Volatility

December 15, 2010

What Do Wikileaks and Foreclosuregate Have In Common?

 

Much has been written about Julian Assange’s theory of how aggressive forced transparency can impose a “secrecy tax” on authoritarian conspiracies like the secrecy regime of the US kleptocracy. The ability of a system like this to smoothly function is predicated on its ability to easily disseminate information among the insiders while keeping it secret from outsiders. So the more paranoid the system becomes about its ability to maintain this monopoly, the more it must restrict information flows, police its own members, and devote resources to this maintenance. Like any other illegitimate, parasitic structure, it becomes less and less efficient and resilient as the self-generated resistance to it grows. According to Assange, Wikileaks is dedicated to imposing this secrecy tax upon these criminal organizations. If the tax becomes onerous enough, it can even render the system unable to function.
 
When I thought about this, it struck me how similar it is to other ramifications of the system crime. Everywhere there are signs of the self-imposed crime tax hindering smooth system function. Probably the best example is Foreclosuregate, where the banks’ systematic refusal to comply with the most basic, stone-carved legal procedures for conveying title and constituting MBS trusts has rendered all “ownership” questionable, and has perhaps in fact rendered most mortgages and most or all MBS trusts unsecured loans. In non-recourse states, the mortgagee may in fact not be able to have recourse even to the house itself. Meanwhile if the scofflaw servicer tried to belatedly (and illicitly) convey the note to the trust, the trust would be revealed as having been fraudulent in the first place, the trustees would incur a severe tax liability, and they’d be exposed to lawsuits from the defrauded investors.
 
The same would be true if the originator simply foreclosed on his own:
 

On one hand, the problem is easily cured – the party who is the documented owner of the loan could foreclose (the original lender). The problem with this is that the proceeds of the foreclosed property, including the recoveries intended to reimburse the servicer for advances, would have no mechanism for getting back into the trust.

If the original lender foreclosed, took title and liquidated the loan, accountants would have an issue with how the proceeds could possibly end up back with the trust. The result would be a total loss for the trust for that loan.

The servicer’s attorneys have no desire to go this route – it terrifies them.

 
Every time I read something like this my first gut thought is to doubt there’s anyone in the system who isn’t willing to break any and every rule and law.
 
But then I figure that a massive criminal conspiracy within the system must run up against the same inertial obstacles revolutionaries have often complained about – that existing professional cadres, no matter what the professional intent of their members, are still as a group committed to certain ways of doing things. It’s their professional culture, and even as intentional criminals they must still often feel the need to dot the i and cross the t.
 
And then the system is supposed to be set up to maximize the flow of loot upward and minimize leakage at the lower levels. Having a perverted but still mechanically functional rule of law and process of bureaucracy is supposed to help effect this. This is why the Nazis were always as punctilious as possible about “legality” for their crimes.
 
So perhaps the half-baked kleptocracy, having run its crimes so far out ahead of its “laws”, will be unable to fix this mess even with its own pseudo-legal contraptions, and will sustain a major blow here.
 
Just like its hysterical attempts to put out the Wikileaks fire are already demonstrating the validity of Assange’s ideas. Although I’m not a tech expert, from what I gather it would be impossible to shut down Wikileaks short of “shutting down the Internet itself”, which I take to mean rendering it far more slow and inefficient. We can imagine what that would do for the system’s economic “recovery”. That fits into their intensifying “cyber war” rhetoric. Joe Lieberman and others have also been threatening even their own friends in the MSM like the NYT. Government agencies and contractors are imposing all sorts of restrictions on what computers within their purview can be used for. I had one commenter tell me his company is even trying to restrict what employees can do on their own personal computers at home. And funniest of all was the spectacle of universities warning prospective government employees among their students about how intensely all their prior online activity is likely to be scrutinized by this prospective employer. The vision of these Ivy League Hitler Youth scrambling to try to sanitize their past online lives and even more vigilantly self-police their words and actions going forward gives us a prime piece of Schadenfreude.
 
So it looks like we already are imposing this secrecy tax.
 
[We can see from all this why we don’t want any sort of “modernized” mortgage registry, which would simply be easier to “legally” game. It would put up less resistance to organized crime. Its very pseudo-efficiency would offer fewer handholds for citizen action.
 
We’re learning everywhere that so-called inefficiency and redundancy really mean resiliency and at least the potential for accountability.
 
In this case, there’s nothing wrong with the existing legal procedure. (Not the scofflaw mortgage mill and securitization procedure.) Is this slow when you’re trying to convey and securitize millions of loans? Yes – which is a good thing. Slow is Good. And as we should have learned by now, we never needed or wanted such financialization of mortgages in the first place. They should have stayed with the originator, with what worked perfectly well before these crimes were invented.
 
There’s no need for shock-doctrine speed and false efficiency, which as we’ve learned to our sorrow is a false economy.]
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17 Comments

  1. For the benefit of those who did not understand the emphasis/motivation behind Bill Mitchell’s efforts to try to explain how MMT provides an explanation for how the economy could work (were it possible to be implemented in an imaginary world where the administrators of the Treasury Dept might focus on solving the problems of setting up conditions to enable full employment). Jim Luke at econproph.com recently published the following:
    December 13, 2010
    History of Full Employment Efforts
    Filed under: Comp. Econ Systems,Econ Hist — Jim Luke @ 9:03 pm

    http://econproph.com/2010/12/13/history-of-full-employment-efforts/#more-1053

    Bill Mitchell’s ‘billyblog’ was written on a recent day by Victor Quirk (graduate student associate of Mitchell) and provides some interesting history of efforts to achieve full employment in ‘Merry Old England’. You might find this of interest.

    Comment by William Wilson — December 15, 2010 @ 6:19 am

  2. Apologies for the unedited post earlier; perhaps, Russ could set up a ‘preview’ step so that editing would be encouraged prior to posting.

    Comment by William Wilson — December 15, 2010 @ 6:23 am

    • Sorry William, I don’t think there is a “preview” option. You could just repost. (I assume you save long comments before hitting “post”.)

      I’d say that a description of what the Treasury Dept. “could” do if it cared about unemployment is worthwhile as an indictment only. The form would be: “Since they could so easily do this, the fact that they don’t proves their criminality.”

      But I see zero point in continuing with the farce that this system will ever do anything constructive, and it’s demeaning to keep begging, like the way even Auerback and Black (of all people) have been doing.

      Indeed, by now for any well-known figure to still pretend like that makes him at best an objective collaborator with the banksters, since he’s only trying to astroturf false faith in incorrigible criminals and an irredeemable system. As I said in the prior post, that’s what Krugman is at best.

      Comment by Russ — December 15, 2010 @ 9:39 am

  3. It’s kind of intriguing how even coverage that defends Wikileaks prefaces the discussion by announcing that Assange is a repulsive jerk. This is usually stated as fact without so much as a supporting allusion. It’s so common for even his quasi-supporters to ridicule Assange’s looks and lambaste his ego one wonders why he needs enemies. I can only guess that writers are trying to address the revulsion they expect their readers feel when Assange’s name is mentioned. It’s rather mystifying — I’ve seen Assange in one or two interviews and he presented like a normal, if intelligent, human being. There must be so much knee-jerk hatred of him at elite levels that writers have to advertise their loathing whenever they write about him. “I hate witches as much as anyone, but did any of us really see Goody Osburn with the devil?”

    1) “Assange has that pasty-faced expressionless Nordic look of a cruel and steely-eyed English barrister who got buggered senseless in his upper-crust public school—or maybe an inscrutable Euro-trash arms dealer who obsessively plays baccarat up and down the Côte d’Azur.”

    “He got his content the old fashioned way—by stealing it from thieves.”
    http://gonzalolira.blogspot.com/2010/12/case-of-wikileaks-part-ithe-hackers.html

    Comment: Ridicules Assange for his appearance. Explicitly, Assange’s looks are bizarre; implicitly, people who look strange are not to be trusted. Also uses a curiously disparaging way to refer to Wikileak’s discovery that Chinese hackers were intercepting information apparently sent by government intelligence services on the anonymous TOR network. The writer is breathtakingly ignorant of hacker culture and seems to despise it for what I presume are personal reasons.

    2) “Sovereign hacker Julian Assange is the identifying figurehead of Wikileaks, whose notoriety and reputation very much merges with his own, blurring the distinction between what it does and stands for and Assange’s rather agitated private life and his somewhat unpolished political opinions.”

    “the self-inflicted celebrity cult of Julian Assange”
    http://mondediplo.com/openpage/twelve-theses-on-wikileaks

    Comment: Assange is the center of controversy, and he is wholly to blame for that. He is a figurehead who is distracting attention from his organization. (Which is of course exactly what his enemies want.) His political opinions do not match elite norms.

    3) “I wish Julian Assange were a better person”
    http://www.slate.com/id/2277764/ Titled: “Assange Is a Jerk. So What?”

    Comment: Article never states what about Assange needs to be improved. His flaws are self-evident and don’t need to be discussed with the reader, who already knows what’s wrong with him.

    4) “[H]e’s a pompous egomaniac sporting a series of bad haircuts and grandiose tendencies”
    http://www.slate.com/id/2276312/

    Comment: Never states why Assange is grandiose, just says he is. Ridicules his appearance.

    5) “With his ghostly complexion, floppy white hair (when it is not dyed or cropped to disguise his identity) and droning bass monotone, Assange not only behaves like a character sprung to life from a science-fiction screenplay but he even looks and sounds like one.”
    http://www.msnbc.msn.com/id/40644359

    Comment: Ridicules his appearance. States that Assange attempts to disguise his identity but doesn’t provide any supporting details. Trivializes him by comparing him to a science fiction character.

    6) Assange “possesses such an ego-swollen head it’s a miracle that he can walk without toppling over.”
    http://www.slate.com/id/2277096/

    Comment: Never states why Assange’s ego is swollen. Again, this is just understood.

    7) The above are all articles that can be said to be somewhat even-handed. Then there are actual enemies. One of the tamest is Christopher Hitchens, who finds it easy “to picture Assange as a cult leader indulging himself with acolytes”.
    http://www.slate.com/id/2276857/ Subhead: “The WikiLeaks founder is an unscrupulous megalomaniac with a political agenda.”

    I expect this will go to moderation due to all the links, but I’ll only try to submit once.

    Comment by reslez — December 15, 2010 @ 8:47 pm

    • Excellent assemblage, reslez. (Yeah, it did go into moderation.)

      I’ve noticed this petulant urge to attack Assange on personal grounds. Even though the grounds themselves, even if true, wouldn’t distinguish him as a person from the average elitist, including from the author himself. The difference in each case is that Assange’s actions are against the machine, the writers’ are for it.

      Those same hacks would lambaste such personal attacks as “uncivil” if populists engaged in them against e.g. Lloyd Blankfein’s bald head. Did you ever see the civility police at Yves’ place? Every thread seems to have its self-designated concern troll: “Why personalize this, Yves? You’re better than that!” Usually there was no personal attack at all.

      As you point out, it’s funny how ignorant they are about Assange’s role here. They attack him for serving as the public face of the organization, as if that’s a self-indulgent ego trip, when that’s really a calculated part of the media strategy and battle tactic. (Even if that wasn’t clear in itself, the fact that Assange has explained the strategy many times should sort of tip them off, shouldn’t it?)

      (As for how effective it’ll be, I guess we’ll find out soon. Assange implied that taking him out personally wouldn’t affect the pace of operations. So that should mean their personal persecution of him won’t affect upcoming deliveries.)

      I think you’re right about the personal hatred of elitists for someone who’s actually engaging in an effective action against them and their masters. They’re frustrated, and as self-entitled schoolyard bullies are sincerely outraged to see anyone fight back on behalf of the victims. Ergo the reason for this kind of schoolyard taunting.

      As for the quasi-supporters, I concluded long ago that this demostrates a dividing line between the “best” liberals who are still in the end elitists (a liberal is a trickle-down elitist by definition), as opposed to true citizen activists.

      Even a “progressive” who hates Obama and the Democrats on policy grounds still has a theoretical dream elite who would extract wealth and monopolize secrets truly “for our own good”. If Assange and Wikileaks represent “transparency fundamentalism” (a term I recently encountered, and which I proudly own in the face of such liberal elitism), then that’s unacceptable to them in principle. At best they can judge each leak in itself for whether it’s “good” or “bad”. In principle, they side with the Pentagon and against the people.

      But they’re too cowardly to openly admit that. So instead they engage in conspiracy theories, they console themselves that Assange is really a CIA plant or something, or they sneer at the practical effect of specific leaks, or they just attack Assange personally.

      Comment by Russ — December 16, 2010 @ 3:49 am

  4. What they have in common is the demonstration of the power of the computer both from the bottom up, and from the top down.

    Had Assange gotten no publicity, his data would just have been there, available—no amusing spectacle of the rage of the State. The foreclosure wrangle highlights the trampling of bottom up individual transactions, by imposed computer algorithm in lieu of individual consent.

    Procedures at law have substantive meaning, to ensure the reality and factual integrity of any bargain, so price discovery occurs in reality, and is not manipulated or imposed from above. The oligarchy’s use of computers is aimed at eliminating individual consent. Beware legal arguments “deeming” or “implying” individual consent. Oligarchs always seek to manipulate the law in this way to seize power and liberty from individuals.

    Comment by lingfish — December 16, 2010 @ 9:09 am

    • You can say that again, lingfish. The last thing anyone has wanted, since the bubble started to burst in 2007, is reality-based price discovery.

      And where would the Wikileaks phenomenon be without Assange’s charismatic leadership (in the ideological and publicity sense)? I don’t know, but I bet the effect wouldn’t have been as extraordinary.

      Comment by Russ — December 16, 2010 @ 3:49 pm

    • lingfish, good of you to highlight the computerization angle.

      I imagine a good example of what Russ means by “progressive” (in air-quotes) could be Romano Prodi. A former university professor and perennially one of the stooge/leaders of the Italian left, he’s a Goldman Sachs alumnus.

      Prodi’s move to make cash transactions over €100 illegal was the least-noted among the unpopular issues that ushered in Berlusconi (himself a different type of gangster). I have no doubt that once Berlusca is gone, though, whether voluntarily or involuntarily, the Italian “left” (I will continue to use the air-quotes) elite will betray the populace and try to force all transactions into the electronic sphere.

      Prodi (ex-EU president and, like Berlusconi, twice prime minister) oversaw a move in the early 1990s where he just outright took 7.5% out of every Italian’s bank accounts, so nothing is really beyond the pale for these folks.

      It matters not that Prodi’s star has faded: Goldman Sachs & Bank of Italy alum. Mario Draghi’s name is now being bandied about as a future contender to Berlusconi for the PM slot.

      Comment by Lidia — December 17, 2010 @ 2:05 pm

      • Lidia, I haven’t been following Italy closely, but that sounds typical of what we face in all Western countries. That’s going further than any proposal I’ve heard of yet in America, but I have no doubt that’s the eventual intent.

        Comment by Russ — December 17, 2010 @ 3:21 pm

      • Correction!! I was wrong about Prodi and the 7.5% tax on deposits.

        That happened under the government of Giuliano Amato, a nominal Socialist. He was Minister of the Interior under Prodi.

        He was succeeded by Ciampi (Goldman Sachs alum), who is now the President of the Republic.

        Comment by Lidia — December 17, 2010 @ 4:11 pm

      • Amato is now behind the European Monetary Fund.

        This writer calls Amato more dangerous than Berlusconi for Italy:
        http://www.aldogiannuli.it/2010/03/democrazia-e-se-giuliano-amato-fosse-piu-pericoloso-di-silvio-berlusconi/

        A key paragraph with my translation: National governments—which today possess fiscal sovereignty—have electoral legitimization. In contrast, the hoped-for EMF can be neither the product of a direct popular investiture, nor designated by national governments, for obvious reasons relative to its decision-making functionality, but—exactly like the IMF—the result of an accord between central banks. Therefore, to postulate the transfer of fiscal sovereignty to a hypothetical EMF would signify nothing less than transferring fiscal decision-making capacity from organs which are the expression of elections to an organ that is autocratic an non-representative.

        In substance, a restricted elite of bankers would contemporaneously exercise fiscal sovereignty as well as monetary sovereignty (which it already has). This would comport, consequently, the conditioning of every spending policy on the part of national governments and parliaments. At this point, we could begin to speak of democracy as an interesting form of past government by now completely obsolete.

        Comment by Lidia — December 17, 2010 @ 4:34 pm

      • The globalizers themselves, e.g. Dani Rodrick with his “trilemma”, admit that globalization is in a zero-sum death struggle with sovereignty and democracy.

        For the one to live, the other must die.

        The goal is definitely to completely disintegrate civil society, law, and public services, replacing them with direct administrative rule by totalitarian bureaucracy. Something like the WTO is modeled on the Nazis’ Polish administration zone.

        I’ve recently written about this e.g. here:

        https://attempter.wordpress.com/2010/11/28/the-seed-war-part-2/

        https://attempter.wordpress.com/2010/11/10/food-sovereignty-vs-the-final-stage-of-neoliberalism/

        https://attempter.wordpress.com/2010/12/10/wikileaks-secrecy-federalism-and-globalization-1-of-2/

        Comment by Russ — December 18, 2010 @ 2:16 am

  5. Well Rus, here’s to the end of leaking. If you leak you won’t eat!!

    http://www.infowars.com:80/dhs-implementing-no-work-list/

    Comment by Paul Repstock — December 17, 2010 @ 2:37 am

    • Yup. The people will certainly get exactly what they deserve.

      What do they deserve? Their actions, one way or the opposite way, will demonstrate.

      Comment by Russ — December 17, 2010 @ 3:05 am

  6. The trouble is this will become a cult religion in short order. The agents (mostly average dumb schmos), are being indoctrinated with the religion. And they will “By God” find the sinners. Meanwhile back at the Ranch, the puppetmasters are howling with glee. Eventually, it all goes off the rails and madness prevails till a new Hitler comes up??

    Comment by Paul Repstock — December 17, 2010 @ 3:12 am

    • One of the things we have going for us is that the very fact that the whole thing is based purely on the most gutter greed and absolute commodification of everything at every point lessens the chance of their being able to muster human values (i.e. misguided versions of them, like the sort Hitler was able to exploit) on their side.

      If we have any competence at all, that resource ought to be far more available to us.

      Comment by Russ — December 17, 2010 @ 3:38 am

    • I would expect that by the end of the year DHS will be as well armed as the military, and have authority over that military??

      Party Cadres??

      Comment by Paul Repstock — December 17, 2010 @ 3:39 am


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