Wednesday, October 20, 2010

ALL US Mortgage Backed Securities an absolute Scam.

ALL US Mortgage Backed Securities an absolute Scam....from inception, and the USA is utterly corrupt to the core, without any hope of redemption ever.....

Pensions and other large investors may sue the banks which sold them mortgage backed securities (mbs) based upon fraudulent misrepresentation.

Indeed, as William D. Cohen and Felix Salmon point out in must-read stories, the big banks hired a company called Clayton Holdings to sample the quality of mortgages being purchased.

Clayton found very high percentages of mortgages which did not meet minimal underwriting standards.

However, instead of disclosing to the investors purchasing mbs that many of the mortgages were bad - or even that there were samples and statistical analyzes performed by Clayton and the banks - the banks simply kept it to themselves, and used that inside information about poor mortgage quality to negotiate a discount of the price that the banks paid when purchasing the loan portfolios from the folks who originated the loans.

This is like buying a used car, but having a mechanic look it over first. Once the mechanic discovered a cracked engine block, the buyer negotiates the purchase price way down, but then turns around and sells the car for a higher price without ever disclosing that there was a cracked engine block or even that a mechanic had looked it over.

Indeed, its worse ... at least with the car, there is something physical to inspect. But because many of the underlying mortgage documents have gone missing, there is nothing for the mbs buyer to investigate even if he wanted to. For example, as I've previously noted, MERS - the holder of 60% of all U.S. residential mortgages (and many commercial mortgages) - is a shell company, and many mortgage documents were forged.

But a financial insider claims (via David Kotok - chief investment officer of Cumberland Advisors - and investment adviser John Mauldin) that the entire mbs sausage-making process is a scam:

"The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.

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

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

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

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

"Same with mortgages.

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

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

"Therefore, how to make sure the safe mortgage loan stayed with the safe MBS tranche, and the risky and/or defaulting mortgage went to the riskier tranche?

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

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

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

"However, legally...and this is the important part...MERS didn't hold any mortgage notes: the true owner of the mortgage notes should have been the REMICs.

"But the REMICs didn't own the notes either, because of a fluke of the ratings agencies: the REMICs had to be "bankruptcy remote," in order to get the precious ratings needed to peddle mortgage-backed Securities to institutional investors.

In other words, the author is saying that mbs buyers thought that they were buying specific tranches tied to real mortgages, but they were just getting a statistical cut of wispy, non-corporeal representations of information related to the entire universe of mortgages floating around in the digitized MERS ether.

So are all mortgage backed securities a scam?

The following 2007 chart from Janet Tavakoli might provide a hint:

See also this, this, this and this.

Bank of America alleged in a court filing this June:

It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies....

April Charney - a consumer lawyer with Jacksonville Area Legal Aid - and CNBC's Dennis Kneale noted in February 2009 that courts have found that some mortgages have been sold again and again to different trusts, when they should have only been sold once.

Kneale explained that that is the reason that two different banks sometimes try to simultaneously foreclose on the same home:

And today, Chris Whalen told CNBC's Larry Kudlow that Bear Stearns will be exposed as having sold the same loan to different investors on numerous occasions:

(6:45 into video)

As I have repeatedly pointed out, the failure of the mortgage originators and banks to prepare and record proper documentation has led to an epidemic of fraud. The pledging of the same mortgage again and again to different trusts related to mortgage backed securities is just one result.

And as long-time foreclosure investigator Nye Lavalle writes:

On thousands of occasions I stated to regulators, CEOS, banks, Fannie and Freddie that the practices of the banks were that they were double and multi-pledging assets and pledging paid off and refinance notes to securitizations. This is something April, Max and I have discussed for years now. Now, they come and admit that each of my allegations were true Without analyzing the deal, as complex as they are, you WILL NEVER KNOW IF THE FORECLOSING PARTY HAS “ANY” RIGHT TO FORECLOSE!!!

The motives I identified for the “Blank Endorsements” and missing assignments and "pre-notarized" “Blank Assignments” and “Blank Allonges” that “were placed into the “custodial/collateral” files were to be able to:

Multi-pledge collateral (Notes) so as to cook the books ....

As I've repeatedly pointed out, the big banks intentionally signed up as many borrowers as possible, even if there was no way they could repay their loans.

For example, I recently wrote:

[Professor William] Black explained that fraud by a financial company usually involves the company:

1) Growing like crazy
2) Making loans to people who are uncreditworthy, because they’ll agree to pay you more, and that’s how you grow rapidly. You can grow really fast if you loan to people who can’t you pay you back
3) Using extreme leverage.
This combination guarantees stratospheric initial profits during the expansion phase of the bubble.

But it guarantees a catastrophic subsequent failure when the bubble loses steam.

And collectively - if a lot of companies are playing this game - it produces extraordinary losses (more than all other forms of property crime combined), and a crash.

In other words, the companies intentionally make loans to people who will not be able to repay them, because - during an expanding bubble phase - they'll make huge sums of money. The top executives of these companies will make massive salaries and bonuses during the bubble (enough to live like kings even even if the companies go belly up after the bubble phase).

[Simon] Johnson confirmed that a high housing default rate was part of the banks' models. The financial giants knew they would make huge sums during the boom, and then transfer their losses to the American people during the bust.

But there might have been another reason that loaning to borrower who couldn't repay was the prevalent business model.

As foreclosure expert Neil Garfield notes, mortgages are worth a lot more if they default than if they perform.

Specifically, a mortgage worth $300,000 if the homeowner repays in full might be worth $9 million to the various owners of synthetic cdos and credit default swaps if the owner defaults.

We know - as alleged by the SEC:
Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure.
Paulson also advised Los Angeles apartment mogul Jeff Greene to do something similar. Greene was heavily involved in the subprime market, and he bought the worst of the mortgage backed securities, and then bet against the bonds using CDS.

But Garfield says that it is broader than just a couple of investors like Paulson and Greene. He believes that was basically the business model for the entire mortgage industry.

He said that the big banks that packaged mortgage backed securities had an incentive to suck in really bad mortgages. If a certain percentage of the mortgages default, the cdo and cds side bets pay many times more than the actual mortgage could possibly pay.

The state attorneys general, Sigtarp, and other federal and state authorities investigating foreclosure fraud should determine the extent to which these incentives motivated the mbs packagers to include mortgages which did not meet underwriting standards and then hide the bad loans.

They should also investigate the extent to which these incentives motivated mortgage originators to create "liar's loans", "ninja loans", "neutron loans", and "toxic waste".

See this on how credit default swaps can be used like buying fire insurance on someone else's house and then burning down the house, and this explanation by Ellen Brown (starting about half way into video).
Last month, World Banksters snapped their fingers and Congress passed HR3808 in 24 hours without any floor debate (demonstrates Congress total corruption) but Barack Obama (AK. Barry Soros CIA agent....) pocket vetoed the legislation and sent it back to Congress. (To obvious and blatant criminality and utter corruption to the core of the USA and Israel.....)

HR3808 would have legalized World Bankster MERS title recordings and fraudulent verification signatures. Congress will take up the mortgage fraud issue after the November elections so the Justice Department will continue to sit on their hands waiting for the bankster criminals to legalize their utter fraud.....

Is this a great county, or what! Ha. Ha. Proud to be American!USA! USA! USA!

How about the CNBC commentary by the “brightest in the room” these clowns remind me of carnival barkers who are all talking at the same time.....

Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky and the Wall Street Journal all say that the U.S. economy is a giant Ponzi scheme.

Virtually all independent economists and financial experts say that rampant fraud was largely responsible for the financial crisis. See this and this.

But many on Wall Street and in D.C. - and many investors - believe that we should just "go with the flow". They hope that we can restart our economy and make some more money if we just let things continue the way they are.

But the assumption that a system built on fraud can continue without crashing is false.

In fact, top economists and financial experts agree that - unless fraud is prosecuted - the economy cannot recover.

Fraud Leads to a Break Down in Trust and Instability in the Markets

As Alan Greenspan said recently:

Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it would not work

Similarly, leading economist Anna Schwartz - co-author of the leading book on the Great Depression with Milton Friedman - told the Wall Street journal in 2008:

"The Fed ... has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."

So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue."


Today, the banks have a problem on the asset side of their ledgers -- "all these exotic securities that the market does not know how to value."

"Why are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot sell them, you don't know what they're worth, your balance sheet is not credible and the whole market freezes up. We don't know whom to lend to because we don't know who is sound. So if you could get rid of them, that would be an improvement."

And economics professor and former Secretary of Labor Robert Reich wrote in 2008:

The underlying problem isn't a liquidity problem. As I've noted elsewhere, the problem is that lenders and investors don't trust they'll get their money back because no one trusts that the numbers that purport to value securities are anything but wishful thinking. The trouble, in a nutshell, is that the financial entrepreneurship of recent years -- the derivatives, credit default swaps, collateralized debt instruments, and so on -- has undermined all notion of true value.

Robert Shiller - one of the top housing experts in the United States - said recently that failing to address the legal issues will cause Americans to lose faith in business and the government:

Shiller said the danger of foreclosuregate -- the scandal in which it has come to light that the biggest banks have routinely mishandled homeownership documents, putting the legality of foreclosures and related sales in doubt -- is a replay of the 1930s, when Americans lost faith that institutions such as business and government were dealing fairly.

Nobel prize-winning economist Joseph Stiglitz says about the failure to prosecute Wall Street fraud:

The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that's really the problem that's going on.


I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That's the point. There were victims all over the world.


Economists focus on the whole notion of incentives.
People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

Wall Street insider and New York Times columnist Andrew Ross Sorkin writes:

“They will pick on minor misdemeanors by individual market participants,” said David Einhorn, the hedge fund manager who was among the Cassandras before the financial crisis. To Mr. Einhorn, the government is “not willing to take on significant misbehavior by sizable” firms. “But since there have been almost no big prosecutions, there’s very little evidence that it has stopped bad actors from behaving badly.”


Fraud at big corporations surely dwarfs by orders of magnitude the shareholders’ losses of $8 billion that Mr. Holder highlighted. If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we’d have a fighting chance at stopping the next one.

Economics professor James Galbraith says:
There will have to be full-scale investigation and cleaning up of the residue of that, before you can have, I think, a return of confidence in the financial sector. And that's a process which needs to get underway.

No wonder Galbraith says that economists should move into the background, and "criminologists to the forefront"

Failure to Stop Fraud and Prosecute Criminals Causes a Loss of Trust in Government, Which Makes Government Less Effective

As Shiller stated in the quote above, the failure of government officials to stop fraud and prosecute the financial fraudsters has caused a lack of trust in government itself.

Indeed, polls show that people no longer trust our economic "leaders". See this and this.

A psychologist wrote an essay published by the Wharton School of Business arguing that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable:

According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. "Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG." The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. "Normal expectations of what is safe and dependable were abruptly shattered," Sachs noted. "As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred."

People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down.

He framed his argument with a fictional patient named Betty Q. Public, a librarian with two teenage children and a husband, John, who had recently lost his job. "She felt betrayed because she and her husband had invested conservatively and were double-crossed by dishonest, greedy businessmen, and now she distrusted the government that had failed to protect them from corporate dishonesty. Not only that, but she had little trust in things turning around soon enough to enable her and her husband to accomplish their previous goals.

"By no means a sophisticated economist, she knew ... that some people had become fantastically wealthy by misusing other people's money -- hers included," Sachs said. "In short, John and Betty had done everything right and were being punished, while the dishonest people were going unpunished."

Helping an individual recover from a traumatic experience provides a useful analogy for understanding how to help the economy recover from its own traumatic experience, Sachs pointed out. The public will need to "hold the perpetrators of the economic disaster responsible and take what actions they can to prevent them from harming the economy again." In addition, the public will have to see proof that government and business leaders can behave responsibly before they will trust them again, he argued.

Government regulators know this - or at least pay lip service to it - as well. For example, as the Director of the Securities and Exchange Commission's enforcement division told Congress:

Recovery from the fallout of the financial crisis requires important efforts on various fronts, and vigorous enforcement is an essential component, as aggressive and even-handed enforcement will meet the public's fair expectation that those whose violations of the law caused severe loss and hardship will be held accountable. And vigorous law enforcement efforts will help vindicate the principles that are fundamental to the fair and proper functioning of our markets: that no one should have an unjust advantage in our markets; that investors have a right to disclosure that complies with the federal securities laws; and that there is a level playing field for all investors.

If people don't trust their government to enforce the law, government will become more and more impotent in addressing our economic problems. If government leaders take action, the market will not necessarily respond as expected. When government leaders make optimistic statements about the economy, people will no longer believe them.

Trying to Cover Up the Truth Extends Financial Crises

Elizabeth Warren, William Black and others say that attempting to cover up the truth extended Japan's financial problems into an entire "Lost Decade".

As Joseph Stiglitz said about Wall Street fraud:

So the whole strategy of the banks has been to hide the losses, muddle through and get the government to keep interest rates really low.

As long as we keep up this strategy, it's going to be a long time before the economy recovers ....

Pam Martens - who worked on Wall Street for 21 years - writes:

The massive losses by big Wall Street firms, now topping those of the Great Depression in relative terms, have yet to be adequately explained. Wall Street power players are obfuscating and Congress is too embarrassed or frightened to ask, preferring to just throw money at the problem and hope it goes away. But as job losses and foreclosures mount and pensions and 401(k)s shrink, public policy measures to address the economic stresses require a full set of unembellished facts...

It was four years after the crash of 1929 before the major titans of Wall Street were forced to give testimony under oath to Congress and the full magnitude of the fraud emerged. That delay may well have contributed to the depth and duration of the Great Depression. The modern-day Wall Street corruption hearings in Congress ... must now resume in earnest and with sworn testimony if we are to escape a similar fate.
To the extent that the government tries to cover up - instead of openly discuss - financial fraud, it will only extend America's economic malaise.

Failing to Prosecute Fraud Encourages Financial Players to Take Bigger and More Blatantly Illegal Actions

Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals - and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Joseph Stiglitz, Professor Black, and many others agree. See this, this and this.

It was largely fraud which brought down the financial system in 2008. Unless we prosecute the fraudsters, they will do even bigger, stupider and more blatantly illegal things in the future which will lead to even bigger crises.

Failure to Prosecute Fraud Exacerbates the Sovereign Debt Crisis

The governments of the world have spent trillions trying to paper over the fraud and prop up the big, insolvent banks, instead of forcing them to restructure and forcing bondholders and shareholders to take a haircut.

A study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent drives up the costs to the country:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.


All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

The American banks and government have certainly pretended that all of the big banks are solvent. As ABC wrote in October 2009:

The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, [the special inspector general for the Troubled Asset Relief Program] states in a new report released today.
Similarly, the stress tests were a complete and utter sham.

The government has given the giant banks huge amounts in loans and guarantees based upon their false representations about their financial health. The Fed has larded up its balance sheet with toxic assets from the banks.

Debt levels are also getting dangerously close to the level that they become a drag on the economy. See this and this. When Keynesian economists argue that debt does not harm the economy, they are talking about debt incurred to pay for stimulus and productive things for the economy. But throwing trillions at the giant banks - who are mainly using the money to gamble - is not stimulus. It helps the executives of the big banks and their shareholders and bondholders, but not the broader economy.

Indeed, attempting to prop up big, insolvent banks is preventing stimulus from getting out into the economy.

Fraud Causes Growing Inequality, Which Undermines the Economy

Growing inequality is very harmful to our economy. Indeed, if wealth is concentrated in too few hands, the "poker game" ends, as only too few fat cats are left with all of the chips. See this, this, this and this.

Fraud benefits the wealthy more than the poor, because the big banks and big companies have the inside knowledge and the resources to leverage fraud into profits. Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market. The giants (especially Goldman Sachs) have also used high-frequency program trading (making up between 40- 70% of all stock trades) which not only distorts the markets, but which also lets the program trading giants take a sneak peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, this and this.

Similarly, JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country's derivatives risk, and 96% of the exposure to credit derivatives. They use their dominance in the market to manipulate the market.

Fraud disproportionally benefits the big players (and helps them to become big in the first place), increasing inequality and warping the market.

Fraud Increases the Severity of Boom-Bust Cycles

More and more people - such as the Bank of International Settlements and Barons - are saying that bubbles inevitably lead to busts, thus destabilizing the economy.

Professor Black says that fraud is a large part of the mechanism through which bubbles are blown.

Without strong laws against fraud, bubble after bubble will be blown, guaranteeing that the financial system cannot be stabilized in a fundamental sense.

Failure to Prosecute Fraud Is Worsening the Housing Crisis

Finally, failure to prosecute mortgage fraud is arguably worsening the housing crisis. See this and this.

Monday, October 4, 2010

Disinformation Tactics: The Methods Used To Keep You In The Dark


By Giordano Bruno | Neithercorp Press

There was a time, not too long ago (relatively speaking), that governments and the groups of elites that controlled them did not find it necessary to conscript themselves into wars of disinformation. Propaganda was relatively straightforward. The lies were much simpler. The control of information flow was easily directed. In fact, during the early Middle-Ages in most European countries commoners were not even allowed to own a Bible, nor was the Bible allowed to be interpreted from Latin to another language, let alone any other tome that might breed “dangerous ideas”. This was due in large part to the established feudal system and its hierarchy of royals and clergy. Rules were enforced with the threat of property confiscation and execution for anyone who strayed from the rigid socio-political structure. Those who had theological, metaphysical, or scientific information outside of the conventional and scripted collective world view were tortured and slaughtered. The elites kept the information to themselves, and removed its remnants from mainstream recognition, sometimes for centuries before it was rediscovered.

With the advent of anti-feudalism, and most importantly the success of the American Revolution, elites were no longer able to dominate information with the edge of a blade or the barrel of a gun. The establishment of Democracies (and Democratic Republics), with their philosophy of open government and rule by the people, compelled Aristocratic minorities to plot more subtle ways of obstructing the truth and thus maintaining their hold over the world without exposing themselves to retribution from the masses. Thus, the complex art of disinformation was born. The technique, the “magic” of the lie, was refined and perfected. The mechanics of the human mind and the human soul became an endless obsession for the elites.

The goal was malicious, but socially radical; instead of expending the impossible energy needed to dictate the very form and existence of the truth, they would allow it to drift, obscured in a fog of contrived data. They would wrap the truth in a “Gordian Knot” of misdirections and fabrications so elaborate that they felt certain the majority of people would surrender, giving up long before they ever finished unraveling the deceit. The goal was not to destroy the truth, but to hide it in plain sight.

In modern times, and with carefully engineered methods, this goal has for the most part been accomplished. However, these methods also have inherent weaknesses. Lies are fragile. They require constant attentiveness to keep them alive. The exposure of a single truth can rip through an ocean of lies, evaporating it instantly. In this article, we will examine the methods used to fertilize and promote the growth of disinformation, as well as how to identify the roots of disinformation and effectively cut them, starving out the entire system of fallacies once and for all.

Media Disinformation Methods

The mainstream media, once tasked with the job of investigating government corruption and keeping elitists in line, has now become nothing more than a PR firm for corrupt officials and their Globalist handlers. The days of the legitimate “investigative reporter” are long gone, and journalism itself has deteriorated into a rancid pool of so called “TV Editorialists” who treat their own baseless opinions as supported fact.

The elitist co-opting of news has been going on in one form or another since the invention of the printing press, however, the first methods of media disinformation truly came to fruition under the supervision of newspaper magnate William Randolph Hearst, who believed the truth was “subjective” and open to his personal interpretation. Hearst’s legacy of lies and sensationalism lives on in the Hearst published magazine ‘Popular Mechanics’, who accuse the growing 9/11 Truth Movement of outrageous “conspiracy theory” while at the same time consistently publishing articles about UFO sightings and secret government flying saucer programs.


As we will show, this strange juxtaposition of mixed signals and hypocritical accusations is characteristic of all purveyors of disinformation.

Some of the main tactics used by the mainstream media to mislead the masses are as follows:

Lie Big, Retract Quietly

Mainstream media sources (especially newspapers) are notorious for reporting flagrantly dishonest and unsupported news stories on the front page, then quietly retracting those stories on the very back page when they are caught. In this case, the point is to railroad the lie into the collective consciousness. Once the lie is finally exposed, it is already too late, and a large portion of the population will not notice or care when the truth comes out. A good example of this would be the collusion of the MSM with the Bush administration to convince the American public after 9/11 that Iraq had WMDs, even though no concrete evidence existed to prove it. George W. Bush’s eventual admission that there had never been any WMDs in Iraq (except chemical weapons which the U.S. actually sold to Saddam under the Reagan / Bush administration) was lightly reported or glazed over by most mainstream news sources. The core reason behind a war that has now killed over a million people was proven to be completely fraudulent, yet I still run into people today who believe that Iraq had nukes…

Unconfirmed Or Controlled Sources As Fact

Cable news venues often cite information from “unnamed” sources, government sources that have an obvious bias or agenda, or “expert” sources without providing an alternative “expert” view. The information provided by these sources is usually backed by nothing more than blind faith. A recent example of this would be the Osama Bin Laden audio tapes which supposedly reveal that the Christmas “Underwear Bomber” was indeed Al-Qaeda:

The media treats the audio tape as undeniable fact in numerous stories, then at the same time prints a side story which shows that the White House cannot confirm that the tape is even real:

If the White House cannot confirm the authenticity of the tape, then why did the media report on its contents as if it had been confirmed?

Calculated Omission

Otherwise known as “cherry picking” data. One simple piece of information or root item of truth can derail an entire disinfo news story, so instead of trying to gloss over it, they simply pretend as if it doesn’t exist. When the fact is omitted, the lie can appear entirely rational. This tactic is also used extensively when disinformation agents and crooked journalists engage in open debate.

Distraction, and the Manufacture of Relevance

Sometimes the truth wells up into the public awareness regardless of what the media does to bury it. When this occurs their only recourse is to attempt to change the public’s focus and thereby distract them from the truth they were so close to grasping. The media accomplishes this by “over-reporting” on a subject that has nothing to do with the more important issues at hand. Ironically, the media can take an unimportant story, and by reporting on it ad nauseum, cause many Americans to assume that because the media won’t shut-up about it, it must be important! An example of this would be the recent push for an audit of the Federal Reserve which was gaining major public support, as well as political support. Instead of reporting on this incredible and unprecedented movement for transparency in the Fed, the MSM spent two months or more reporting non-stop on the death of Michael Jackson, a pop idol who had not released a decent record since “Thriller,” practically deifying the man who only months earlier was being lambasted by the same MSM for having “wandering hands” when children were about.

Dishonest Debate Tactics

Sometimes, men who actually are concerned with the average American’s pursuit of honesty and legitimate fact-driven information break through and appear on T.V. However, rarely are they allowed to share their views or insights without having to fight through a wall of carefully crafted deceit and propaganda. Because the media knows they will lose credibility if they do not allow guests with opposing viewpoints every once in a while, they set up and choreograph specialized T.V. debates in highly restrictive environments which put the guest on the defensive, and make it difficult for them to clearly convey their ideas or facts.

TV pundits are often trained in what are commonly called “Alinsky Tactics.” Saul Alinsky was a moral relativist, and champion of the lie as a tool for the “greater good;” essentially, a modern day Machiavelli. His “Rules for Radicals” were supposedly meant for grassroots activists who opposed the establishment, and emphasized the use of any means necessary to defeat one’s political opposition. But is it truly possible to defeat an establishment built on lies, by use of even more elaborate lies, and by sacrificing one’s ethics?

Today, Alinsky’s rules are used more often by the establishment than by its opposition. These tactics have been adopted by governments and disinformation specialists across the world, but they are most visible in TV debate. While Alinsky sermonized about the need for confrontation in society, his debate tactics are actually designed to circumvent real and honest confrontation of opposing ideas with slippery tricks and diversions. Alinsky’s tactics, and their modern usage, can be summarized as follows:

1) Power is not only what you have, but what the enemy thinks you have.

We see this tactic in many forms. For example, projecting your own movement as mainstream, and your opponent’s as fringe. Convincing your opponent that his fight is a futile one. Your opposition may act differently, or even hesitate to act at all, based on their perception of your power.

2) Never go outside the experience of your people, and whenever possible, go outside of the experience of the enemy.

Don’t get drawn into a debate about a subject you do not know as well as or better than your opposition. If possible, draw them into such a situation instead. Look for ways to increase insecurity, anxiety and uncertainty in your opposition. This is commonly used against unwitting interviewees on cable news shows whose positions are set up to be skewered. The target is blind-sided by seemingly irrelevant arguments that they are then forced to address. In television and radio, this also serves to waste broadcast time to prevent the target from expressing his own positions.

3) Make the enemy live up to their own book of rules.

The objective is to target the opponent’s credibility and reputation by accusations of hypocrisy. If the tactician can catch his opponent in even the smallest misstep, it creates an opening for further attacks.

4) Ridicule is man’s most potent weapon.

“Ron Paul is a crackpot.” “Dennis Kucinich is short and weird.” “9-11 twoofers wear tinfoil hats.” Ridicule is almost impossible to counter. It’s irrational. It infuriates the opposition, which then reacts to your advantage. It also works as a pressure point to force the enemy into concessions.

5) A good tactic is one that your people enjoy.

The popularization of the term “Teabaggers” is a classic example, it caught on by itself because people seem to think it’s clever, and enjoy saying it. Keeping your talking points simple and fun keeps your side motivated, and helps your tactics spread autonomously, without instruction or encouragement.

6) A tactic that drags on too long becomes a drag.

See rule number 6. Don’t become old news. If you keep your tactics fresh, its easier to keep your people active. Not all disinformation agents are paid. The “useful idiots” have to be motivated by other means. Mainstream disinformation often changes gear from one method to the next and then back again.

7) Keep the pressure on with different tactics and actions, and utilize all events of the period for your purpose.

Keep trying new things to keep the opposition off balance. As the opposition masters one approach, hit them from the flank with something new. Never give the target a chance to rest, regroup, recover or re-strategize. Take advantage of current events and twist their implications to support your position. Never let a good crisis go to waste.

8) The threat is usually more terrifying than the thing itself.

This goes hand in hand with Rule #1. Perception is reality. Allow your opposition to expend all of its energy in expectation of an insurmountable scenario. The dire possibilities can easily poison the mind and result in demoralization.

9) The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition.

The objective of this pressure is to force the opposition to react and make the mistakes that are necessary for the ultimate success of the campaign.

10) If you push a negative hard and deep enough, it will break through into its counterside.

As grassroots activism tools, Alinsky tactics have historically been used (for example, by labor movements) to force the opposition to react with violence against activists, which leads to popular sympathy for the activists’ cause. Today, false (or co-opted) grassroots movements use this technique in debate as well as in planned street actions. The idea is to provoke (or stage) ruthless attacks against ones’ self, so as to be perceived as the underdog, or the victim. Today, this technique is commonly used to create the illusion that a certain movement is “counterculture” or “anti-establishment.”

11) The price of a successful attack is a constructive alternative.

Never let the enemy score points because you’re caught without a solution to the problem. Today, this is often used offensively against legitimate activists, such as the opponents of the Federal Reserve. Complain that your opponent is merely “pointing out the problems.” Demand that they offer a solution.

12) Pick the target, freeze it, personalize it, and polarize it.

Cut off the support network and isolate the target from sympathy. The targets supporters will expose themselves. Go after individual people, not organizations or institutions. People hurt faster than institutions.

The next time you view an MSM debate, watch the pundits carefully, you will likely see many if not all of the strategies above used on some unsuspecting individual attempting to tell the truth.

Internet Disinformation Methods

Because the MSM’s bag of tricks has been so exhausted over such a long period of time, many bitter and enraged consumers of information are now turning to alternative news sources, most of which exist on the collective commons we call the internet. At first, it appears, the government and elitists ignored the web as a kind of novelty, or just another mechanism they could exploit in spreading disinformation. As we all now well know, they dropped the ball, and the internet has become the most powerful tool for truth history has ever seen.

That being said, they are now expending incredible resources in order to catch up to their mistake, utilizing every trick in their arsenal to beat web users back into submission. While the anonymity of the internet allows for a certain immunity against many of Saul Alinsky’s manipulative tactics, it also allows governments to attack those trying to spread the truth covertly. In the world of web news, we call these people “disinfo trolls.” Trolls are now being openly employed by governments in countries like the U.S. and Israel specifically to scour the internet for alternative news sites and disrupt their ability to share information.

Internet trolls, also known as “paid posters” or “paid bloggers,” are increasingly being employed by private corporations as well, often for marketing purposes. In fact, it is a rapidly growing industry.

Trolls use a wide variety of strategies, some of which are unique to the internet, here are just a few:

1) Make outrageous comments designed to distract or frustrate: An Alinsky tactic used to make people emotional, although less effective because of the impersonal nature of the web.

2) Pose as a supporter of the truth, then make comments that discredit the movement: We have seen this even on our own forums — trolls pose as supporters of the Liberty Movement, then post long, incoherent diatribes so as to appear either racist or insane. Here is a live example of this tactic in use on Yahoo! Answers.

The key to this tactic is to make references to common Liberty Movement arguments while at the same time babbling nonsense, so as to make those otherwise valid arguments seem ludicrous by association.

In extreme cases, these “Trojan Horse Trolls” have been known to make posts which incite violence — a technique obviously intended to solidify the false assertions of the notorious MIAC report and other ADL/SPLC publications which purport that constitutionalists should be feared as potential domestic terrorists.

3) Dominate Discussions: Trolls often interject themselves into productive web discussions in order to throw them off course and frustrate the people involved.

4) Prewritten Responses: Many trolls are supplied with a list or database with pre-planned talking points designed as generalized and deceptive responses to honest arguments. 9/11 “debunker” trolls are notorious for this.

5) False Association: This works hand in hand with item #2, by invoking the stereotypes established by the “Trojan Horse Troll.”

For example: calling those against the Federal Reserve “conspiracy theorists” or “lunatics”. Deliberately associating anti-globalist movements with big foot or alien enthusiasts, because of the inherent negative connotations. Using false associations to provoke biases and dissuade people from examining the evidence objectively.

6) False Moderation: Pretending to be the “voice of reason” in an argument with obvious and defined sides in an attempt to move people away from what is clearly true into a “grey area” where the truth becomes “relative.”

7) Straw Man Arguments: A very common technique. The troll will accuse his opposition of subscribing to a certain point of view, even if he does not, and then attacks that point of view. Or, the troll will put words in the mouth of his opposition, and then rebut those specific words. For example: “9/11 truthers say that no planes hit the WTC towers, and that it was all just computer animation. What are they, crazy?”

Sometimes, these strategies are used by average people with serious personality issues. However, if you see someone using these tactics often, or using many of them at the same time, you may be dealing with a paid internet troll.

Government Disinformation Methods

Governments, and the globalists who back them, have immense assets — an almost endless fiat money printing press — and control over most legal and academic institutions. With these advantages, disinformation can be executed on a massive scale. Here are just a handful of the most prominent tactics used by government agencies and private think tanks to guide public opinion, and establish the appearance of consensus:

1) Control The Experts: Most Americans are taught from kindergarten to ignore their instincts for the truth and defer to the “professional class” for all their answers. The problem is that much of the professional class is indoctrinated throughout their college years, many of them molded to support the status quo. Any experts that go against the grain are ostracized by their peers.

2) Control The Data: By controlling the source data of any investigation, be it legal or scientific, the government has the ability to engineer any truth they wish, that is, as long as the people do not care enough to ask for the source data. Two major examples of controlled and hidden source data include; the NIST investigation of the suspicious 9/11 WTC collapses, in which NIST engineers, hired by the government, have kept all source data from their computer models secret, while claiming that the computer models prove the collapses were “natural”. Also, the recent exposure of the CRU Climate Labs and their manipulation of source data in order to fool the public into believing that Global Warming is real, and accepting a world-wide carbon tax. The CRU has refused to release the source data from its experiments for years, and now we know why.

3) Skew The Statistics: This tactic is extremely evident in the Labor Department’s evaluations on unemployment, using such tricks as incorporating ambiguous birth / death ratios into their calculation in order to make it appear as though there are less unemployed people than there really are, or leaving out certain subsections of the population, like those who are unemployed and no longer seeking benefits.

3) Guilt By False Association: Governments faced with an effective opponent will always attempt to demonize that person or group in the eyes of the public. This is often done by associating them with a group or idea that the public already hates. Example: During the last election, they tried to associate Ron Paul supporters with racist groups (and more recently, certain Fox News anchors) in order to deter moderate Democrats from taking an honest look at Congressman Paul’s policies.

4) Manufacture Good News: This falls in with the skewing of statistics, and it also relies heavily on Media cooperation. The economic “Green Shoots” concept is a good example of the combination of government and corporate media interests in order to create an atmosphere of false optimism based on dubious foundations.

5) Controlled Opposition: Men in positions of power have known for centuries the importance of controlled opposition. If a movement rises in opposition to one’s authority, one must usurp that movement’s leadership. If no such movement exists to infiltrate, the establishment will often create a toothless one, in order to fill that social need, and neutralize individuals who might have otherwise taken action themselves.

During the 1960’s and 70’s, the FBI began a secretive program called COINTELPRO. Along with illegal spying on American citizens who were against the Vietnam conflict or in support of the civil rights movement, they also used agents and media sources to pose as supporters of the movement, then purposely created conflict and division, or took control of the direction of the movement altogether. This same tactic has been attempted with the modern Liberty Movement on several levels, but has so far been ineffective in stopping our growth.

The NRA is another good example of controlled opposition, as many gun owners are satisfied that paying their annual NRA dues is tantamount to actively resisting anti-gun legislation; when in fact, the NRA is directly responsible for many of the compromises which result in lost ground on 2nd amendment issues. In this way, gun owners are not only rendered inactive, but actually manipulated into funding the demise of their own cause.

6) False Paradigms: Human beings have a tendency to categorize and label other people and ideas. It is, for better or worse, a fundamental part of how we understand the complexities of the world. This component of human nature, like most any other, can be abused as a powerful tool for social manipulation. By framing a polarized debate according to artificial boundaries, and establishing the two poles of that debate, social engineers can eliminate the perceived possibility of a third alternative. The mainstream media apparatus is the key weapon to this end. The endless creation of dichotomies, and the neat arrangement of ideologies along left/right lines, offers average people a very simple (though hopelessly inaccurate) way of thinking about politics. It forces them to choose a side, usually based solely on emotional or cultural reasons, and often lures them into supporting positions they would otherwise disagree with. It fosters an environment in which beating the other team is more important than ensuring the integrity of your own. Perhaps most importantly, it allows the social engineer to determine what is “fair game” for debate, and what is not.

Alinsky himself wrote: “One acts decisively only in the conviction that all the angels are on one side and all the devils on the other.”

One merely needs to observe a heated debate between a Democrat and a Republican to see how deeply this belief has been ingrained on both sides, and how destructive it is to true intellectual discourse.

Stopping Disinformation


The best way to disarm disinformation agents is to know their methods inside and out. This gives us the ability to point out exactly what they are doing in detail the moment they try to do it. Immediately exposing a disinformation tactic as it is being used is highly destructive to the person utilizing it. It makes them look foolish, dishonest, and weak for even making the attempt. Internet trolls most especially do not know how to handle their methods being deconstructed right in front of their eyes, and usually fold and run from debate when it occurs.

The truth, is precious. It is sad that there are so many in our society that have lost respect for it; people who have traded in their conscience and their soul for temporary financial comfort while sacrificing the stability and balance of the rest of the country in the process. The human psyche breathes on the air of truth, without it, humanity cannot survive. Without it, the species will collapse in on itself, starving from lack of intellectual and emotional sustenance. Disinformation does not only threaten our insight into the workings of our world; it makes us vulnerable to fear, misunderstanding, and doubt, all things that lead to destruction. It can lead good people to commit terrible atrocities against others, or even against themselves. Without a concerted and organized effort to diffuse mass-produced lies, the future will look bleak indeed....

Saturday, October 2, 2010


The CIA's dead Osama Bin Laden personally ordered commando attacks on Britain, U.S. intelligence chiefs babble.....Al-CIAda again....

There are to be no attacks on Israel.....

The CIA/MOSSAD are said to have sent a directive to its planners several months ago naming the countries and the type of attacks they wanted. (dailymail.n)

Gunmen had planned to open fire on crowds at busy European tourist sites and take hostages at hotels.

The attacks would have been similar to the Mumbai atrocities of November 2008 which left 173 dead. (dailymail.A)

“You had to attack civilians, the people, women, children, innocent people, unknown people far removed from any political game,” stated Gladio operative Vincezo Vinciguerra. (Vincenzo Vinciguerra – Wikipedia, the free encyclopedia / NATO’s secret armies linked to terrorism?)

Let us look at Belgium and terrorism.

From NATO, Gladio and the strategy of tension. N.A.T.O stay behind.:

In Belgium, in 1984 a bizarre operation occurred around Vielsalm in the Ardennes region.

A squad of US Marines were parachuted into Belgium, and met by a member of the Belgian military intelligence.

They hid for a fortnight before attacking the police station of Vielsalm, in a so-called Oesling exercise, killing a Belgian officer. One marine was injured during the operation, losing an eye.

Initially the attack was passed off as terrorism, but was later proven to be the work of the American and Belgian military - as confirmed by the Senate investigations of 1991.

Other attacks occured, where, as was the case in Vielsalm, arms and ammunition were taken. Arms that found their way subsequently to extremist groups.

One central question in the Belgian Senate investigation into the stay-behind network was whether it had been involved in the so-called
Brabant Massacres of the 1980s.

These were a group of attacks that occured in the area around Brussels called Brabant over a period of two years. Jewellers, restaurants, and in a number of cases supermarkets were attacked by a gang of heavily armed and ruthless men.

In all the attacks very small amounts of money were taken, while "at the same time massive brutality and professionalism was employed" [NATO's Secret Armies pg 139].

For example, on November 9th 1985 on a busy Saturday, three armed hooded men entered a supermarket and started shooting. Eight people were killed, some while trying to escape.

The money taken from the raid amounted to a couple of thousand pounds, and was found dumped in a canal in an unopened sack...

An official report published on the Brabant Massacres in 1990, before the discovery of the secret army network, had concluded that the killers had official links:

“According to the report, the killers were members or former members of the security forces – extreme right-wingers who enjoyed high-level protection and were preparing a right-wing coup” [NATO’s Secret Armies, pg 145]