Politics – Page 3744 – The Burning Platform

IRAN IS BIG

Another good article from http://www.theoildrum.com/. Some interesting charts and maps. The first chart shows that Iran produced 6 million barrels of oil per day in the 1970s. The Islamic revolution and the brutal war with Iraq resulted in a collapse of their oil production. It has barely reached 4 million barrels per day since the early 1990s. They are unable to ramp up production due to sanctions and the lack of technological expertise. More than 60% of their exports go to the far east. China, Japan and India will not be happy if Israel and the U.S. decide to teach Iran a lesson.

I’ve always been geographically challenged. I never realized the size of Iran. Take a really good look at that map. Iran dominates the Middle East. Take a long hard look at the Persian Gulf and the Strait of Hormuz. Approximately 15 oil tankers per day, carrying 34% of the world’s oil supply, must traverse a 6 mile wide traffic lane. Imagine what would happen to worldwide oil prices if this Strait was shutdown. The Iranians aren’t stupid. This is their trump card.

Imagine how many soldiers it would take to subdue a country this large. Cruise missiles and B1 bombers aren’t going to defeat Iran. We’d just be killing thousands of innocent Iranians. The neo-cons like Gingrich and Romney act like taking out Iran will be a piece of cake. When have the neo-cons ever been wrong? The sanctions and embargoes are designed to force Iran to do something stupid. They will be attacked no matter what they do. The unintended consequences will likely lead to the next phase of this Fourth Turning.

Iran – Possible Implications of an Oil Embargo

Posted by Euan Mearns on December 6, 2011 – 6:30am
Does Thursday’s announcement that the EU is considering to ban oil imports from Iran epitomise the draining of power from west to east? The big winners here will be China and India, who do not fear rising Iranian influence and who will gladly soak up any additional oil exports they may have to offer. However, ending this small dependency upon Iranian oil imports in Europe (Figure 2) does clear the way for military action without the need to ponder the immediate consequences on oil imports.

Figure 1 Iran displays export land traits where growing domestic consumption is eating into the oil available for export that has been declining slowly since 2003. Data from BP. Y-axis is barrels per day (1000s). Balance = production less consumption which is a proxy for net exports. Production = crude+condensate+NGL whilst consumption may include refinery “gains” and bio-fuel. In many countries there is also an active two-way trade in crude and refined products.

In a week where the UK embassy in Iran was overrun and the two countries are breaking off diplomatic ties, on the back of heightened concern about Iran’s nuclear weapons program and an unexplained explosion at an Iranian missile launching site, the EU has decided to flex its muscles and to ban Iranian oil imports. The big winners here are the other countries importing oil from Iran – Japan, China, India and South Korea. Does the EU really believe that in today’s extremely tight oil market that oil sanctions against Iran will worry them in the least?

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Figure 2 Table from a worthy article on Iranian oil and demographics posted on Crude Oil Peak details the countries importing oil from Iran in 2008. The four EU countries to be affected by any embargo will be Italy, Spain, Greece and France. Given that Greece and Spain are already in recession and that Italy and France are heading in that direction, it seems likely that their oil consumption will already be on the wane and that losing these relatively small amounts of Iranian imports will have little consequence.

Figure 3 OPEC net exports (production consumption balance from BP) showing the importance of The Gulf states.

With the risks of armed conflict against Iran increasing with every week that passes it is important to grasp what this may mean for global oil markets. Two end points seem to exist. The first is where “the West”, i.e. NATO or some other looser alliance ± Israel launches a cruise missile attack (conventional) against Iran’s nuclear facilities. destroying them. In that eventuality Iran, with current leadership, would be unlikely to ever again export oil to “the West”, but since at that point The West will not be importing any oil from Iran this would not matter.

Figure 4 Iranian oil infrastructure, setting in the Arabian or Persian Gulf and the linch pin location of The Straights of Hormuz. Map from Wikipedia.

The second more extreme scenario is that armed conflict spreads, compromising oil exports through the Straights of Hormuz. Oil exports from Saudi Arabia, Kuwait, The United Arab Emirates (UAE), Qatar, Iraq and Iran all pass through Hormuz. Data is not available for Iraq, but exports from Saudi, Kuwait, UAE and Qatar stood at around 12,805,000 bpd in 2010. The global net export market stood at around 35,173,000 and so these 4 countries alone account for around 36.4% of the global export market (excluding Iraq and Iran). Should these exports cease, albeit temporarily, the oil price will go through the roof, causing severe trauma to the global economy, including China.

In addition, there are significant liquefied natural gas exports from Qatar that pass through Hormuz on a daily basis. According to BP, Qatar exported around 96 BCM of gas in 2010 (Figure 5) to the countries shown in Figure 6. In Europe, the UK, Spain, and Belgium would be most affected by disruption to LNG supplies from the Gulf whilst in Asia, India, S Korea, and Japan would be most affected. This highlights the increasingly exposed nature of OECD energy supplies where electricity supplies may be threatened by armed conflicts on the other side of the world.

Figure 5 Production / consumption balance for natural gas in Qatar.

Figure 6 Destinations of LNG exports from Qatar in 2010.

IT’S GOOD TO BE A MEGA-CORPORATION

The 30 mega-corporations in the chart below generated $164 billion of profits in the last three years and paid no taxes. Not only did they pay no taxes, they received $10.6 billion in tax refunds. Not a bad return on their $476 million lobbying investment. This was all done legally. You see when their lobbyists right the laws for Congress and the tax rules for the IRS, things tend to fall in your favor. I’d love to see the compensation amounts for the CEOs of these organizations.

Did you pay any taxes between 2008 and 2010? If so, you paid more in Federal taxes than 29 of these 30 mega-corporations. You should fire your lobbyist.

Remember this information the next time you hear Gingrich or Romney declare that corporate tax rates are too high.

Country’s Largest Corporations Spend More Money On Lobbying Than Taxes

In a “remember me, three years ago?” speech in Kansas yesterday, President Obama told the crowd, “This country succeeds when everyone gets a fair shot, when everyone does their fair share and when everyone plays by the same rules.” A new report [pdf] from the non-profit organization Public Campaign shows that 30 of the country’s largest corporations—including GE, Wells Fargo, Verizon, and Fed Ex—paid more to lobby Congress from 2008 through 2010 than they did in federal income taxes. What country was the president referring to?

Of the 30 companies, only one actually paid any federal income taxes: FedEx. The rest received nearly $11 billion in rebates. And even FedEx only paid 1%, 34% less than the statutory rate. As for lobbying, the 30 corporations spent a combined $476 million—or $400,000 a day every single day of the year, to ensure their interests were represented in Congress. GE led with way with $84 million in the three-year period (wonder why?) Verizon spent $54 million, and Boeing spent $52 million.

We can hear Eric Cantor crying now: “But these companies create jobs!” Of the seven companies that would make their employment records public, the report shows that over 50,000 Americans were laid off by these corporations, despite them turning a profit.

If you’ve been weeping uncontrollably if you even attempt to pick the paper up from your stoop following the news, the results of this report shouldn’t surprise you. But hey, a few more speeches in Kansas should straighten things out.

A COUPLE FASCINATING HOURS WITH NEIL HOWE

I had the pleasure of spending two hours with Neil Howe today. On his way back to Washington DC from a meeting with a client in NYC he stopped at 30th Street Station and we grabbed a bite to eat and chatted for a couple hours. Neil’s background is fascinating. His grandfather was astronomer Robert Julius Trumpler. His father was a physicist and his mother was a professor of occupational therapy. I know there has been a dominant opinion on this site that liberal arts degrees are worthless. I don’t think any college degree is worthless. I realize we need more engineers and scientists, but many people are not wired for these professions. We need writers, historians, and thinkers too. Neil Howe is a perfect example. His undergraduate degree from Berkley was in literature. He then earned graduate degrees in economics and history. His well rounded education has given him a much broader view of the world. And he’s a Boomer. Proof that all Boomers aren’t bad.

I had never met Neil. We have had occasional email correspondence and he was the star of Generation Zero, in which I had tiny part. He is a famous man. He’s written or co-written 15 books. He runs a very successful company called Lifecourse Associates. Based on my two hours in his acquantance you would never know he was a famous person. He is extremely down to earth. He is a nice guy. I never felt intimidated, even though his brain power is out of my league. He was actually interested in my background and my opinions.

But enough small talk. You want to know what he thinks about our current Fourth Turning. He was proud that some distinguished institutions had agreed with the Strauss & Howe dating definitions for Boomers, Xers, and Millenials. His starting point for this Fourth Turning is 2007. We are only four years into this Turning and haven’t reached regeneracy yet. I asked him why regeneracy had begun in the last two Fourth Turnings by year four, but hasn’t begun yet. He said that each Turning has its own flow. We agreed that something huge would need to happen in order to create a regeneracy in this country. It could be an economic collapse or it could be war.

He believes the situation which has the biggest potential to blow up the world is Iran. He thinks people are underestimating the implications of a conflict with Iran. He thinks Israel will act unilaterally to keep Iran from getting a nuclear bomb. I asked him if he thinks there will be a world war during this Fourth Turning. He doesn’t think it will be a world war. He expects regional conflicts in the Middle East.

I asked him why the Boomers didn’t seem to be supporting and leading the Millenial generation. He said that within families Boomers and Millenials are very close. This will ultimately exhibit itself. He thinks Boomers will eventually choose to sacrifice some of their entitlements in order to give Millenials a fighting chance at a future. We discussed the upcoming presidential election. He had some nice things to say about Ron Paul. He has been surprised by Newt Gingrich’s rise in the polls. Neil has known Gingrich for 20 years since he has worked on public policy in DC. He believes his past will come back to haunt him. He thinks Romney is likely to win the Republican nomination by default. If the economy stays in the dumper, Romney will be our next President. He is a Prophet/Boomer leader. Neil doesn’t think Bloomberg could win as a 3rd party candidate because of his association with Wall Street. Anyone associated with Wall Street is toxic.

His opinion about OWS was interesting. He says that the movement is made up of 50% Millenials. He thinks the creators of the movement are actually anarchist Boomers trying to use the Millenials for their own purposes. He thinks the movement has a lot of passion but not a lot of depth. His firm has done surveys and he found that most Millenials don’t even know there is an OWS movement. I asked him whether libertarians are likely to be happy with this Fourth Turning. He said that libertarians have an impact early in a Fourth Turning (Ron Paul, Tea Party), but once the regeneracy occurs people rally around the central authority and government is likely to take on more power and control. Not a happy thought.

Neil lamented what a great opportunity was missed in early 2009 by Barack Obama. The situation in the country was awful. He had both Houses in Congress. His popularity was at its peak. He could have done anything. The country could have accepted short term pain and began to fix our structural problems. He could have had an orderly liquidation of the Wall Street banks. He could have combined short term stimulus with a long term fix for our entitlement programs. But instead he rolled over for Wall Street and dished out Keynesian pork to his supporters. A once in a lifetime chance was missed.

He believes the Federal Reserve policies are disastrous. Zero percent interest rates have sucked the vitality from our economy. The policies are exacerbating our debt problems. People have no incentive to save with zero interest rates. I told him that TBP members are anxious to know what happens next. Here’s where you’ll be disappointed. Neil doesn’t make predictions of events. There will always be dramatic events as time passes, but it is how generations react to those events that matter. There is no doubt that it will take a dramatic event to create a regeneracy of spirit in this country. The triggers for this Crisis were clearly visible in 1997 when Strauss and Howe wrote their classic book – debt, civic decay, and global disorder. The toxic combination is still roiling the world. We can only guess at the timing and specific events that will push us into the next phase of this Crisis.

I told Neil that I end many of my posts these days with, “Fourth Turnings sure are interesting.” He thought that was funny. With Neil’s train due to arrive in a few minutes we got up to say our goodbyes. We agreed that we are living in interesting times. He joked that at least we know how this will end, which is more than most people. He is going to revive his Fourth Turning blog and asked if I would contribute articles. I told him I’d be honored.

All in all, it was a fascinating and enlightening two hours having a great discussion with a brilliant man.

HMMM. HOW CONVENIENT – DEBT, DRONES & DEMAGOGUES

So Iran shoots down one of our drones. Now the questions. Are we flying spy drones over Iran in order to provoke them into doing something stupid? Did we purposely allow it to be shot down? Will Iran’s blustering and threats to retaliate allow the U.S. to create a foreign conflict in order to take the focus off our imploding economy? China declared last week that they would be willing to go to war in support of Iran. Are we approaching an Archduke Ferdinand moment when countries are forced to choose sides in order to not lose face? Could our Fourth Turning War be just over the horizon? If conflict starts with Iran, what will happen to the price of oil? How many more liberties and freedoms will be sacrificed when the oligarchs lead us into another undeclared war of choice?

If you don’t fly spy drones over foreign countries that we are not at war with, they can’t get shot down. How would we react if China or Russia was flying spy drones over the U.S.?

The ignorant masses will be convinced that Iran is at fault and deserves to be obliterated. Comfortably numb.

Iran Military Shoots Down US Drone, Threatens Response

Submitted by Tyler Durden on 12/04/2011 10:05 -0500

From PressTV:

A senior Iranian military official says Iran’s Army has shot down a remote-controlled reconnaissance drone operated by the US military in the eastern part of the country.

The informed source said on Sunday that Iran Army’s electronic warfare unit successfully targeted the American-built RQ-170 Sentinel stealth aircraft after it crossed into Iranian airspace over the border with neighboring Afghanistan.

He added that the US reconnaissance drone has been seized with minimum damage.

The RQ-170 is a stealth unmanned aircraft designed and developed by Lockheed Martin Company.

The US military and the CIA use the drone to launch missile strikes in Afghanistan and in Pakistan’s northwestern tribal region.

The unnamed Iranian military official further added that “due to the clear border violation, the operational and electronic measures taken by the Islamic Republic of Iran’s Armed Forces against invading aircraft will not remain limited to the Iran’s borders.

The report comes as the United States has beefed up its military presence in and around the Persian Gulf region in recent months in the wake of popular uprising in Bahrain.

The US Department of Defense says Washington is closely monitoring the developments in Bahrain, which is the headquarters of the US Navy’s Fifth Fleet and holds some 4,200 US service members.

From Reuters:

Iran’s military said on Sunday it had shot down a U.S. reconnaissance drone aircraft in eastern Iran, a military source told state television.

“Iran’s military has downed an intruding RQ-170 American drone in eastern Iran,” Iran’s Arabic-language Al Alam state television network quoted the unnamed source as saying.

“The spy drone, which has been downed with little damage, was seized by the Iranian armed forces.”

Iran shot down the drone at a time when it is trying to contain foreign reaction to the storming of the British embassy in Tehran on Tuesday, shortly after London announced that it would impose sanctions on Iran’s central bank in connection with Iran’s controversial nuclear enrichment programme.

Britain evacuated its diplomatic staff from Iran and expelled Iranian diplomats in London in retaliation, and several other EU members recalled their ambassadors from Tehran.

The attack dragged Iran’s relations with Europe to a long-time low.

Washington and EU countries have been discussing measures to restrict Iran’s oil exports since the United Nations nuclear watchdog issued a report in November with what it said was evidence that Tehran had worked on designing an atom bomb.

And from AP:

Iran’s semiofficial Fars news agency says the country’s armed forces have shot down an unmanned U.S. spy plane that violated Iranian airspace along its eastern border.

The report says the plane was an RQ170 type drone and is now in the possession of Iran’s armed forces. The Fars news agency is close to the powerful Revolutionary Guard.

Iran is locked in a dispute with the U.S. and its allies over Tehran’s disputed nuclear program, which the West believes is aimed at the development of nuclear weapons. Iran denies the accusations, saying its nuclear program is entirely peaceful.

It appears Iran plans to retaliate:

Iran’s response to the downed U.S. drone’s violation of its airspace will not be limited to the country’s borders, a military source told state television.

“The Iranian military’s response to the American spy drone’s violation of our airspace will not be limited to Iran’s borders any more,” Iran’s Arabic language Al Alam television quoted the military source as saying, without giving details.

Iran said in July it had shot down an unmanned U.S. spy plane over the holy city of Qom, near its Fordu nuclear site.

As a reminder from Stratfor, here is how the US navy was deployed most recently as of Wednesday. Looks like life for the Stennis boys is about to get exciting.

HOW ABOUT $175 A BARREL OIL?

I think the chances of military conflict with Iran in the next two years are better than 50%. Students stormed the UK embassy in Iran. London is kicking the Iranians out of their embassy in London. Israel blew up an Iranian missile base a couple weeks ago. Israel will not let Iran get a nuke. Obama needs to distract the public from our terrible economy with a foreign crisis. The implications of Iranian oil coming off the worldwide markets would be devastating. China would not be happy since they get 10% of their oil from Iran. The world is already on the verge of collapse and a surge in oil prices would create a worldwide depression. This Fourth Turning sure is interesting.

Funds, refiners ponder oil Armageddon: war on Iran

REUTERS – Oil consuming nations, hedge funds and big oil refineries are quietly preparing for a Doomsday scenario: An attack on Iran that would halt oil supplies from OPEC’s second-largest producer.

Most political analysts and oil traders say the probability of military action is low, but they caution the risks of such an event have risen as the West and Israel grow increasingly alarmed by signs that Tehran is building nuclear weapons.

That has Chinese refiners drawing up new contingency plans, hedge funds taking out options on $170 crude, and energy experts scrambling to determine how a disruption in Iran’s oil supply — however remote the possibility — would impact world markets.

With production of about 3.5 million barrels per day, Iran supplies 2.5 percent of the world’s oil.

“I think the market has paid too little attention to the possibility of an attack on Iran. It’s still an unlikely event, but more likely than oil traders have been expecting,” says Bob McNally, once a White House energy advisor and now head of consultancy Rapidan Group.

Rising tensions were clear this week as Iranian protesters stormed two British diplomatic missions in Tehran in response to sanctions, smashing windows and burning the British flag.

The attacks prompted condemnation from London, Washington and the United Nations. Iran warned of “instability in global security.”

While traders in Europe prepare for a possible EU boycott of imports from Iran, mounting evidence elsewhere points to long-odds preparation for an even more severe outcome.

In Beijing, the foreign ministry has asked at least one major Iranian crude oil importer to review its contingency planning in case Iranian shipments stop.

In India, refiners are leafing through an unpublished report produced in March to look at fall-back options in the event of a major disruption.

And the International Energy Agency, the club of industrialised nations founded after the Arab oil embargo that coordinated the release of emergency oil stocks during Libya’s civil war, last week circulated to member countries an updated four-page factsheet detailing Iran’s oil industry and trade.

The document, not made public but obtained by Reuters, lists the vital statistics of Iran’s oil sector, including destinations by country. Two-thirds of its exports are shipped to China, India, Japan and South Korea; a fifth goes to the European Union.

Hedge funds, particularly those with a global macro-economic bias, have taken note, and are buying deep out-of-the-money call options that could pay off big if prices surge, senior market sources at two major banks said.

Open interest in $130 and $150 December 2012 options for U.S. crude oil on the New York Mercantile Exchange (NYMEX) rose by over 20 percent last week. Interest in the $170 call more than doubled to over 11,000 lots, or 11 million barrels. Still more traded over-the-counter, sources say.

McNally says that oil prices could surge as high as $175 a barrel if the Strait of Hormuz — conduit for a fifth of the world’s oil supply, including all of Iran’s exports — is shut in.

IAEA CITES “CREDIBLE” INFORMATION

This month’s speculation of an attack on Iran is the most intense since 2007, when reports showing that Iran had not halted uranium enrichment work fuelled speculation that President George W. Bush could launch some kind of action during his last year in office. Those fears helped fuel a 36 percent rise in oil prices in the second half of the year.

The latest anxiety was set off by the International Atomic Energy Agency’s November 8 report citing “credible” information that Iran had worked on designing an atomic bomb. A new round of sanctions followed, including the possibility that Europe could follow the United States in banning imports.

That alone would roil markets, but ultimately would likely just drive discounted crude sales to other consumers like China.

A more alarming — if more remote — possibility would be an attack by Israel, which has grown increasingly alarmed by the possibility of a nuclear-armed Iran. Israeli Defense Minister Ehud Barak said on November 19 that it was a matter of months, not years, before it would be too late to stop Tehran.

In that context, every tremor has been unnerving for markets. Some experts say an explosion at an Iranian military base earlier in the month was the work of Mossad, Israel’s intelligence agency. An unusually large tender by Israel’s main electricity supplier to buy distillate fuel raised eyebrows, although it was blamed on a shortage of natural gas imports.

REFINERS BRACE

No country has more reason to be concerned than China, which now gets one-tenth of its crude imports from Iran. Shipments have risen a third this year to 547,000 barrels per day as other countries including Japan reduce their dependence. Sinopec, Asia’s top refiner, is the world’s largest Iranian crude buyer.

The Foreign Ministry and the National Development and Reform Commission, which effectively oversees the oil sector, have asked companies that import the crude to prepare contingency plans for a major disruption in supply, a source with a state-owned company told Reuters.

The precautionary measure preceded the latest geopolitical angst and is broadly in line with Beijing’s growing concern over its dependence on imported energy. Earlier this year it issued a notice for firms to prepare for disruptions from Yemen.

But the focus has sharpened recently, the source said.

“The plan is not particularly for the tension this time, but it seems the government is paying exceptionally great attention to it this time,” said the source on condition of anonymity.

In India, which gets 12 percent of its imports from Iran, refiners had a potential preview of coming events when the country’s central bank scrapped a clearing house system last December, forcing refiners to scramble to arrange other means of payment in order to keep crude shipments flowing.

That incident — in addition to the Arab Spring uprising and the Japanese earthquake — prompted the government to document a brief but broad strategy for handling major disruptions.

The document, which has not been reported in detail, says that India could sustain fuel supplies to the market in the event of an import stoppage for about 30 days thanks to domestic storage, and would turn to unconventional and heavier imported crude as a fall-back.

It also urged the country’s state-owned refiners to work on developing domestic storage facilities for major OPEC suppliers, consider hiring supertankers to use as floating storage and to sign term deals to price crude on a delivered basis, a copy of the document seen by Reuters shows.

The government has not tasked refiners with additional preparations this month, industry sources say. And in any event, there’s not much they could do.

“If they cut supplies we will be left with no option than to buy from the spot market or from other Middle East suppliers,” said a senior official with state-run MRPL, Iran’s top India client.

To be sure, there’s only so much any refiner can do. The gap left by Iran will trigger a frenzy of buying on the spot market for substitute barrels, likely leading the IEA to release emergency reserves, as it did following the civil war in Libya, or other countries like Saudi Arabia to step into the breach.

“We probably need to do this ASAP but are putting our heads in the sand so far,” said one oil trader in Europe.

For refiners like Italy’s Eni (ENI.MI) and Hellenic Petroleum (HEPr.AT), the most pressing issue is not necessarily an unexpected outage but an import boycott imposed by their government. France has won limited support for such an embargo, but faces resistance from some nations that fear it could inflict more economic damage.

CHEAP PUNTS

Unlike in 2007, there’s not yet much evidence that a significant geopolitical risk premium is being factored into prices.

European benchmark Brent crude oil has rallied 4 percent in the past two days, partly due to accelerating discussion of a Europen boycott as well as Tuesday’s unrest in Tehran, during which protesters stormed two British diplomatic compounds.

But it is also down 4 percent since the IAEA’s November 8 report. Analysts say that it’s impossible to extract any Iran-specific pricing from a host of other recently supportive factors, including new hope to end Europe’s debt crisis, strong global distillate demand and upbeat U.S. consumer data.

“I don’t think there’s very much evidence (of an Iran premium),” says Ed Morse, global head of commodities research at Citigroup and a former State Department energy policy adviser.

And he does not see an attack as likely: “I think it’s a low probability event. Maybe higher than a year ago, but still low.”

But that is not stopping some from looking ahead. Oil prices would likely spike to at least $140 a barrel if Israel attacked Iran, according to the most benign of four scenarios put forward this week by Greg Sharenow, a portfolio manager at bond house PIMCO and a former Goldman Sachs oil trader.

He refused to predict a limit for prices under the most extreme “Doomsday” scenario in which disruptions spread beyond Iran and the Straits of Hormuz is blocked.

With that in mind, hedge funds are buying cheap options in a punt on an extreme outage. For about $1,500 per contract, a buyer can get the right to deliver a December 2012 futures contract at $150 a barrel; even if prices do not rise that high, the value of the options contract could increase tenfold.

The spark of demand for upside price protection this month is an abrupt reversal from most of this year, when the bias was toward puts that would hedge the risk of economic calamity.

“The kind of put skew we were seeing in the last three to six months was remarkable with people preparing for disaster – the Planet of the Apes trade, another massive market crash,” says Chris Thorpe, executive director of global energy derivatives at INTL FC Stone.

“Only in the last three or four weeks has there been increased call buying.”

Options remain relatively costly compared to earlier in the year, with implied volatility — a measure of option cost — of 43 percent above this year’s average of just below 35 percent, the CBOE Oil Volatility index shows.

But nonetheless it’s clear that for some funds the potential upside of violence in Iran means that interest is increasing.

Says Thorpe: “It’s at the back of people’s minds.”

CENTRAL BANKS IN LAST DITCH DESPERATE MOVE TO SAVE BANKERS AND SCREW YOU AGAIN

When you see such coordinated action by all the major Central Banks in the world, you know the situation is much worse than you are being told by the ruling oligarchy. The confidence and trust is gone. Every major bank in the world is insolvent, whether it be in the U.S., Europe or China. These Central Banks are owned and controlled by the very banks they are bailing out. They are telling you they have it under control. They do not. They have lost control. The debt is too great and will destroy the economic system of the world.

This is a last ditch effort by those in power to grab the last vestiges of middle class wealth. The stock market will soar today, benefitting bankers, politicians, and the 1%. They have solved nothing. The debt remains. The debt will not be paid.

Oil, food and commodity prices immediately soared on this announcement. Again, the wealthy will get richer and the average American will be destroyed by inflation on the things they need to live. The game goes on.

Gold jumped $20 in seconds. It is your only defense against the looting by the evil banking syndicate.

Here Comes The Global, US-Funded Liquidity Bail Out

Submitted by Tyler Durden on 11/30/2011 08:02 -0500

As expected, the Fed has just bailed out the world once again:

FED, ECB, BOJ, BOE, SNB, BANK OF CANADA LOWER SWAP RATES – BBG
ECB, FED other major central bank to lower the pricing of existing USD liquidity swaps by 50BPS

And as we have been writing every single day, the worldwide dollar crunch is now confirmed:

At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar

And finally, a promise to bailout Bank of America when it hits $4.00 again:

U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

This means that the global situation is far, far more dire than the talking heads have said. Luckily, when this step fails, which it will, Mars can always come and bail us out.

For release at 8:00 a.m. EDT

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.

These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.

As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant. At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise. These swap lines are authorized through February 1, 2013.

Federal Reserve Actions
The Federal Open Market Committee has authorized an extension of the existing temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank through February 1, 2013. The rate on these swap arrangements has been reduced from the U.S. dollar OIS rate plus 100 basis points to the OIS rate plus 50 basis points. In addition, as a contingency measure, the Federal Open Market Committee has agreed to establish similar temporary swap arrangements with these five central banks to provide liquidity in any of their currencies if necessary. Further details on the revised arrangements will be available shortly.

U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

HAPPY THANKSGIVING FROM RUSSIA WITH LOVE

The United States has the most bad ass military on the planet. We are really good at pushing around flyweights like Iraq, Afghanistan, and Libya. Are we really looking to take on Russia and China? These are the unintended consequences of sticking our fucking nose into every other country’s business. We aren’t the only country in the world that has “strategic interests”. Russia has a shitload of oil and natural gas. China manufactures half the shit we will be buying on Black Friday and holds about $800 billion of our Treasury bonds.

Has our hubris grown to such a level that we would be willing to start World War III over fucking Syria or Iran? Is this the beginning of our Fourth Turning war? Is this another example of the ruling oligarchy trying to distract the masses from our Greater Depression with a foreign enemy?

Will this country ever come to its senses and realize our Empire is crumbling and the only hope is to voluntarily exit from trying to police the world? WE’RE BANKRUPT!!!!!

My son just received a letter from the the Selective Service Administration informing him he had to register or risk imprisonment or fines.

MY SON WILL NOT BE GOING TO WAR FIGHTING RUSSIANS, CHINESE, SYRIANS, OR IRANIANS TO SATISFY THE NEEDS OF THE CORRUPT CRIMINAL OLIGARCHY THAT RUNS THIS COUNTRY.

WE WILL EITHER LEAVE THIS COUNTRY OR JOIN A REVOLUTION TO DEPOSE THE SCUM CURRENTLY IN CHARGE.

HAPPY THANKSGIVING!!!!

Russia Retaliates Against US: Puts Radar Station On Combat Alert, Prepares To Take Out European Missile Defense Systems

Submitted by Tyler Durden on 11/23/2011 22:50 -0500

Earlier today, we presented the latest developments in the escalating possibility of an imminent air (and potentially land) campaign targeting Syria by the “western world”, a move that would infuriate not only Iran, but also Russia and China, both of which have made it clear they would not sit idly by and let such an “aggression” stand. Now it is Russia’s turn to retaliate. Cutting straight to the chase – in a nationally televized appearance by Russian president Dmitry Medvedev: in response to what the Russian believes is an active incursion and a potential act of eventual aggression on behalf of NATO countries in Eastern Europe (and hence the US), he he said the following (7 minutes in): “First, I am instructing the Defense Ministry to immediately put the missile attack early warning radar station in Kaliningrad on combat alert. Second, protective cover of Russia’s strategic nuclear weapons, will be reinforced as a priority measure under the programme to develop out air and space defenses. Third, the new strategic ballistic missiles commissioned by the Strategic Missile Forces and the Navy will be equipped with advanced missile defense penetration systems and new highly-effective warheads. Fourth, I have instructed the Armed Forces to draw up measures for disabling missile defense system data and guidance systems if need be… Fifth, if the above measures prove insufficient, the Russian Federation will deploy modern offensive weapon systems in the west and south of the country, ensuring our ability to take out any part of the US missile defense system, in Europe. One step in this process will be to deploy Iskander missiles in Kaliningrad Region. Other measures to counter the European missile defense system will be drawn up and implemented as necessary. Furthermore, if the situation continues to develop not in Russia’s favor we reserve the right to discontinue further disarmament and arms control measures. Besides, given the intrinsic link between strategic offensive and defensive arms, conditions for our withdrawal from the New START Treaty could also arise.” That said, he concludes that Russia is still open to dialog. However, if Obama merely intends to bomb any nation at will, we are very much concerned that everything Medvedev has just threatened will be enacted. And exponentially more so when Putin comes back in charge. One thing is certain – Russia is not North Korea, and taking this speech for more empty jawboning is probably not the wisest option.

Is the U.S. About to Invade Syria … and Pick a Fight with China and Russia?

Submitted by George Washington on 11/23/2011 20:02 -0500

Tyler pointed out yesterday and today that the risk of a Syrian war is quickly rising.

I want to amplify on three aspects of this issue:

(1) a war against Syria was planned 10 years ago

(2) the American people don’t want a new war and

(3) Russia and China may strongly react against such a war

THE AMERICAN PEOPLE DON’T WAR WAR … BUT A SYRIAN WAR WAS PLANNED 10 YEARS AGO

I noted in August:

While the U.S. is doing its best to try to whip up support for a war against Syria (a war planned at least 10 years ago), a new Rasmussen poll finds:

Just 12% of Likely U.S. Voters believe the United States should get more directly involved in the Syrian crisis, according to a new Rasmussen Reports national telephone survey. Sixty-six percent (66%) think the United States should leave the Syrian situation alone.

ARE WE PICKING A FIGHT WITH CHINA AND RUSSIA?

This is even more dangerous because China has warned the U.S. against attacking Syria, and Russia has reportedly moved warships into Syrian waters to defend Syria from a U.S. attack.

Relations between the U.S. and Russia have degraded recently. See this and this. This is largely due to the U.S. threatening war against any nation which becomes an economic rival.

May cooler heads prevail.

Decaying into a Police State

i wrote this before cop violence visited my home town. the cop who sprayed chemicals into the faces of students at UC Davis occurred within several hundred feet of where i stood in May 1970, in protest against the murders at Kent State. i’ll have plenty to say about the davis incident later. but for now, my latest blog entry.

If you want a vision of the future, imagine a boot stamping on a human face – forever.

~George Orwell, 1984

The process is sadly well under way. And I am throwing in the towel on the American people for ushering in the police state. I’m not going to bother cataloging all the recent behavior, authoritative use of violence, lying rhetoric, or even to define what is a police state. The line of events, from the patriot acts, the department of homeland security, the groping of children and senior citizens at airports, the wiretaps, rendition and torture, the expansion of wars and assassinations, up to the suppression of Occupation Wall Street protests, are part of the historic record. As is the blatant serial betrayal and misuse of trust, granted the political leaders and perversely twisted against us, most obviously with wars and bailouts, as prequel to the inevitable misuse of trust in the police state the public had granted, and will have used against them down the future line. No police state in history has ever acted otherwise, and the American one will not be the first.

A police state in the USA can only take hold with the acquiescence of the people. That prerequisite has been met. Most recently reconfirmed with the acceptance of police violence in several cities, inflicted upon OWS protesters. Acceptance being the absence of tens of thousands of citizens in the streets, demanding arrest and prosecution of the police officers who committed violence. But like the bankers, mortgage brokers and other criminals, these have gone un-investigated and uncharged. The number of American people demanding justice is miniscule.

My former comfortable conclusion that America could never become a police state did not rest on naiveté or swallowing myths from school days. It rested on what I saw as I moved from youth into middle age; recurrent, consistent evidence of the American citizen’s love of personal freedom and intolerance for encroachment upon that freedom.

Back when the Clintons were selling their health care run by the insurance industry scheme. (Btw, where the Clintons failed, the insurance companies won. They run the show, and pocket billions in profits each quarter.) Anticipating developing technologies, the government planners hatched a plan for a health care information and coverage card. It would be like a social security card; it would be your ‘proof of insurance’, provided by the government, and it would a few years later be able to carry all your essential medical history on this credit-card type document.

People hated it. Overwhelmingly. So rapid and fierce the objection by the masses, the republican opposition didn’t even have time to get in front of the issue for political points.

A couple of pundits recognized the reason this idea was so abhorrent to ordinary Americans. They saw this would be a de-facto national identity card. Identity papers. Something routinely carried and produced on demand by authorities in most western democracies. But not the USA, dammit.

Deep in the gut of the typical American was a rejection of the concept of a national id card. Despite the ubiquity of the social security number used for identification, how many people actually carry their card? How often is the card itself demanded?

But that gut feeling has eroded. Slowly, insidiously. The zeitgeist of the American people is completely different than just a few years ago, regarding the equation of security and liberty. (An equation, which as ben franklin promised, never ever balances.) In the early stages of that change, I thought it impossible to go much further. But further it did.

Things today are way fucking different.

People are cool with government wiretaps. People are cool with any and all manner of anti-terrorist action. Even torture. People are cool with mass violence and death in the deserts above oil fields far from here. And now, people are cool with mass numbers of riot police to quash peaceful protest, dissent and free speech. For complete bullshit reasons (sanitation; curfews and time limits numbered in weeks; hurting small businesses and normal commerce; any other crap Bloomberg’s lawyers come up with).

The tolerance of stupid failed wars, so many historians and philosophers have told us, goes hand-in-glove with acceptance of decreased domestic rights. Now we are seeing this linkage for ourselves.

We still enjoy a tremendous degree of personal freedom in the United States. Setting aside the economic aspects of freedom, the necessity for some degree of economic security for personal freedom to have any meaning, we still have it damn good. If you compare our liberty to that of the rest of the world, today or looking back in history.

But, our standard is our own history. Our own recent history. Most of the current government infringements on our free expression and movement are small and subtle. But the direction is steady, and the movement is gaining momentum. Not in a good way. While the quantity of perceived freedom for the masses of Americans has eroded only slightly, even a hurricane announces itself with but a few raindrops and a moderate wind gust.

The riot-gear clad cops are dispatched not just for drug busts. Not just for ‘riots’. But for small, peaceful protests. Frequently for the purpose of intimidation, nothing more or less. Airport security is engaged in behavior control, ham-handed enforcement of unquestioning obedience, having nothing to do with stopping a terrorist bomb. Now, tactics of the powers-that-be include centrally planned suppression of the OWS movement. Possibly by the justice department/department of homeland security themselves

But the escalation of police and security acts against the populace is only the symptom. The sickness is the acceptance of the creeping police state. The people are cool with it, by and large.

There is exactly one force and one force alone that can stop or reverse the erosion of freedom by authorities. The people. The masses of people. Because left to their own devices, those in power will always choose control over freedom. And they have been left to their own devices too much for too long.

The suckers who still vote had no trouble re-electing all the clowns who extended the patriot act. Even so-called ‘tea party’ candidates who liked the idea of government security powers, voted ‘yes’ and got returned to congress. The percentage of people who are not troubled by squads of riot-gear clad thugs swinging batons on peaceful protesters. That is what counts. That is the one and only way the police state growing and festering in the United States of America can possibly continue.

If the American people allow it.

Well, the American people are doing far worse than passively allowing the police state to grow. They are actively approving the suppression of OWS. Not just a few Americans. Millions. Fucking millions. Maybe even a majority.

Approving the use of riot cops. Applauding. Happy with the fact, while befuddled why anyone (like me,) would be disturbed, would think bulldozing the encampments are a big deal.

I never thought Americans would nod approvingly at the things that are commonplace today. I don’t understand why this change in the American psyche came about, even though I have closely and carefully watch it happen. It makes me sad.

I suppose comfort and freedom from troubling thoughts has become so necessary to my fellow citizens, that rampant consumer consumption wasn’t enough to satisfy the need for comfort. Order, routine and security from discomfort became more important than rights long ago taken for granted. Quaint rights like freedom of assembly, of speech, of religion (if you are a Muslim in downtown new york and own a building), to carry a gun, to not be stopped and frisked, rights that people delusionally believe will only be infringed upon for ‘other people’; the criminal, the ‘terrorist’, the political loon or extremist. Rights people cannot imagine being denied for them. Completely disconnected in their mind from a little feel-up at the airport, or having to show ID papers to walk down a particular street.

People are more infatuated with stomping on the rights of ‘others’ who are deemed undesirable, than they are in love with rights for everybody. They think their personal rights are immune.

Heh. They got a nasty surprise coming.

So many people wonder how the civilized, politically aware German population allowed the change in their society ushered in by the Nazis from 1933-’39. Fuck, we Americans of 2011 are so much worse than the German people. So much worse. Empty of any common sense or insight regarding the freedom that is the lifeblood of our nation.

By 1933, Germany had suffered humiliating defeat in 1918; economic privation as a result of the peace treaty; a crippling hyperinflation and currency failure in 1923; ten years of economic depression before The Great Depression even started, and things went from horrible to much worse; a decade of escalating political violence, deadly violence, on the streets of major cities, political assassinations numbering in the tens of thousands. And that violence was not monopolized by the rising brown shirts; communists, socialists, monarchists, police forces, private militias, public militias were all shooting and killing one another in the streets.

Hard to blame a people drained by fifteen years of unemployment, economic depression, a failed money system, and blood literally running in the streets, that they were willing to trade a few freedoms in return for some long-denied security.

What’s our fucking excuse?

Traffic was backed up on one day for a big protest march? Those dirty hippies have taken over one of a hundred parks in your city? Shit, the cost of police overtime is at least a rational concern when your city is already borrowing to pay pensions and salaries and keep services operating. And you can be forgiven asking the next question, ‘are so many cops working overtime really needed to watch those OWS campers, after a few weeks of peacefully just sitting there’?

Exactly what are you getting in return for allowing (or cheering) the violent suppression of protest by riot cops?

Comfort. Routine. Not having your normal evening news entertainment 22 minutes punctuated with people saying and doing weird things and drumming. That’s all.

Bad trade, America. There hasn’t even been a real riot. A few broken windows in Oakland; one cop in NYC gets hit in the hand with a piece of glass, and three others are splashed in the face with vinegar. That is it. And crass attempts to crush dissent, completely illegally, in complete violation of the letter and the spirit of the bill of rights and hundreds of court rulings over the year, all cool. No problem, in fact, I’m glad my mayor put things back to normal.

Heh. The turning upside down of the rule of law in the USA had been just some people are immune to the law, and can steal billions. While the rest of us suffer irrational punishment for petty theft of possession of a joint. Now, people completely in compliance with the law, and following police commands are arrested and charged. Not just upside down, but completely twisted and distorted. Of course a police captain is not charged with assault when he pepper-sprays two women doing exactly as they are told; but they are charged with resisting, disturbing, hell, they’ll probably have to pay for the pepper spray.

Whether OWS fades away (I doubt it) or grows and thrives (I think likely for several months, but the suppressors will just ramp up their violence and bullshit) is not what I am talking about. Irrelevant.

The quiet acceptance by millions of Americans (and active approval by millions more Americans) of the suppression of political dissent, with violence, has convinced me. The decay into a police state is not gonna stop. A done deal. I’m crying ‘uncle’; throwing in the fucking towel; invoking the mercy rule; no mas, por favor.

It doesn’t matter what your personal definition of a ‘police state’ may be. A reasonable definition can be applied today and has been by some friends and pundits. Doesn’t matter.

Even if the economic catastrophe hits this Monday morning, and causes the slumbering masses of America to wake up and smell the reality, it is too late. The mentality of the American people has already allowed the advancement on the road to a police state to go too far. The trend toward sacrificing freedom for the (bullshit) promise of security can’t be reversed or undone by anything short of millions of people in the street in opposition. And those millions ain’t gonna take to the streets until they are starving; and that battle will be unnecessarily more difficult and more bloody because we let the enemy arm themselves so well (on our dime). And gave them ample time to practice.

Sure, I can still write this, without risking arrest and punishment today. We ain’t there yet by my definition. But that dude who the other day said out loud what a Molotov cocktail can do to a crowded Macy’s store wouldn’t have been arrested and punished for those exact words in the exact same context ten years ago. A 2004 protest of a hundred thousand people in New York City against the Iraq war or the republican convention was met with less violence than an encampment of 200 people in 2011. Shit has changed significantly, rapidly, and irreversibly. Until people wake up.

And folks are still sound asleep.

MBS-M=BS

I’m cutting to the chase. This is no time to bury the lead.

There are no mortgages to back Mortgage Backed Securities. Investors are holding pools of unsecured debt. This debt is not backed by liens against real property.

What does that mean?

For investors – pension funds, insurance companies, sovereign wealth funds, towns in Norway – it means you have been swindled. The investment products you purchased (Special Purpose Vehicles, converted to Trusts and later Bonds) don’t exist. And it looks like they never did.

For homeowners – it means that your largest asset is worth far less than market value. If you had a securitized mortgage at any time – the chain of title was broken. Your home has clouded title. It doesn’t matter what the terms of your mortgage were – conventional, ARM – how responsible or irresponsible you were. All those issues are irrelevant. In the future, you will only be able to sell your home to a cash buyer, because title companies will refuse to insure your property.

There’s also a very high probability that you are not paying your true creditor each month. You’ve kept your end of the bargain, honored your contract. But the lender is not going to honor their contract with you by providing you with clear title at the end of the schedule. They can’t.

How did this happen?

The creation and sale of Mortgage Backed Securities is governed by New York State Security Law. It is a very stringent and tough set of laws intended to protect investors from fraud. Only it didn’t protect investors.

Why?

President Clinton’s ramp up of The Community Reinvestment Act is partially to blame. It destroyed a banks’ incentive to write a quality mortgage that it would keep on the books for 30 years and replaced it with the incentive to write bad loans and move them off balance sheet as soon as possible.

I say CRA is partially to blame, because it created an environment for people in financial services and GSE’s to commit fraud. The executives at investment banks and the fly-by-night originators did not have to adhere to CRA regulations. Their behavior was clearly motived by unrelenting, enormous greed. The government did not force these individuals and organizations to commit massive control fraud. They made a conscious decision to plunder homeowners and investors all by their lonesome.

CRA set the table for a ramp up in issuance and sale of Mortgage Backed Securities (MBS). These products have been around since 1977 and were considered sound investments. The problems arose when the sheer volume of MBS increased after CRA regulations kicked in.

Bond indentures have basic representations and warranties that must be honored. They weren’t. NY Security Law protects investors against fraud by requiring the banks to return all of their clients’ money if it was discovered that one loan in the pool did not follow the terms of the agreement.

Well, have you noticed an avalanche of lawsuits in the last three years? Every day, a new lawsuit is filed, charging Bank of America, Goldman Sachs, JP Morgan Chase, Citibank, Deutch, UBS, et al with security fraud. One of the largest was the Blackrock lawsuit against Bank of America. A judge just scuttled the $8.5 billion settlement.

The headline MBS-M=BS is missing. They bury the lede.

Numerous government agencies have sued and settled security fraud cases too.

The truth is hiding in plain sight. It’s high time we acknowledge that global investors have been bamboozled. Yes, the smartest, most sophisticated investment professionals in the world were fleeced. William K Black, the economist and criminologist says it was an $11 trillion heist.

You would see more lawsuits against the banks and financial firms that created, packaged, rated, and sold MBS if the managers who invested in MBS on behalf of their clients had a scintilla of integrity. But they don’t. So they won’t.

If they reveal the fraud to their senior managers, stock-holders and customers they will be fired. They would not collect that nice seven figure bonus they rely on to make their nut. So, they pretend and extend. They kick the can down the road. MBS fraud? “Nothing to see here people, move along…”

Why are there no mortgages to back MBS?

The NY Security Law requires that the original Mortgage/Deed (lien on the property) and the Promissory Note (promise to pay) be deposited into the Trust within 90 days of the loan origination. This is a very strict guideline. The 90 day window was to ensure that the trust held no assets that could be ‘clawed back’ if one of the contributing parties (like the originator) filed for bankruptcy. No exceptions allowed.

In addition, state property law often requires that the Note and the Mortgage/Deed travel together. When these two documents are separated, many state and Federal judges rule the chain of title has been broken, there is an imperfect lien. Clouded title is the outcome.

What’s the problem?

I mean, how hard can it be to keep the original Mortgage and Note together and lock the documents down into the Trust before the 90-day deadline expires? Apparently, it was very hard. In fact, we’re learning through discovery and analysis of loans, that it was downright impossible.

The parties who originated the loans, created the MBS, and/or ‘purchased’ the loans on the secondary market, kept the mortgages. They didn’t submit them into the Trust.

Why would they hold onto the mortgages?

We believe, and it is conjecture and opinion, that they made a conscious decision to hold the mortgage which is the lien on the property, to redeem in the future. You see, they expected that the MBS would be paid off and closed in 7-10 years, given normal rates of housing turn-over. Why not hold onto the mortgage, and when/if the home-owner defaults, seize the property?

What about the Promissory Note?

Unlike the Mortgage/Deed, the Promissory Note has real immediate value and can be sold to many parties over an extended period of time. So it was. They often scanned the Note, filed it in their electronic internal database and sold the original Note over and over and over again.

That’s why home-owners are often unable to secure their original Promissory Note. The real deal would reveal the identities and number of parties who purchased it. That would provide evidence to the home-owner that their contract was broken and fraud was committed. When the original Note does appear, it is covered in black boxes that redact its trail.

The sale of the Note is the reason why attorneys for ‘lenders’ submitted Lost Note Affidavits to the court in foreclosure proceedings. It’s why they paid a firm called DOCX to ‘recreate’ lost Notes and entire files for a fee, of course. The original Notes reveal the fraud. Can’t have that, now can we? Better option is to commit fraud upon the court and suborn perjury.

It begs the question – why on earth would officers of the court and banking executives risk criminal prosecutions and disbarment by proffering fraudulent documents upon the court? Why would they recreate evidence that supports their claim of loan ownership?

The answer is simple. They created evidence because they didn’t possess evidence that proves they are the true creditors. Why don’t they have evidence? Answer – because they are not the true creditors.

The fraud is revealed in foreclosure, when the need to produce documents authenticating true creditor status and legal standing is required. We don’t have a foreclosure crisis. We have an MBS fraud and property title crisis.

How prevalent was the practice of separating the Note and the Deed?

It was standard operating procedure which became glaringly apparent when the number of foreclosures sky-rocketed and homeowners could not locate their original closing documents. The Note and Deed were separated after origination when the property was recorded on MERS.

MERS, the Mortgage Electronic Registration System (which deserves a stand-alone post) separated the Note from the Mortgage/Deed, immediately clouding title on 60-100 million properties. MERS business model violates 400 years of settled state property law and the Federal Uniform Commercial Code.

MERS is billed as a joint venture between banks, title companies and GSE’s. But we’ve uncovered evidence that Fannie, Freddie, ands Ginnie leaned heavily on banks to adopt MERS as its primary recording system. All parties are implicated. However, blame for the creation of MERS rests squarely on the Federal Government.

So we have ample evidence the Note was separated from the Mortgage/Deed, and never submitted into the Trust. NY Security Laws were violated. Investors were defrauded. Title was clouded on 60-100 million homes. Four million homes were seized in illegal foreclosures. Four hundred years of state property laws were trashed.

Is that it?

Nope. There’s more – lots more.

Evidence is mounting that fraud was committed through-out the securitization chain.

The scheme resembles the plot of “The Producers.”

We believe that the salesmen for the MBS went to the investor community with an offer they couldn’t refuse. They promised an existing pool full of mortgages from Ozzy and Harriett homeowners who always paid on time and would provide steady income stream for institutional investors. The salesmen took the investors’ money.

Then they went to the originators and told them to go out into the market and find the Ozzy and Harriett homeowners they promised to the investor. The originators ‘found’ customers, closed the loans and collected the fees. All parties in the chain had 90 days to find the promised customer, close the loan and process it through the securitization channel. On Wall Street, 90 days is an eternity. They’d make the deadline – no sweat.

When the MBS market hit full stride and serious money started flowing in, the pace picked up and they were unable to even provide the appearance of following the law. So they didn’t even try. They just took the money.

We believe that once Attorneys General like NY’s Eric Schneiderman, or Delaware’s Beau Biden dig into discovery, they will uncover evidence that substantiates our theory. But right now it is just a theory.

What we do know is, the regulators didn’t regulate. The investigators didn’t investigate. They chose not to protect the public from the malfeasance. Instead, they accepted lucrative job offers from banks and their white shoe law firms. They just took the money.

Investors and homeowners have been defrauded. Investors have the resources to protect themselves.

Homeowners don’t. They need government’s protection.

Beating home-owners into submission with the moral hazard club must end. It’s time to set the record straight.

The global credit markets did not collapse in September 2008 because homeowners bought too much house, or insisted on granite counter-tops and walk-in closets they didn’t deserve.

The crisis erupted when it became public knowledge among elites in global banking and government that there were no mortgages to back Mortgage Backed Securities. Zip, zero, nada.

When the s@#$ hit the fan, the crony capitalists did what crony capitalists always do…they covered up the crime – which was committed by their peer group – and facilitated a billionaire bail-out of epic proportions in the US and around the globe.

How do I know this? Why should you believe me?

In September 2008, when the world as we know it almost ended and the credit crisis was in full swing, I honestly did not understand how sub-prime loans could bring down the global economy. I mean they were calling many of these dubious products, liar’s loans for years, weren’t they? Clearly everyone knew about the risk. How could it be that investment banks like Lehman and Bear Stearns could make bets against the pooled loans – and not have been regulated or sanctioned for their risky behavior? What exactly constitutes ‘bad paper’? Why was the US government buying it? What exactly will TARP accomplish?

So I started to investigate. IBD readers know William O’Neil’s advice was to follow the Big Money. So I did. I logged on and attended their conferences. I read their chat room and message board posts. I studied their white papers and analyzed their investment advice.

I was shocked at what I learned.

In 2008 and early 2009, the institutional investors, fund managers and banking elites were openly saying, “There were no mortgages to back Mortgage Backed Securities.” They called it the Black Swann. Many worried that people would start rioting in the streets once they learned the truth.

Did these financial gurus bother to tell you what they knew?

Hell, no.

Instead, they recommended their clients purchase gold and farmland in developing nations.

I poured over mainstream financial news sites and publications. There was nary a word – not a peep – on MBS fraud. Nobody was covering the story or telling the whole truth.

So I started to dig and began a 3+-year odyssey studying MBS. I read original documents, Congressional testimony, case law, academic white papers, and more. It took me two years to fully comprehend what I had learned. It took another six months for me to be able to explain it to other people.

In December 2010, I outlined the elements of the MBS fraud to a trusted friend who works in the capital markets. He was incredulous at the news and said, “We assumed in the end that there were crappy loans in the MBS, (that’s why we got out early) but nobody thinks that there are no mortgages at all. Let me check it out with senior level executives whose opinion I trust. I’ll get back to you.”

He studied my research, spoke with his contacts and confirmed the story. There are no mortgages to back Mortgage Backed Securities.

In the ensuing months, we have had conversations with many people who work in finance, law, government and media. Nobody has told us we are wrong.

Our primary focus is to educate homeowners about the MBS fraud and help them understand how it impacts them. We are volunteering our time and energy because homeowners have been severely damaged and nobody in power is helping them.

We’re not anarchists, or anti-business zealots. We’re ordinary people who have worked in business for over 30 years. We are capitalists – not crony capitalists. We believe in free markets, small efficient government and most of all, the Rule of Law.

It is not our intention to collapse the system. We don’t think people who haven’t paid their mortgages should get a free house. We do believe that homeowners have the right to know the identity of their true creditor. In America, no one’s home should be seized and sold by a party that has no legal standing to foreclose.

Due Process is not reserved for Americans with FICO scores of 750+.

The Founding Fathers didn’t grant property rights just for those who pay their bills on time.

At its core, the MBS fraud represents a breakdown in the Rule of Law.

A number of us on TBP lament that America is no longer a nation of laws, but of men.

That is true today, but it doesn’t mean that it will be true tomorrow. We can fix this – it is not too late.

Everyday Americans need to learn the elements of MBS fraud and demand that the elites in Big Government and Big Business who committed these crimes face criminal prosecutions.

It is hard, tedious, frustrating work. Learning the details of the fraud will make your head explode and your heart break.

Securing our freedom and property rights is a burden. In my humble opinion, it is a burden we all must share. Blanket cries of ‘arrest the bankers’ will not do. We need to be specific. It is imperative that we name names, list specific crimes and present actionable intelligence to the public and law enforcement agencies.

I believed that a narrative of MBS fraud that everyday people can understand was needed. So I wrote one. The glaring headline, “There are No Mortgages to Back Mortgage-Backed Securities” was missing – so I supplied it.

It is a beginning – a broad template that can be filled in with corresponding facts and evidence obtained from public records, case law and depositions/discovery.

The details of the fraud are very intricate and tend to bog down the narrative, so I am providing you with access to my library of documentation that will help you gain a deeper understanding of the fraud. The document dump can be accessed at: https://skydrive.live.com/?cid=0aa1f8ea3d902284&Bsrc=EMSHGM&Bpub=SN.Notifications&id=AA1F8EA3D902284%21103

I will focus on MERS, destruction of property title and county land records, illegal foreclosures, CRA – inflated property appraisals and more in future posts.

In the meantime, if you have gained value from this post, please make a contribution to The Burning Platform. We believe in free markets here at TBP, so feel free to hit the contribute button with abandon.

OCCUPY PISSES OFF EVERYONE

The editorial below was in my paper yesterday. It really grabbed my attention. It was from Dale McFeatters of the Scripps News Service. They are a liberal leaning organization. Their editorials skew to the left. They are sick and tired of Occupy Wall Street. They say it is time to go home and work through the existing establishment rules, regulations and captured party system.

Mayor Bloomberg is an Independent. He is sick and tired of Occupy Wall Street. He destroyed their encampment site yesterday and is fed up with their tactics. He also happens to be a multi-billionaire whose wealth was created from selling his product to Wall Street.

The Mayor of Phila is an ultra-liberal who just won re-election in this bastion of Democratic politics with 75% of the vote. He went on TV this week and said he is fed up with Occupy Phila and their refusal to move when his City Hall construction project begins.

The Mayor of Oakland makes the Mayor of Phila look like a conservative. She ordered an all out attack on the Occupy Oakland encampment.

Fox News and the Wall Street Journal despise the Occupy Wall Street movement and spew lies and misinformation about the movement 24 hours per day. They are the mouthpiece of right wing neo-con Rupert Murdoch, a multi-billionaire. The NY Daily News has been highly critical of the movement and is owned by left leaning Mort Zuckerman.

The narrow minded people who are easily led by the MSM buy into the various storylines spun by a media that does not want this movement to gain traction. They are distracted by minutia when the big picture is so disgusting. They applaud as young people brave enough to fight the elements and make a stand against corruption are bludgeoned and imprisoned for exercising their right to free speech and public assembly, while remaining silent as Wall Street bankers committed the crime of the century – absconding with trillions of American middle class wealth.

Step back for a moment and think. Who is the enemy? Is it really the thousands of young people just starting their lives and lashing out against a system that is designed to benefit Wall Street bankers, Mega Corporations and politicians of both parties in Washington DC?

The enemy is clear to me. The entire financial/corporate/political establishment is corrupt, dysfunctional, and benefits only the ruling oligarchy of this country. The nation’s lifeblood has been sucked dry by these vampires. The entire system has been hijacked by the few. You can call it crony capitalism or corporate fascism, but the bottom line is that the average American is getting screwed and the people getting the most screwed are the Millenial generation that is being left with an un-payable debt burden, no jobs, and no hope for a better tomorrow. This is why they are enraged. This is why they are protesting.

The self righteous Boomer generation leaders who control the levers of power in Washington DC, Wall Street and the corporate boardrooms do not want the system to change. They like the system just fine. Therefore, they hate a movement that threatens their wealth, power, and status. Both parties are frightened by the Occupy movement. The left and the right have their talking points and the existing system works just fine as they both get enriched as the country plunges deeper into debt by $4 billion per day.

The non-thinking and willfully ignorant people of this country need to snap out of their daze and think for themselves. The endless propaganda spewed at them day after day has dulled their sense of right and wrong. The Occupiers have begun to open the eyes of some people. They have forced a discussion of issues the establishment wants to keep buried. Neither Bush or Obama has attempted to go after the criminals on Wall Street. That is the tell. Both parties are captured. The Dodd-Frank bill was a toothless 700 page waste of time written by bank lobbyists.

When I see people and pundits declare the Occupy Movement irrelevant, I laugh at their utter stupidity. Would hundreds of billions been transferred from the criminal Wall Street banks to credit unions without the Occupy Movement spurring this effort? Would the $5 per month debit card fee inflicted on Americans by the criminal Wall Street banks been withdrawn without the rage and anger of the Occupy Movement? The answer is NO. Wall Street hates having the Eye of Mordor focused on their criminal and immoral activities.

This movement will not die because police thugs kick them out of parks using their 100,000 rules, regulations, ordanances, laws, and curfews. A society that depends on so many laws to “protect” its citizens has descended into a moral cesspool. I don’t need laws to tell me right from wrong and moral from immoral. The heart of these protests is a system that is broken. There will be many different solutions offered by those that are angry, but the BIG PICTURE is that the system must be brought down. It will not fix itself. Tinkering on the edges will not fix it.

We are in the midst of a Fourth Turning. It is a chaotic and confusing time. Anger, misery and bloodshed are a given. The existing social order will be swept away. That is guaranteed. What replaces it will be up to us. I’ll support any movement that spits in the eye of the establishment. I’ll support people like Ron Paul that want to tear down the established order. Everyone will need to choose sides. There is no fence sitting during the Fourth Turning. I hope you are pissed off. I know I am.

Editorial: Occupy protesters have made their point. Now go home

Submitted by SHNS on Mon, 11/14/2011 – 15:20

An editorial / By Dale McFeatters, Scripps Howard News Service

In 1981, a group of demonstrators set up camp outside a British air base to protest the government’s decision to allow U.S. nuclear-tipped cruise missiles to be based there.

The Greenham Common Women’s Peace Camp initially generated a great deal of publicity, inspired imitators in other countries, sporadically tried to block access to the air base, and perhaps reached its zenith in 1983 when as many as 70,000 people turned out for one of their demonstrations.

The women survived several attempts by police to evict them, and eventually the authorities left their tent cities alone, as long as the women, and they were almost all women, confined themselves to picketing, leafleting and chanting.

In 1991, thanks to a nuclear-arms treaty with the Soviet Union, the last of the cruise missiles were removed, taking with them, one would have thought, the reason for the camp. But the women stayed on for nine more years, expressing an increasingly vague and inchoate commitment to “peace.” Many of the Greenham women cited a sense of unity, sisterhood, shared purpose and, when pressed, little desire to return to the humdrum routine of their former lives.

One senses that, in accelerated fashion, the Occupy Wall Street movement has arrived at that point. On Wall Street and in cities across the country, the protesters have effectively made their point about income inequality — the 1 percent versus the 99 percent; lopsided tax breaks given to hedge-fund managers and the proclivity of Wall Streeters to lavishly reward themselves regardless of whether their performance merits it. And, yes, economically the great middle class has been stagnant for a decade or more.

As the Occupy movement drags on — the first encampment went up Sept. 17 — the issues that inspired it are receding in the public consciousness and the issue has increasingly become the encampments themselves.

There have been problems of noise, sanitation, isolated incidents of crime and violence and the inevitable run-ins with police, but generally the Occupy movement has been a benign one. But its time in the public square is over. Public space meant for the enjoyment of the many should not be arrogated to advance the interests of the few.

Go home. Find political candidates who share your views and go to work for them. Raise money. Man phone banks. Knock on doors. Help the poor and minorities and those with limited English get government IDs in states that have passed voter-suppression laws.

And don’t forget to vote yourself. It really works in this country. Always has.

(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)