes courtesy of Zerohedge.

Congressman and Chairman of the House’s Homeland Security Committee: Terrorist Threat Worse Now than Before 9/11

Submitted by George Washington on 10/18/2012 16:04 -0400

The Washington Times notes:

U.S. Rep. Peter T. King, New York Republican and Chairman of the House’s Homeland Security Committee, said Tuesday that al Qaeda is a greater threat now than it was before the terrorist attacks of Sept. 11, 2001.

“That is the consensus of most intelligence experts,” he said on CNN’s “Starting Point.”

If King is right, then it shows that America’s anti-terrorism policies since 9/11 have been adismal failure¹.

Why?

D’oh! We’re Supporting Terrorists

Initially – in the name of fighting our enemies – the U.S. has directly been supporting Al Qaeda and other terrorist groups for the last decade. See this, this, this, this and this.

If Al Qaeda is a greater threat now than before 9/11, maybe it’s because – oh, I don’t know – we’re supporting them?

Our Program of Torture Created Terrorists

In addition, torture creates new terrorists:

A top counter-terrorism expert says torture increases the risk of terrorism (and seethis).

One of the top military interrogators said that torture by Americans of innocent Iraqis is the main reason that foreign fighters started fighting against Americans in Iraq in the first place (and see this).

Former counter-terrorism czar Richard A. Clarke says that America’s indefinite detention without trial and abuse of prisoners is a leading Al Qaeda recruiting tool

A former FBI interrogator — who interrogated Al Qaeda suspects — says categorically that torture actually turns people into terrorists

A 30-year veteran of CIA’s operations directorate who rose to the most senior managerial ranks, says:
Torture creates more terrorists and fosters more acts of terror than it could possibly neutralize.

A former US Air Force interrogator said that torture just creates more terrorists

A former U.S. interrogator and counterintelligence agent, and Afghanistan veteransaid, “Torture puts our troops in danger, torture makes our troops less safe, torture creates terrorists. It’s used so widely as a propaganda tool now in Afghanistan. All too often, detainees have pamphlets on them, depicting what happened at Guantanamo.”

The Senate Armed Services Committee unanimously stated:

“The administration’s policies concerning [torture] and the resulting controversies … strengthened the hand of our enemies.”

Two professors of political science have demonstrated that torture increases, rather than decreases, terrorism

General Petraeus said that torture hurts our national security

And the reporter who broke Iran-Contra and other stories says that torture actually helped Al Qaeda, by giving false leads to the U.S. which diverted its military, intelligence and economic resources into wild goose chases

So the widespread program of torture under the Bush administration didn’t help.

Our Wars In the Middle East Have Created More Terrorists

Moreover, security experts – including both conservatives and liberals – agree that waging war in the Middle East weakens national security and increases terrorism. Seethis, this, this, this, this, this, this and this.

Ooops.

Killing innocent civilians is one of the main things which increases terrorism. As one of the top counter-terrorism experts (the former number 2 counter-terrorism expert at the State Department) told me, starting wars against states which do not pose an imminent threat to America’s national security increases the threat of terrorism because:

One of the principal causes of terrorism is injuries to people and families.

(Indeed, Al Qaeda wasn’t even in Iraq until the U.S. invaded that country.)

And top CIA officers say that drone strikes increase terrorism (and see this).

Furthermore, James K. Feldman – former professor of decision analysis and economics at the Air Force Institute of Technology and the School of Advanced Airpower Studies – and other experts say that foreign occupation is the main cause of terrorism

University of Chicago professor Robert A. Pape – who specializes in international security affairs – points out:

Extensive research into the causes of suicide terrorism proves Islam isn’t to blame — the root of the problem is foreign military occupations.

***

Each month, there are more suicide terrorists trying to kill Americans and their allies in Afghanistan, Iraq, and other Muslim countries than in all the years before 2001 combined.

***

New research provides strong evidence that suicide terrorism such as that of 9/11 is particularly sensitive to foreign military occupation, and not Islamic fundamentalism or any ideology independent of this crucial circumstance. Although this pattern began to emerge in the 1980s and 1990s, a wealth of new data presents a powerful picture.

More than 95 percent of all suicide attacks are in response to foreign occupation, according to extensive research [co-authored by James K. Feldman - former professor of decision analysis and economics at the Air Force Institute of Technology and the School of Advanced Airpower Studies] that we conducted at the University of Chicago’s Project on Security and Terrorism, where we examined every one of the over 2,200 suicide attacks across the world from 1980 to the present day. As the United States has occupied Afghanistan and Iraq, which have a combined population of about 60 million, total suicide attacks worldwide have risen dramatically — from about 300 from 1980 to 2003, to 1,800 from 2004 to 2009. Further, over 90 percent of suicide attacks worldwide are now anti-American. The vast majority of suicide terrorists hail from the local region threatened by foreign troops, which is why 90 percent of suicide attackers in Afghanistan are Afghans.

Israelis have their own narrative about terrorism, which holds that Arab fanatics seek to destroy the Jewish state because of what it is, not what it does. But since Israel withdrew its army from Lebanon in May 2000, there has not been a single Lebanese suicide attack. Similarly, since Israel withdrew from Gaza and large parts of the West Bank, Palestinian suicide attacks are down over 90 percent.

***

The first step is recognizing that occupations in the Muslim world don’t make Americans any safer — in fact, they are at the heart of the problem.

Max Keiser's Guests on the Keiser Report

This is a MUST have for any person seeking to wake up from the Federal Reserve induced stupor.

Episode 351 [09.10.2012]
Aston Walker
Award-winning Birmingham, UK film-maker who was sent to prison for 16 months for looting a clothes shop in the 2011 riots. At his trial, Judge Melbourne Inman QC commented: "Yours is a sad case in many ways Mr Walker." Sad, perhaps, that he does not have an equal opportunity to loot as a City banker, suggests Max...
Occupii.org

Episode 350 [06.10.2012]
William K. Black
American lawyer, academic, author, and a former bank regulator. Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of "control fraud", in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud. He is currently an Associate Professor of Economics and Law at the University of Missouri-Kansas City School of Law.
University of Missouri-Kansas City School of Law - Profile

Episode 349 [04.10.2012]
Dr. Michael Hudson
President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971).
Michael-Hudson.com

And many many more here:

http://www.photostartsheet.com/max-keiser-guests.html

Wednesday, October 17, 2012

FactCheck: US Presidential Debate Did Not Discuss Drone Warfare

I don't care which candidate you are for, whether you are an optimist or a pessimist, a liberal, undecided, or a conservative. You did not get one iota of information or discussion about the current state of drone warfare around the world.

The fact is that the US is leading the drone warfare with it's superior military might, but the rest of the world will catch up, since American and Israeli military industrial corporations are selling equipment and technology all over the world. How long before we reach a state at which we say it is a Terminator Planet?

You don't have to wait until 2025 to learn more, you can pick up a bookhttp://www.tomdispatch.com/books/ now and read more about it. You can read Wired magazine, or Slate, or watch RT, or even read about it in the New York Times if you are really paying attention.

But you won't hear about it much on mass media. That's because our media is owned by profit making corporations that benefit from sensational garbage and warmongering.

And you won't hear about it in the presidential debates either. Either candidate will continue the unmanned warfare since it frees them from having to explain the body bags of American soldiers.

And you will likely keep paying your taxes to fund the war. Ignorance is bliss, isn't it?

Read More...

http://www.bbc.co.uk/news/world-asia-19842410
http://www.tnr.com/blog/plank/107795/the-defeaning-silence-americas-most-important-foreign-policy-issue#
http://dronewarsuk.wordpress.com/aboutdrone/
http://www.huffingtonpost.com/daphne-eviatar/the-drone-war-may-be-popu_b_1917292.html
http://www.chicagotribune.com/news/sns-rt-us-yemen-dronesbre89g0vj-20121017,0,7344632.story

The Twisted Times Daily, Blowing Past the Smoke and Mirrors

Monday, October 15, 2012

Eurozone 2012 is Argentina 2001 - Economic Collapse Caused by Fraud

While everyone is watching their favorite TV celebrities play with their balls, the world's financial elite continue to repeat their mantra of "Rape, Pillage, and Plunder". People watch the events of Greece, Spain, and Italy, and say "oh those lazy socialist bastards".

Have you seen this somewhere before? Doesn't this all seem so familiar? Don't you recall having heard something like this no too long ago?

It it has happened before, certainly the laws have changed and the people are being protected from it happening again, right?

Watch this documentary about the economic collapse of Argentina in 2001 and ask yourself, does this look familiar?

Private Central Banks, Currency Wars, and Debt Slavery

Private central banks, like the Federal Reserve, and the Bank of England, are controlled by a tiny wealthy elite. On a daily basis they print money out of thin air, lend it to their partners in crime at super low rates, who then depress economies by withdrawing money from circulation, and buy hard assets.

At the same time, the printing of money in the USA, Japan, China, the UK, the EU, for example, floods developing nations with capital as new bubbles are created to chase the greater return. Those developing economies, such as Brazil, India, and Latin American markets, have to raise interest rates to fight inflation, as the inflow of money, representing higher demand, creates upward pressure on asset prices. A new bubble is created and in several years when the bubble is set to explode, they will pull their money out like Argentina in 2001.

These are currency wars. The artillery consists of interest rates, LIBOR rates, interbank rates, tax and banking policy, and derivatives. The pawns on the board that get sacrificed and sold into debt slavery are you and I, and hundreds of millions of people who just can't understand why they have to work harder for less.

Sunday, October 14, 2012 1:49 PM

Currency Wars: Bernanke Defends Fed Policy, Calls for Emerging Market Currency Appreciation

Fed chairman Ben Bernanke is at odds with Brazil, China, and even the IMF over his policies. Please consider the BBC report Bernanke defends Federal Reserve stimulus measures

Brazil has said US monetary easing to keep interest rates low and weaken the dollar has hurt emerging economies.

And International Monetary Fund chief Christine Lagarde warned on Sunday of consequent asset bubbles developing in emerging nations.

Speaking in Tokyo, where the International Monetary Fund and World Bank are holding annual meetings, Mr Bernanke said: "The linkage between advanced-economy monetary policies and international capital flows is looser than is sometimes asserted."

On Friday, Brazil's finance minister, Guido Mantega, warned that his country would take "whatever measures it deems necessary" to fight the problem.

"Emerging markets can't passively endure large and volatile capital flows and currency fluctuations caused by rich countries' policies," Mr Mantega said in Tokyo.

"Advanced countries cannot count on exporting their way out of the crisis at the expense of emerging-market economies," he said. "Currency wars will only compound the world's economic difficulties."

In a speech at the end of the IMF meeting, Ms Lagarde said: "We have seen several bold initiatives by major central banks certainly that the IMF highly praises and values as major contributing factors to stability."

But she acknowledged that "there are diverging views within and across countries about important issues including the management of capital flows".

She said monetary easing "could strain the capacity of those economies to absorb the potentially large flows and could lead to overheating asset price bubbles.

Bernanke's Speech

Let's take a closer look at Bernanke's speech that has Brazil clearly upset, and the IMF questioning what Bernanke is doing. Here are a few snips from "Challenges of the Global Financial System: Risks and Governance under Evolving Globalization," by Ben Bernanke in Tokyo, Japan.

Although the monetary accommodation we are providing is playing a critical role in supporting the U.S. economy, concerns have been raised about the spillover effects of our policies on our trading partners. In particular, some critics have argued that the Fed's asset purchases, and accommodative monetary policy more generally, encourage capital flows to emerging market economies. These capital flows are said to cause undesirable currency appreciation, too much liquidity leading to asset bubbles or inflation, or economic disruptions as capital inflows quickly give way to outflows.

I am sympathetic to the challenges faced by many economies in a world of volatile international capital flows. And, to be sure, highly accommodative monetary policies in the United States, as well as in other advanced economies, shift interest rate differentials in favor of emerging markets and thus probably contribute to private capital flows to these markets. I would argue, though, that it is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies, for several reasons.

Three Point Defense

Here is Bernanke's three point defense of Fed policy followed by my rebuttal.

Bernanke: First, the linkage between advanced-economy monetary policies and international capital flows is looser than is sometimes asserted.

Mish: That is a meaningless statement. Here is an equally true but also meaningless statement. The linkage between advanced-economy monetary policies and international capital flows is tighter than is sometimes asserted. The key word is "sometimes". It all depends on who is doing the assertion.

Bernanke: Second, the effects of capital inflows, whatever their cause, on emerging market economies are not predetermined, but instead depend greatly on the choices made by policymakers in those economies. In some emerging markets, policymakers have chosen to systematically resist currency appreciation as a means of promoting exports and domestic growth.

Mish: Of course it depends on how policymakers in those countries react. They can bend over and kiss Bernanke's ass or they can promote exports just like the Fed is attempting to do.

Bernanke: Finally, any costs for emerging market economies of monetary easing in advanced economies should be set against the very real benefits of those policies. The slowing of growth in the emerging market economies this year in large part reflects their decelerating exports to the United States, Europe, and other advanced economies. Therefore, monetary easing that supports the recovery in the advanced economies should stimulate trade and boost growth in emerging market economies as well.

Mish: If monetary easing in the US was supposed to boost growth in emerging markets, then why didn't it? The fact is that all of this manipulation is undesirable, regardless of what county is doing it. Proper signals come from free market flows, not central-planner fools who have a track record of producing boom and bust cycles of ever-increasing amplitude.

In regards to the latter point, note that IMF chief Christine Lagarde speaks out of both sides of her mouth at once, each saying different things.

One side of her mouth praises the Fed, the other says "monetary easing could strain the capacity of those economies to absorb the potentially large flows and could lead to overheating asset price bubbles."

So which is it Christine?

Bernanke Calls for Emerging Market Currency Appreciation

The Wall Street Journal reports, Bernanke Calls for Emerging Market Currency Appreciation

Federal Reserve Chairman Ben Bernanke encouraged policy makers in developing economies to let their currencies appreciate, delivering a strongly worded counterargument to their own critiques of the Fed.

"In some emerging markets, policy makers have chosen to systematically resist currency appreciation as a means of promoting exports and domestic growth," he argued. "However, the perceived benefits of currency management inevitably come with costs, including reduced monetary independence and the consequent susceptibility to imported inflation." Capital surges and inflation in these markets, in other words, are problems that policy makers in these markets could address themselves if they chose to, he argued.

The passage was an apparent shot at authorities in China, who intervene aggressively in foreign-exchange markets to keep their currency closely tied to the dollar, though Mr. Bernanke didn't mention any countries by name.

His comments come as other policy makers have been very critical of the Fed. Brazil's finance minister, Guido Mantega, has accused the Fed of starting a "currency war."

Mr. Bernanke has made similar arguments before, but these were especially pointed and come at a sensitive moment. The Fed in September launched a new bond-buying program that has sparked a new wave of global criticism.

Mr. Bernanke argued that central bankers in developing economies should "refrain from intervening in foreign-exchange markets, thereby allowing the currency to rise."

What's Good For the Goose

Bernanke has the gall to bitch about currency manipulation when his policies are designed to do the same thing. QE is designed to weaken the US dollar, and somehow that is OK, but not straight-up currency intervention.

Speaking of which, why is Bernanke and the entire rest of the world willing to sit back and say nothing about the biggest straight-up currency manipulation in history? I am talking of course about the Swiss National Bank and its unlimited measures to prevent the rise of the Swiss Franc vs. the Euro.

Quite frankly, they are all beggar-thy-neighbor hypocrites, which is what currency wars are all about.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Exposing Bank Fraud

Bank fraud is being exposed everywhere and the citizens are unable to do anything about it because the government protects the fraud to maintain the status quo.

Time to see the documentary "Confidence Game".

Tuesday, October 9, 2012

Why We Can't Audit the Federal Reserve

We can't audit the Federal Reserve as Ron Paul and nearly the entire House of Congress has suggested. That would result in a massive loss of confidence in the US government and the US market when the secrets of the Federal Reserve and their criminal Wall Street banksters are revealed once again.

If that happened, markets would be ravaged by higher interest rates on everything from credit cards, homes, cars, businesses, interbank lending, and treasury bonds. Then the TBTF banks that hold nearly 90% of the nation's assets would begin a tidal waves of forecloses not seen since the 1930's. The 30% of homeowners now underwater would give up hope that their home was an investment and flee when the their jobs were eliminated as a result of the economic impact. Banks would refuse to negotiate and continue picking up the depressed and deflated assets for pennies on the dollar like used toys at a garage sale. Like no other time in recent history the banks would become our masters.

As rates rose, the 20% of the homeowners now with adjustable rate mortgages would see their monthly payments surge until the pinch was too hard they would have to walk away.

Combined with the ageing workforce, the unemployed, underemployed, overworked, and underpaid would suffer with bad FICO scores and the psychological wounds of bankruptcy and financial failure all the while straining the existing city, state, and Federal social programs while a shrinking labor force would bear the tax burden, not to mention the inflationary pressures, and reduced purchasing power of the US dollar in world markets. The wealthy would survive as they always do since they have already figured out ways to avoid taxation. The rest of us would suffer immensely.

The number of homeless would rise. Social unrest would become a daily event across the country. The stress levels would escalate until the healthcare problems became acute. Sickness and crime would bubble up like the plague all across the country. Racial tensions would escalate as victims and pundits blame everyone else but themselves.

No, we can't audit the Federal Reserve because that would expose the hollow American economy, a divided nation, and fragile society, and yes, even weaken national security.

When the foreigners stop buying our treasuries to finance our debt, either because they learn of our atrocities in their land, or they finally feel they have the upper hand with us weakened by social unrest and political lockjaw, the government deficit will no longer have cheap financing and the cost of war will become unthinkable. We would have to pull our troops from the over 1000 secret and exposed military bases, torture sites and safe houses. Our empire would crumble like Rome, exposing us for what we really are at the moment; a fascist empire greater than Hitler and his Nazi supporters every dreamed of.

Of course the first thing all of you would do is DENY this is the case. You would DENY that we are fighting wars overseas for oil, gas, gold, silver, copper, and shipping channels. You would deny that we are selling weapons and running drugs. You would deny that the government has done anything wrong and if somehow you were convinced they were screwing up you would blame the Democrats or the Republicans.

We would start to get ANGRY with our fellow citizens, our neighbors, those who are not like us; the newcomers, the Jews, the whites, the Mexicans, etc. We would start blaming each one of these communities for each of our problems to the point that some would even go beyond fighting words to actual physical fighting.

(That's the plan you see. It is called Divide and Conquer. The british have used that strategy ever since they learned it from the Chinese in the 1600's during the Opium Wars.)

We start fighting with each other over the mess that they have made and they crack down with martial law, tariffs, taxes, abductions, censorship, imprisonment, and murder. They would do this all the while cutting social benefits such as teachers, unemployment, medicare, medicaid, libraries, and of course any form of due process.

Our military would wind up for a fight. The Pentagon, directed by think tanks loyal to Israel, would raise the fear of terrorism high enough until they could justify another war. (Of course, let it be known that America doesn't just go to war because a bunch of politicians and media hacks call for it. No, we typically only go to war when there is an attack on our soil, our men, or our interests. The USS Maine, the USS Liberty, the USS Maddox, the fleet at Pearl Harbor, or the towers and Pentagon on 9/11. These are all American military, government, or commercial targets that we were told were hit by foreign enemies and provoked us into war. A war follows every attack on our interests soon after these false flags. A false flag like 9/11, a new Pearl Harbor would distract the nation from our own problems and focus our attention on a foreign enemy. All the while the government would rachet up martial law at home and war abroad.)

Then we will start to feel helpless and vulnerable and everyone will be willing to accept the solutions that are presented to us. (Create a problem and provide a solution is a tactic used to get the weak to accept oppression and heightened security at the cost of our liberty. It is also used to slip new laws through Congress during the lame duck session, like the Patriot Act of 2001 and the Federal Reserve Act of 1913.) Desperate and hungry, we would begin BARGAINING with anyone we can just to stay afloat, to stay in our homes, to keep our jobs, or to stay off the streets. Selling our lands, our cars, our bodies, and our souls to stay alive.

But that's not the path we should take.

What We Should Do.

Instead of letting all this happen to us like wimpy victims, we should stand up and force our local governments to take over the homes in foreclosure and sell them to local residents already devastated by the crisis. The financing for these purchases can only come from local community banks like credit unions.

This alone would eliminate the Too Big to Fail (TBTF) banks that have sucked us dry on every occasion. We would save money by investing local. Local economies would thrive with the return of all the local money and prosperity.

The decentralization would weaken the Federal government, upsetting the puppetmasters (our shadow government) who would take it our on their debt slaves (that's you and I) while the local city states would rise again, free of Federal oversight and restrictions.

Much much more would need to be done with regards to energy efficiency to ensure civilized living and a better quality of life. Many more things would need to be made locally, sold locally, and reused locally.

This is because without our military to bank them up, the big oil companies that were spun off of Standard Oil in 1911 would no longer enjoy cheap oil abroad. With the cost of oil exploding like a a volcano, the food industry would come to a screeching halt. People would literally starve because their berries couldn't be imported from Chile off season for the same low price. Domestic farmers would go bankrupt when their overseas markets closed up on them and they couldn't buy the genetically modified seeds every year or pay for equipment to harvest their crops.

Yes, we should localize. We need a transition in economy, a transition in culture, a transition in government, and a transition in energy if we are going to survive the next century.

How Does the Israeli Lobby Provoke the USA Into War in the Middle East?

This is an excellent 40 min interview with Grant F. Smith, director of the Institute for Research: Middle Eastern Policy, where he discusses his article “Spy Crisis Launched AIPAC’s Think Tank;” WINEP Research Director Patrick Clawson’s now infamous speech on how to instigate war the American way; how the Israel lobby periodically reinvents itself to avoid being shut down by the feds; a brief history lesson on the Lavon Affair; and AIPAC’s involvement in drafting legislation on regulating the internet.There is extensive evidence in many books and declassified documents that point out the crimes of the Israeli lobby in the United States. Apparently the Ministry of Foreign Affairs in Israel is directed by right wing extremists hell bent on waging war on middle eastern countries, either for the benefit of exploiting their natural resources, or for the sheer malicious purpose of killing muslims. It is hard to say but either way, the facts do not bode well for any who advocate for such support. This is where the discussion leads to Zionism, the Ludwig Party in Israel, and of course the entire recent Jewish history beginning with the foundation of Israel when the Balfour agreement was signed by one of the Rothschilds during World War I.

Listen to the interview here.

Watch the video of WINEP Research Director Patrick Clawson below.

Monday, October 8, 2012

The World's Largest Money-Laundering Machine: The Federal Reserve

If you are a student of the Federal Reserve, criminal banking activities, social re-engineering, or need an explanation of the trillion dollar conspiracy, you MUST! read this.

Taken from Zerohedge:

Submitted by Charles Hugh Smith from Of Two Minds

The World's Largest Money-Laundering Machine: The Federal Reserve

The Fed policy's first-order effect is to issue hundreds of billions in "free money" to banks; the second-order effect is to destroy the rule of law in the U.S.

Let's start with a few questions about the proper role of the Central State and Central Bank: why should they bail out private banks?The answer boils down to something like this: "If the private banks absorbed the losses that are rightly theirs in a capitalist system, they would implode. Since the State and Central Bank have enabled these private banks to infiltrate and dominate the nation's financial system, that system is now hostage to these private 'too big to fail' banks."

In other words, "capitalism" in America now means socializing losses and privatizing profits generated by State and Central Bank intervention. Imagine for a moment the "beauty" of this system for owners of private banks: in a truly socialized banking system, the taxpayers would absorb any losses, but the State would also benefit from any future bank-sector profits. In the U.S. system, the losses are socialized but the people draw no benefit; the profits flow to the top 1/10th of 1% private financiers.

This is the perfection of State-financier crony capitalism.

Let's next ask why the Central State and Central Bank should subsidize and bail out the mortgage industry, a major component of private banking. Once again we find losses are neatly distributed to the citizenry while the profits all flow to private hands. Given that 98% of all mortgages are backed or guaranteed by Federal agencies (Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA, FmHA, etc.), the mortgage market is already completely socialized: the taxpayers are on the hook for any and all losses, but the profits from originating and servicing the loans are all private.

Meanwhile, 1 out of 6 FHA insured loans are are delinquent, and everyone who cares to examine the ledger knows the taxpayers will soon be bailing out FHA just as they did Fannie Mae and Freddie Mac.

But the socialization of losses and privatizing of profits is only the first-order effect of the banks' capture of the State. The second-order effect is even more destructive: the rule of law has been subverted by the world's largest money-laundering machine, the Federal Reserve.

Once again we can start by asking why a nation's Central Bank should buy mortgages from private financial institutions. Once again the first answer is a variation on the same theme: the Central Bank prints money and buys the mortgages as a way of socializing private losses and passing through billions of dollars in "free money" to private hands.

The newly printed money robs purchasing power from every holder of the currency (the socialization of costs) while the immense flood of "free money" flows to private hands.

Here's how it works. We know Fannie Mae is absorbing losses of 50% to 65% on its foreclosed properties (Nearly half of Fannie Mae REO unable to reach market, via U. Doran), and we also know that 31% of all homeowners with mortgages are "underwater," owing more than their house is worth (Housing, Diminishing Returns and Opportunity Cost).

We also know the Federal Reserve bought $1.1 trillion in MBS (mortgage-backed securities) in 2009-10, and the Fed has announced its intention to buy $40 billion more MBS a month until the housing bubble re-inflates or Doomsday, whichever comes first.

The Fed also bought $1 trillion in Treasury bonds, monetizing Federal debt:

Let's say you own a portfolio of mortgage-backed securities and your pals at the Fed are willing to buy the garbage at full price, no questions asked: are you going to sell your few AAA-rated MBS, the good stuff, or are you going to sell them the absolute dregs, the MBS so stuffed with defaulted mortgages that you've never dared to even do a mark-to-market estimate of their real worth?

You dump the worst of your portfolio, naturally, and so in effect the $1.1 trillion in MBS the Fed bought with newly created cash was probably worth (charitably) $600 billion at best. That means the Fed not only wiped out the losses that should have accrued to the owners of the impaired mortgages by removing the MBS from their books, it handed the owners (banks, pension funds, etc.) a cool $500 billion in "free money" by paying full value for massively impaired assets.

Since there is about $9.7 trillion outstanding mortgages (down from $10.3 trillion at the top of the bubble--not much deleveraging going on here),the Fed could have paid off 10% of every outstanding mortgage in the country with that $1.1 trillion. The one-time payment of principle would have flowed right to the mortgage owners, just like the Fed's "gift purchase" did, but in this case the money would have reduced the principle owed by homeowners, reducing their debt directly.

Setting aside the ethical implications (what about those who have no mortgage, etc.), the difference between the way the $1 trillion flows to the mortgage owners is remarkably different: in the first case, the homeowners get nothing and the banks get $500 billion in free money. In the second case, the banks still get the $1 trillion, but because it flowed through the borrowers, it reduces the mortgage principle.

Since the Fed can create unlimited money, why not pay off every mortgage in the land? That's only $9.7 trillion, and if the Fed wanted to unleash an orgy of spending, that would certainly do it. Trillions in losses would be filled with "free money," since the Fed would pay the full value of all mortgages.

This thought experiment reveals the real agenda of the Fed's asset purchases: it's not about aiding the nation or borrowers, it's all about funneling "free money" to the banks to restore their balance sheets and profits.

There's another reason, one outlined by Catherine Austin Fitts: QE3 – Pay Attention If You Are in the Real Estate Market. Correspondent Jim S. has alerted me to the wide-ranging consequences of the Fed's money-laundering, and correspondents Chad D. and Stephen N. also directed me to this article.

The second-order purpose of the Fed's mass purchases of mortgages is to recycle dodgy phantom mortgages--in effect laundering the debt and money on a vast scale. Here is an excerpt from Fitts' analysis:

The Fed is now where mortgages go to die. Thousands of mortgages on homes that do not exist or on homes that have more than one “first” mortgage are now going to the Fed to disappear. Thousands of multifamily and commercial mortgages will be bought up as well. As this happens, trillions of dollars that have been amassed offshore will be free to come back into the US to buy up and reposition land, farmland, residential and commercial real estate and other tangibles.

With documents shredded, criminal liabilities extinguished and financial institutions made whole, funds can return without fear of seizure.

QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts and QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars.

In a nation in which rule of law existed in more than name, here's what should have happened:

1. The scam known as MERS, the mortgage industry's placeholder of fictitious mortgage notes, would be summarily shut down.

2. All mortgages in all instruments and portfolios, and all derivatives based on mortgages, would be instantly marked-to-market.

3. All losses would be declared immediately, and any institution that was deemed insolvent would be shuttered and its assets auctioned off in an orderly fashion.

4. Regardless of the cost to owners of mortgages, every deed, lien and note would be painstakingly delineated or reconstructed on every mortgage in the U.S., and the deed and note properly filed in each county as per U.S. law.

That none of this has happened is proof-positive that the rule of law no longer exists in America. The term is phony, a travesty of a mockery of a sham, nothing but pure propaganda. Anyone claiming otherwise: get the above done. If you can't or won't, then the rule of law is merely a useful illusion of a rapacious, corrupt, extractive, predatory neofeudal Status Quo.

The essence of money-laundering is that fraudulent or illegally derived assets and income are recycled into legitimate enterprises. That is the entire Federal Reserve project in a nutshell. Dodgy mortgages, phantom claims and phantom assets, are recycled via Fed purchase and "retired" to its opaque balance sheet. In exchange, the Fed gives cash to the owners of the phantom assets, cash which is fundamentally a claim on the future earnings and productivity of American citizens.

Some might argue that the global drug mafia are the largest money-launderers in the world, and this might be correct. But $1.1 trillion is seriously monumental laundering, and now the Fed will be laundering another $480 billion a year in perpetuity, until it has laundered the entire portfolio of phantom mortgages and claims.

The rule of law is dead in the U.S. It "cost too much" to the financial sector that rules the State, the Central Bank and thus the nation. Once the Fed has laundered all the phantom assets into cash assets and driven wages down another notch, then the process of transforming a nation of owners into a nation of serfs can be completed.

Here's the Fed's policy in plain English: Debt-serfdom is good because it enriches the banks. All hail debt-serfdom, our goal and our god!

Friday, October 5, 2012

What does ConocoPhillips have out for MF Global?

Let's see how this story goes. I will copy various new sources and tweets into this article for the next few weeks and see where the story goes.

I predict it will have something to do with Jon Corzine stealing money from ConocoPhillips. JP Morgan will be involved since they run the show.

@laurenlyster What does ConocoPhillips have out for MF Global Case Set for Hearing http://goo.gl/CKnDX

Remember this:

MF Global Criminal Charges Unlikely As CFTC Looks To Civil Cases

Reuters | Posted: 09/12/2012 7:41 pm EDT Updated: 09/13/2012 8:15 am EDT