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TBR News July 22, 2014

Jul 21 2014

The Voice of the White House


Washington, D.C. Julyu 21, 2014: “I notice the rigged media howling about how the evil Putin is shooting down Malaysian aircraft.
            What a bad man!
            How fortunate we are to have a wonderful leader like Obama, supported by the nutty McCain and others of his ilk.
            The more one digs into the shoot-down, the more obvious it is that Kiev’s chocolate oligarch ordered it, hoping to pay back the rebels for defying him.
            That he was destroying himself and his CIA-backed regime is obviously not apparent either to himself or to Washington.
            I recall that in 1956, the senior CIA man, Frank Wisner, promised dissidents in Hungary full American support in the event they rebelled against the Russian puppet government. When Eisenhower refused to support the rebellion, and it was crushed by Russian military intervention,  Wisner shot himself.
            That was a wise move.
            And that situation was mirrored by the CIA involvement in Guatemala over the United Fruit business.
            Another CIA failure.
            And the Russians, and others, know that the Greenpeace-CIA  assault on the Gazprom Arctic drilling rig also failed.
            And one hears, and reads private papers, that there is going to be an attempt to convince Canada to allow American troops to set up bases along their northern Arctic coast to confront Russian Arctic involvements (oddly enough on their own territory!) but that project, like so many others, will deflate and blow away.
            And I note a new and very large oil field has been discovered off the coast of Ireland.
Can we expect an American military occupation of that country to establish True Democracy and to assist a puppet government to seriously and properly develop their liquid assets?
In point of fact, we are running out of oil, in spite of the fictional claims to vast amounts of fracking low quality oil.
            And when the American public discovers that gas has gone to $10.00 a gallon, they will become restive and unhappy.
            Restive and unhappy citizens will then be able to visit FEMA camps for periods of reorientation, rehabilitation and bad food.
            Rising sea levels, increasingly bad winters, and deadly droughts are even now all coming upon us (as a manifestation of God’s will in support of True Democracy) and I believe the proper answer is to put a barbed wire fence around the entire national perimeter and make all the encased inmates stand for count at 4 PM daily.
            And always look for the truth in my jest.”   


The Restive Population Report


Detroit residents fight back over water shutoff: ‘It’s a life-or-death situation’

The beleaguered city says a water shutoff is essential to recoup $89m in overdue bills. But the decision has outraged thousands of Detroiters – who have taken matters into their own hands


July21, 2014

by Jon Swaine in Detroit



When the coast is clear, and the trucks from the contractor shutting off water for the city of Detroit have rolled away, the men with water keys come.

They offer residents whose supply has just been shut off a tempting deal. For $20, they will use their tools to turn the water main back on immediately, and illegally, sparing the household the agonising days spent without showering, cooking or flushing that have already been endured by at least 16,000 of their neighbours so far this year.

It is only the most desperate action being taken in response to the beleaguered city’s aggressive campaign to recoup $89m in overdue water bills by abruptly cutting the supplies of people behind on their payments. Amid growing anger, Detroit officials agreed in court on Monday to a two-week pause, to allow poor customers to come forward and show that they genuinely cannot afford to pay. But then the shutoffs will resume.

“You’re going to do what you have to do to get water back on in your home,” said Valerie Blakely, a community organiser and mother of five whose overdue bill stands at more than $1,000. “As far as I’m concerned, what the city is doing is the illegal activity. You’re not going to come and put us in a life-or-death situation and not have us act like we are fighting for our own survival.”

Some physically obstruct the contractors. Others leave cars parked over their mains at night. A guide circulating online instructs people how to lock the main back on and seal it in concrete. “If anyone from the city or water department asks what happened: the shutoff is outside your home,” it says. “Who knows what some radical did while you were asleep?”

But resistance is risky. A city inspection of 178 homes whose water was shut off last week found that 79 had restarted their supplies, triggering $21,750 in fines on top of what the residents already owed. Of 414 shut-off homes checked in June, 205 were found to have turned the water back on. A first-time penalty is $250. Being caught a second time carries a $500 fine. A third strike, supposedly, leads to the permanent termination of the house’s water supply.

“There are severe consequences,” said Bill Johnson, a spokesman for Detroit’s water and sewerage department. “People are making things worse for themselves. The penalties may be more than the actual bill.”

Johnson told reporters on Monday that city inspectors would be using the two-week hiatus to hunt for more users who had turned their water back on.

The penalties are the latest salvo in a battle between Kevyn Orr, the emergency manager overseeing Detroit’s unprecedented bankruptcy, and thousands of hard-up people in a once-proud American city where the median household income is now less than half the national average, and where adults with jobs and children not living in poverty are now in minorities.

Anyone who owes $150, or is two months overdue, on their water bills, faces shut-offs by the private contractor, Homrich, a demolition company that is being paid up to $6m in public funds. The city says that about 80,000 residential customers are now past due on their bills, owing a total of $43m – more than $535 on average. Last month, the city council approved an 8.7% increase on water prices, which will push household bills to almost twice the US average.

Orr describes the shutoffs as “a necessary part of Detroit’s restructuring” as it works to reduce the $18bn in debts it listed when filing for America’s biggest municipal bankruptcy a year ago. About $5.4bn of that total related to water and sewer bonds. Orr has said these creditors will be paid in full.

Yet opponents claim that he is simply scrambling to clean up the water department’s books for a privatisation that could push prices even higher – and that the total owed by the city’s struggling people is dwarfed by the fees Detroit is paying big banks after making bad financial bets. There is widespread anger, too, that homes have been targeted before the 21,000 delinquent businesses, schools and other non-residential properties, which together owe $46m. City officials claim that cutting off supplies in commercial properties is “more complicated”, and that more shut-off crews must first be hired and trained.

Orr also stresses that anyone with “demonstrated financial need” who approaches the water department before being cut off can enter more manageable payment plans – which, following Monday’s announcement, are going to be better publicised. Claiming that half of customers who are cut off settle their bills within 24 hours, allowing their service to be restored, city officials insist that genuinely poor residents are not being persecuted.

“These are not people who can’t afford to pay,” said Johnson. “They just don’t want to pay. These are people who are scamming, who want to scam the system.” He went on: “People pay their cable bill, their cell phone bill, all these other bills, and the water bill is the last one they will pay. Why? Because we have never had until this year an aggressive cut-off campaign”.

It is an allegation that enrages people on the ground. “That’s offensive for them to say, and is just blatant lies,” said Blakely. Campaigners assisting shut-off residents say that many do not know about the payment plans, or can not afford the 30% initial payment anyway. Those who do, and can, are made to wait hours on hold to customer service or wait all day in line.

Many of the people who settled up within 24 hours of being cut off, supporters say, were able to do so only after receiving emergency cash from churches, charities or friends. One resident told the Guardian that her neighbour raided funds set aside for her elderly mother’s prescriptions to get their water running again. “This is a public health emergency in America,” said Ann Rall, a leading figure in the Detroit People’s Water Board, a coalition of interested groups. “It is an absolute outrage”.

On a hot afternoon last week, the day after the shut-off contractors had visited, the pavements outside 27 houses on Rutland Street, in the west of the city, bore a sky-blue mark, spray-painted by the workers as a sort of public announcement that the residents inside have had their water cut. No one seems to know what purpose this serves. “This blue line, this mark of the beast – it is shaming and it is outrageous,” Lila Cabril, 69, told city officials at a disastrously handled and bad-tempered town hall meeting a few miles to north the following evening.

In one blue-marked bungalow, Belinda S said that she, her husband Kevin, and their five children aged between four and 22, were surviving on buckets of water brought over by a cousin who lives nearby. “It ain’t easy,” Belinda said, with a smile. The family used to live in a nicer place in a better part of the city. She and Kevin worked at the same manufacturing plant, alternating day shifts and nights. “We were making decent money, and had a decent living,” she said. They paid their bills.

Then the company closed its facility and moved their jobs out of Detroit. Kevin found a new berth at Focus: HOPE, an education and training non-profit, but Belinda couldn’t find anything. She recently hit the time limit for receiving unemployment benefits. Now the whole family lives on the $11 an hour that Kevin makes. They owe more than $1,000 in water bills, some of which, Belinda insists, dates back to before they even moved in. “It’s rough, but we’re making it,” she said. “I think God is good, cos we’re still making it.”

Amid widespread terror about the fact that a lack of running water is cited by the federal government as evidence of child neglect, Belinda did not want her surname to be published. Others refused to discuss their situations at all. Campaign groups have begun protecting shut-off residents from reporters, after some of those who featured in early coverage of the crisis received torrents of abuse on social media.

The situation is so dire that last month the United Nations weighed in. Responding to a complaint filed by the pressure groups, an expert panel led by Catarina de Albuquerque, the UN’s special rapporteur on safe drinking water and sanitation, said cutting off the supplies of those who cannot afford to pay “constitutes a violation of the human right to water and other international human rights.”

At the town hall meeting, Johnson, the city spokesman, dismissed the UN’s intervention with a sneer. “I personally don’t think the department should respond at all,” he said. “This is the same organisation that’s trying to achieve world peace – it’s not going to happen.” Residents gasped and jeered. Several police officers stood on guard, one taking photographs of the audience with his cell phone from the balcony.

Johnson enraged the audience further by repeating the claim that no one who couldn’t afford their bills was being cut off. “No matter what you’re saying, that is not happening,” he said. In her seat, Lila Cabril erupted. “I know people unable to pay,” she said. “People are ashamed they cannot pay – you don’t understand.”

Voices grew louder and fingers were pointed. “I was born in a ghetto. I worked my way out of it,” Johnson, impeccably groomed in a tailored suit with a pocket square and polished black shoes, told her. “Don’t tell me I don’t understand poverty. I lived it.”

Audience members were handed a pack on their way into the meeting that included a small keypad, and asked to vote on a series of questions displayed on an interactive screen. 75% said that they opposed the shut-off policy. Some were astonished to find that the welcome packs also included free rain-water gauges for their gardens, emblazoned with the Detroit Water and Sewerage Department crest.

The anger boiled over into downtown Detroit the next afternoon, when a rally of a few thousand protesters marched on a dispatch facility for the shut-off trucks, blocking the entrance. Nine were said to have been arrested. “The banks got paid off, we got shut off!” some chanted. They demanded an immediate and long-term moratorium on shut-offs and a drastic overhaul of the water pricing system to make it less expensive for poorer users – for which they have detailed plans.

The crowds were addressed by the actor Mark Ruffalo, who campaigns against hydrofracking and for safe water. “These shut-offs are an absolute humiliation to the American sensibility of decency,” he told the Guardian.

“Listen, man,” he added, leaning in and growing visibly angry. “These people are Americans. We will not blink an eye to send trillions of dollars overseas to wage warfare in an illegal war. But we can’t come up with the money that it takes to keep a community in water, when it’s in the throes of an economic catastrophe that was caused by Wall Street?”

About half of $1.16bn in bonds issued by the city for the water and sewer department in 2011-12 – $547m – was used to pay for termination fees to major Wall Street banks after the contractual cancellation of financial deals because of a downgrade in the city’s credit rating.

Back on Rutland Street, a bearded man in torn and dirty clothes shuffled down the pavement towards Belinda S’s front door. He grunted and groaned at her, rubbing his stomach as if to request food.

            After shooing him away, she excused herself so that she could continue preparing dinner for her children, with water supplied by her cousin. While some of her neighbours are resorting to illicitly turning their water back on, she said, she has steadfastly refused. “Of course you’re tempted,” she said. “But me? I can’t do nothing illegal. I’d just get caught.”


In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates


July 19, 2014

by Jessica Silver-Greenberg and  Michael Corkery 

New York Times


Rodney Durham stopped working in 1991, declared bankruptcy and lives on Social Security. Nonetheless, Wells Fargo lent him $15,197 to buy a used Mitsubishi sedan.

“I am not sure how I got the loan,” Mr. Durham, age 60, said.

Mr. Durham’s application said that he made $35,000 as a technician at Lourdes Hospital in Binghamton, N.Y., according to a copy of the loan document. But he says he told the dealer he hadn’t worked at the hospital for more than three decades. Now, after months of Wells Fargo pressing him over missed payments, the bank has repossessed his car.

This is the face of the new subprime boom. Mr. Durham is one of millions of Americans with shoddy credit who are easily obtaining auto loans from used-car dealers, including some who fabricate or ignore borrowers’ abilities to repay. The loans often come with terms that take advantage of the most desperate, least financially sophisticated customers. The surge in lending and the lack of caution resemble the frenzied subprime mortgage market before its implosion set off the 2008 financial crisis.

Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.

The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans.

And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.

The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.

In another echo of the mortgage boom, The Times investigation also found dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford.

Many subprime auto lenders are loosening credit standards and focusing on the riskiest borrowers, according to the examination of documents and interviews with current and former executives from five large subprime auto lenders. The lending practices in the subprime auto market, recounted in interviews with the executives and in court records, demonstrate that Wall Street is again taking on very risky investments just six years after the financial crisis.

The size of the subprime auto loan market is a tiny fraction of what the subprime mortgage market was at its peak, and its implosion would not have the same far-reaching consequences. Yet some banking analysts and even credit ratings agencies that have blessed subprime auto securities have sounded warnings about potential risks to investors and to the financial system if borrowers fall behind on their bills.

Pointing to higher auto loan balances and longer repayment periods, the ratings agency Standard & Poor’s recently issued a report cautioning investors to expect “higher losses.” And a high-ranking official at the Office of the Comptroller of the Currency, which regulates some of the nation’s largest banks, has also privately expressed concerns that the banks are amassing too many risky auto loans, according to two people briefed on the matter. In a June report, the agency noted that “these early signs of easing terms and increasing risk are noteworthy.”

Despite such warnings, the volume of total subprime auto loans increased roughly 15 percent, to $145.6 billion, in the first three months of this year from a year earlier, according to Experian, a credit rating firm.

“It appears that investors have not learned the lessons of Lehman Brothers and continue to chase risky subprime-backed bonds,” said Mark T. Williams, a former bank examiner with the Federal Reserve.

In their defense, financial firms say subprime lending meets an important need: allowing borrowers with tarnished credits to buy cars vital to their livelihood.

Lenders contend that the risks are not great, saying that they have indeed heeded the lessons from the mortgage crisis. Losses on securities made up of auto loans, they add, have historically been low, even during the crisis.

Autos, of course, are very different than houses. While a foreclosure of a home can wend its way through the courts for years, a car can be quickly repossessed. And a growing number of lenders are using new technologies that can remotely disable the ignition of a car within minutes of the borrower missing a payment. Such technologies allow lenders to seize collateral and minimize losses without the cost of chasing down delinquent borrowers.

That ability to contain risk while charging fees and high interest rates has generated rich profits for the lenders and those who buy the debt. But it often comes at the expense of low-income Americans who are still trying to dig out from the depths of the recession, according to the interviews with legal aid lawyers and officials from the Federal Trade Commission and the Consumer Financial Protection Bureau, as well as state prosecutors.

While the pain from an imploding subprime auto loan market would be much less than what ensued from the housing crisis, the economy is still on relatively fragile footing, and losses could ultimately stall the broader recovery for millions of Americans.

The pain is far more immediate for borrowers like Mr. Durham, the unemployed car buyer from Binghamton, N.Y., who stopped making his loan payments in March, only five months after buying the 2010 Mitsubishi Galant. A spokeswoman for Wells Fargo, which declined to comment on Mr. Durham citing a confidentiality policy, emphasized that the bank’s underwriting is rigorous, adding that “we have controls in place to help identify potential fraud and take appropriate action.”

The Mitsubishi was repossessed last month, leaving Mr. Durham without a car. But his debt ordeal may not be over.

Some lenders go after borrowers like Mr. Durham for the debt that still remains after a repossessed car is sold, according to court filings. Few repossessed cars fetch enough when they are resold to cover the total loan, the court documents show. To get the remainder, some lenders pursue the borrowers, which can leave them shouldering debts for years after their cars are gone.

But for now, Mr. Durham, who is disabled, has a more immediate problem.

“I just can’t get around without my car,” he said.


The Brokers


Outside, the banner proclaimed: “No Credit. Bad Credit. All Credit. 100 percent approval.” Inside the used-car dealership in Queens, N.Y., Julio Estrada perfected his sales pitches for the borrowers, including some immigrants who spoke little English.

Sure, the double-digit interest rates might seem steep, Mr. Estrada told potential customers, but with regular payments, they would quickly fall. Mr. Estrada, who sometimes went by John, and sometimes by Jay, promised others cash rebates.

If the soft sell did not work, he played hardball, threatening to keep the down payments of buyers who backed out, according to court documents and interviews with customers.

The salesman was ultimately indicted by the Queens district attorney on grand larceny charges that he defrauded more than 23 car buyers with refinancing schemes.

Relatively few used-car dealers are charged with fraud. Yet the extreme example of Mr. Estrada comes as some used-car dealers — a business that has long had a reputation for aggressive pitches — are pushing sales tactics too far, according to state prosecutors and federal regulators.

And these are among the thousands of used-car dealers who are working hand-in-hand with Wall Street to sell cars. Court records show that Capital One and Santander Consumer USA all bought loans arranged by Mr. Estrada, who pleaded guilty last year. Since then, Mr. Estrada was indicted on separate fraud charges in March by Richard A. Brown, the Queens district attorney. That case is still pending.

To guard against fraud, the banks say, they vet their dealer partners and routinely investigate complaints. Capital One has “rigorous controls in place to identify any potential issues,” said Tatiana Stead, a bank spokeswoman, adding that last year “we terminated our relationship with the dealership” where Mr. Estrada worked. Dawn Martin Harp, head of Wells Fargo Dealer Services, said that “it’s important to note that not all claims of dealer fraud turn out to be fraud.”

James Kousouros, Mr. Estrada’s lawyer, said that “for those individuals for whom Mr. Estrada bore responsibility, he accepted this and is committed to the restitution agreed to.” Some civil lawsuits filed by borrowers were found to be without merit, he said.

For their part, car dealers note that like any industry they sometimes have rogue employees, but add that customers are overwhelmingly treated fairly.

“There is no place for fraud or any other nefarious activities in the industry, especially tactics that seek to take advantage of vulnerable consumers,” said Steve Jordan, executive vice president of the National Independent Automobile Dealers Association.

In their role as matchmaker between borrowers and lenders, used-car dealers wield tremendous power. They make the pitch to customers, including many troubled borrowers who often believe that their options are limited. And the dealers outline the terms and rates of the loans.

In interviews, more than 40 low-income borrowers described how they were worn down by used car dealers who kept them in suspense for hours before disclosing whether they even qualified for a loan. The seemingly interminable wait, the borrowers said, left them with the impression that the loan — no matter how onerous the terms — was their only chance.

The loans also came with other costs, according to interviews and an examination of the loan documents, including add-on products like unusual insurance policies. In many cases, the examination by The Times found, borrowers ended up shouldering loans that far exceeded the resale value of the car. A reason for that disparity is that some borrowers still owe money on cars that they are trading in when they purchase a new one. That debt is then rolled over into the new loan.

“By the end, they are paying $600 a month for a piece of junk,” said Charles Juntikka, a bankruptcy lawyer in Manhattan.

The dealers have an incentive to increase both the size and the interest rate of the loans.

The arithmetic is simple. The bigger size and rate of the loan, the bigger the dealers’ profit, or so-called markup — the difference between the rate charged by the lenders and the one ultimately offered to the borrowers. Under federal law, dealers do not have to disclose the size of the markup.

To buy her 2004 Mazda van, Dolores Blaylock, 51, a home health care aide in Austin, Tex., said she unwittingly paid for a life insurance policy that would cover her loan payments if she died.

Her loan totaled $13,778 — nearly three times the value of the van that she uses to shuttle her father, who uses a wheelchair, to his doctor’s appointments.

Now, Ms. Blaylock says she regrets ever buying the van, which frequently breaks down. “I am afraid to drive it out of town,” she said.

In some cases, though, the tactics veer toward outright fraud. The Times’s scrutiny of loan documents, including some produced in litigation, found that some used-car dealers submitted loan applications to lenders that contained incorrect income and employment information. As was the case in the subprime mortgage boom, it is unclear whether borrowers provided incorrect information to qualify for loans or whether the dealers falsified loan applications. Whatever the cause, the result is the same: Borrowers with scant income qualified for loans.

Mary Bridges, a retired grocery store employee in Syracuse, N.Y., said she repeatedly explained to a car salesman that her only monthly income was about $1,200 in Social Security. Still, Ms. Bridges said that the salesman falsely listed her monthly income as $2,500 on the application for a car loan submitted by a local dealer to Wells Fargo and reviewed by The Times.

As a result, she got a loan of $12,473 to buy a 2004 used Buick LeSabre, currently valued by Kelley Blue Book at around half that much. She tried to keep up with the payments — even going on food stamps for the first time in her life — but ultimately the car was repossessed in 2012, just two years after she bought it.

“I have always been told to do the responsible thing, but I said, ‘This is too much,’ ” the 76-year-old widow said.

The dealer agreed to pay Ms. Bridges $1,000 after Syracuse University law students threatened to file a lawsuit accusing the company of violating state and federal consumer protection laws.

But Wells Fargo, which resold the car for $4,500 last July, is still pursuing Ms. Bridges for $2,900 — a total that includes her remaining loan balance and an $835 fee for “cost of repossession and sale,” according to a copy of a letter that Wells Fargo sent to Ms. Bridges last August. (Wells Fargo declined to comment on Ms. Bridges.)

Even when authorities have cracked down on dealers, borrowers are still vulnerable to fraud. Last June, Shahadat Tuhin, a New York City taxi driver, bought a car from Mr. Estrada, the salesman in Queens who less than a year earlier had been indicted.

The charge by the Queens district attorney didn’t keep him out of the business. While his criminal case was pending, the salesman persuaded Mr. Tuhin to buy a used car for 90 percent more than the price he agreed upon. Needing the car to take his daughter, who has a heart condition, to the doctor, Mr. Tuhin said he unwittingly signed for a $26,209 loan with completely different terms than the ones he had reviewed.

Immediately after discovering the discrepancies, Mr. Tuhin, 42, said he tried to return the car to the dealership and called the lender, M&T Bank, to notify them of the fraud.

The bank told him to take up the issue with the dealer, Mr. Tuhin said.

M&T declined to comment on Mr. Tuhin, but said it no longer does business with that dealership.


The Money


Investors, seeking a higher return when interest rates are low, recently flocked to buy a bond issue from Prestige Financial Services of Utah. Orders to invest in the $390 million debt deal were four times greater than the amount of available securities.

What is backing many of these securities? Auto loans made to people who have been in bankruptcy.

An affiliate of the Larry H. Miller Group of Companies, Prestige specializes in making the loans to people in bankruptcy, packaging them into securities and then selling them to investors.

“It’s been a hot space,” Richard L. Hyde, the firm’s chief operating officer, said during an interview in March. Investors are betting on risky borrowers. The average interest rate on loans bundled into Prestige’s latest offering, for example, is 18.6 percent, up slightly from a similar offering rolled out a year earlier. Since 2009, total auto loan securitizations have surged 150 percent, to $17.6 billion last year, though some estimates have put the total volume even higher. To meet that rising demand, Wall Street snatches up more and more loans to package into the complex investments.

Much like mortgages, subprime auto loans go through Wall Street’s securitization machine: Once lenders make the loans, they pool thousands of them into bonds that are sold in slices to investors like mutual funds, pensions and hedge funds. The slices that include loans to the riskiest borrowers offer the highest returns.

Rating agencies, which assess the quality of the bonds, are helping fuel the boom. They are giving many of these securities top ratings, which clears the way for major investors, from pension funds to employee retirement accounts, to buy the bonds. In March, for example, Standard & Poor’s blessed most of Prestige’s bond with a triple-A rating. Slices of a similar bond that Prestige sold last year also fetched the highest rating from S.&P. A large slice of that bond is held in mutual funds managed by BlackRock, one of the world’s largest money managers.

Private equity firms have also seen the opportunity in auto subprime lending. A $1 billion investment by Kohlberg Kravis Roberts & Co., Centerbridge Partners and Warburg Pincus in a large subprime lender roughly doubled in about two years. Typically, it takes private equity firms three to five years to reap significant profit on their investments.

It is not just the private equity firms and large banks that are fanning the lending boom. Major insurance companies and mutual funds, which manage money on behalf of mom-and-pop investors, are also snapping up securities backed by subprime auto loans.

While there are no exact measures of how many of these loans end up on banks’ balance sheets, interviews with consumer lawyers and analysts suggest the problem is spreading, propelled by the very structure of the subprime auto market.

The vast majority of banks largely rely on dealers to screen potential borrowers. The arrangement, which means the banks rarely meet customers face to face, mirrors how banks relied on brokers to make mortgages.

In some cases, consumer lawyers say, the banks actually ignore complaints by borrowers who accuse dealers of fabricating their income or even forging their signatures.

“Even when they are presented with clear evidence of fraud, the banks ignore it,” said Peter T. Lane, a consumer lawyer in New York. “The typical refrain is, ‘It’s not our problem, take it up with the dealer.’ ”

It could quickly become the banks’ problem, analysts say, if questionable loans sour, causing losses to multiply.

For now, the banks are not pulling back. Many are barreling further into the auto loan market to help recoup the billions in revenue wiped out by regulations passed after the 2008 financial crisis.

Wells Fargo, for example, made $7.8 billion in auto loans in the second quarter, up 9 percent from a year earlier. At a presentation to investors in May, Wells Fargo said it had $52.6 billion in outstanding car loans. The majority of those loans are made through dealerships. The bank also said that as of the end of last year, 17 percent of the total auto loans went to borrowers with credit scores of 600 or less. The bank currently ranks as the nation’s second-largest subprime auto lender, behind Capital One, according to J. D. Power & Associates.

Wells Fargo executives say that despite the surge, the credit quality of its loans has not slipped. At the May presentation, Thomas A. Wolfe, the head of Wells Fargo Consumer Credit Solutions, emphasized that the overall quality of its auto loans was improving. And Tatiana Stead, the Capital One spokeswoman, said that Capital One worked “to ensure we do not follow the market to pursue growth for growth’s sake.”

Prestige says its loans experience relatively low losses because borrowers have discharged many of their other debts in bankruptcy, freeing up more cash for their car payments. Another advantage for the lender: No matter how tough things get for troubled borrowers, federal law prevents them from escaping their bills through bankruptcy for at least another seven years.

“The vast majority of our customers have been successful with their loans and leave us with a much higher credit score,” said Mr. Hyde, Prestige’s chief operating officer.


The Risks


All it took was three months.

Dolores Jackson, a teacher’s aide in Jersey City, says she thought she could handle the $540 a month on the 2012 Chevy Malibu she bought in January 2013.

But the payments on the $27,140 loan from Exeter Finance, which is owned by Blackstone, quickly overwhelmed her, and she prepared to declare bankruptcy in April.

“I was drowning,” she said.

Other borrowers have also found themselves quickly overwhelmed by car loan payments.

Even after getting a second job at Staples, Alicia Saffold, 24, a supply technician at the Fort Benning military base in Georgia, could not afford the monthly payments on her $14,288.75 loan from Exeter. The loan, according to a copy of her loan document reviewed by The Times, came with an interest rate of nearly 24 percent. Less than a year after she bought the gray Pontiac G6, it was repossessed.

In the case of Marcelina Mojica and her husband, Jonathan, they are keeping up with their payments on their $19,313.45 Wells Fargo auto loan — but just barely. They are currently living in a homeless shelter in the Bronx.

“The car gets more money than what we put in our fridge,” said Mr. Mojica, 28. Such examples of distress underscore the broader strains within the subprime auto loan market.

Exeter Finance declined to comment on Ms. Saffold or Ms. Jackson, but Blackstone, its parent company, emphasized that the credit quality of its lender’s loans was improving and that it worked hard to ensure its customers received the best rates. To ensure the accuracy of loan documents, Blackstone said, employees vet both dealers and borrowers.

“Exeter Finance believes it’s important to provide people with the option to finance transportation essential to their livelihood,” said Mark Floyd, the company’s chief executive.

Still, financial firms are beginning to see signs of strain. In the first three months of this year, banks had to write off as entirely uncollectable an average of $8,541 of each delinquent auto loan, up about 15 percent from a year earlier, according to Experian.

Some investors think the time is right to start selling their holdings. Earlier this year, for example, private equity firms, including K.K.R., sold most of their stake in the subprime auto lender, Santander Consumer USA, when the lender went public. Since the company’s initial public offering, the stock has fallen more than 16 percent.

While losses from soured car loans would be far less than those on subprime mortgages, the red ink could still deal a blow to the banks not long after they recovered from the housing bust. Losses from auto loans might also cause the banks to further retrench from making other loans vital to the economic recovery, like those to small business and would-be homeowners.

In another sign of trouble ahead, repossessions, while still relatively low, increased nearly 78 percent to an estimated 388,000 cars in the first three months of the year from the same period a year earlier, according to the latest data provided by Experian. The number of borrowers who are more than 60 days late on their car payments also jumped in 22 states during that period.

As a result, some rating agencies, even those that had blessed auto loan securitizations with high ratings, are starting to question the quality of the loans backing those securities, and warn of losses that investors could suffer if the bonds start to sour. Describing the potential trouble ahead, Kevin Cole, an analyst with Standard & Poor’s, said, “We believe these trends could lead to higher losses and weakened profitability in a few years.”

If those losses materialize, they could pummel a wide range of investors, from pension funds to insurance companies to mutual funds held by Americans preparing for retirement. For the huge baby-boomer generation, including many whose savings were sapped by the 2008 crisis and the ensuing recession, any losses from the auto loan securities could deal them another setback.

“Borrowers are haunted by this debt, and it can crater their credit scores, prevent them from getting other loans and thrust them even further onto the financial margins,” said Ahmad Keshavarz, a consumer lawyer in New York.

Some borrowers are stuck making payments on loans that were fraudulently made by dealers, according to an examination of dozens of lawsuits against dealers. There are no exact measures of just how many people whose cars have been repossessed end up in this predicament, but lawyers for borrowers say that it is a growing problem, and one that points to another element of subprime auto lending.

Thanks to an amendment to the Dodd-Frank financial overhaul, the vast majority of dealers are not overseen by the Consumer Financial Protection Bureau. Since its start in 2010, the agency has earned a reputation for aggressively penalizing lenders, but it has limited authority over dealers.

The Federal Trade Commission, the agency that does oversee the dealers, has cracked down on certain questionable practices. And although the agency has won a number of cases against dealers for failing to accurately disclose car costs and other abuses, it has not taken aim at them for falsifying borrowers’ incomes, for example.

And the help is not coming fast enough for borrowers like Mr. Durham, the retiree in Binghamton; Mr. Tuhin, the taxi driver in Queens; or Ms. Saffold, the technician in Georgia.

“Buying the car was the worst decision I have ever made,” Ms. Saffold said.



It was Putin’s missile!

by Pepe Escobar


And here’s the spin war verdict: the current Malaysia Airlines tragedy – the second in four months – is “terrorism” perpetrated by “pro-Russian separatists”, armed by Russia, and Vladimir Putin is the main culprit. End of story. Anyone who believes otherwise, shut up.

Why? Because the CIA said so. Because Hillary “We came, we saw, he died” Clinton said so. Because batshit crazy Samantha “R2P” Power said so – thundering at the UN, everything duly printed by the neo-con infested Washington Post. [1]

Because Anglo-American corporate media – from CNN to Fox (who tried to buy Time Warner, which owns CNN) – said so. Because the President of the United States (POTUS) said so. And mostly because Kiev had vociferously said so in the first place.

Right off the bat they were all lined up – the invariably hysterical reams of “experts” of the “US intelligence community” literally foaming at their palatial mouths at “evil” Russia and “evil” Putin; intel “experts” who could not identify a convoy of gleaming white Toyotas crossing the Iraqi desert to take Mosul. And yet they have already sentenced they don’t need to look any further, instantly solving the MH17 riddle.

It doesn’t matter that President Putin has stressed the MH17 tragedy must be investigated objectively. And “objectively” certainly does not mean that fictional “international community” notion construed by Washington – the usual congregation of pliable vassals/patsies.

And what about Carlos?

A simple search at reveals that MH17 was in fact diverted 200 kilometers north from the usual flight path taken by Malaysia Airlines in the previous days – and plunged right in the middle of a war zone. Why? What sort of communication MH17 received from Kiev air control tower?

Kiev has been mute about it. Yet the answer would be simple, had Kiev released the Air Traffic Control recording of the tower talking to flight MH17; Malaysia did it after flight MH370 disappeared forever.

It won’t happen; SBU security confiscated it. So much for getting an undoctored explanation on why MH17 was off its path, and what the pilots saw and said before the explosion.

The Russian Defense Ministry, for its part, has confirmed that a Kiev-controlled Buk anti-aircraft missile battery was operational near the MH17’s crash. Kiev has deployed several batteries of Buk surface-to-air missile systems with at least 27 launchers; these are all perfectly capable of bringing down jets flying at 33,000 ft.

Radiation from a battery’s Kupol radar, deployed as part of a Buk-M1 battery near Styla (a village some 30km south of Donetsk) was detected by the Russian military. According to the ministry, the radar could be providing tracking information to another battery which was at a firing distance from MH17’s flight path. The tracking radar range on the Buk system is a maximum of 50 miles. MH17 was flying at 500 mph. So assuming the “rebels” had an operational Buk and did it, they would have had not more than five minutes to scan all the skies above, all possible altitudes, and then lock on. By then they would have known that a cargo plane could not possibly be flying that high. For evidence supporting the possibility of a false flag, check here.*

And then there’s the curiouser and curiouser story of Carlos, the Spanish air traffic controller working at Kiev’s tower, who was following MH17 in real time. For some Carlos is legit – not a cipher; for others, he’s never even worked in Ukraine. Anyway he tweeted like mad. His account – not accidentally – has been shut down, and he has disappeared; his friends are now desperately looking for him. I managed to read all his tweets in Spanish when the account was still online – and now copies and an English translation are available.


These are some of his crucial tweets:


            “The B777 was escorted by 2 Ukrainian fighter jets minutes before disappearing from radar (5.48 pm)”

“If the Kiev authorities want to admit the truth 2 fighter jets were flying very close a few minutes before the incident but did not shoot down the airliner (5.54)”

“As soon as the Malaysia Airlines B777 disappeared the Kiev military authority informed us of the shooting down. How did they know? (6.00)”

“Everything has been recorded on radar. For those that don’t believe it, it was taken down by Kiev; we know that here (in traffic control) and the military air traffic control know it too (7.14)”

“The Ministry of the Interior did know that there were fighter aircraft in the area, but the Ministry of Defense didn’t. (7.15)”

“The military confirm that it was Ukraine, but it is not known where the order came from. (7.31)”

Carlos’s assessment (a partial compilation of his tweets is collected here http://slavyangrad.wordpress.com/2014/07/18/spanish-air-controller-kiev-borispol-airport-ukraine-military-shot-down-boeing-mh17/ ): the missile was fired by the Ukraine military under orders of the Ministry of Interior – NOT the Ministry of Defense. Security matters at the Ministry of the Interior happen to be under Andriy Parubiy, who was closely working alongside US neo-cons and Banderastan neo-nazis on Maidan.

Assuming Carlos is legit, the assessment makes sense. The Ukrainian military are divided between Chocolate king President Petro Poroshenko – who would like a d?tente with Russia essentially to advance his shady business interests – and Saint Yulia Timoshenko, who’s on the record advocating genocide of ethnic Russians in Eastern Ukraine. US neo-cons and US “military advisers” on the ground are proverbially hedging their bets, supporting both the Poroshenko and Timoshenko factions.

So who profits?

The key question remains, of course, cui bono? Only the terminally brain dead believe shooting a passenger jet benefits the federalists in Eastern Ukraine, not to mention the Kremlin.

As for Kiev, they’d have the means, the motive and the window of opportunity to pull it off – especially after Kiev’s militias have been effectively routed, and were in retreat, in the Donbass; and this after Kiev remained dead set on attacking and bombing the population of Eastern Ukraine even from above. No wonder the federalists had to defend themselves.

And then there’s the suspicious timing. The MH17 tragedy happened two days after the BRICS announced an antidote to the IMF and the World Bank, bypassing the US dollar. And just as Israel “cautiously” advances its new invasion/slow motion ethnic cleansing of Gaza. Malaysia, by the way, is the seat of the Kuala Lumpur War Crimes Commission, which has found Israel guilty of crimes against humanity.

Washington, of course, does profit. What the Empire of Chaos gets in this case is a ceasefire (so the disorganized, battered Kiev militias may be resupplied); the branding of Eastern Ukrainians as de facto “terrorists” (as Kiev, Dick Cheney-style, always wanted); and unlimited mud thrown over Russia and Putin in particular until Kingdom Come. Not bad for a few minutes’ work. As for NATO, that’s Christmas in July.

From now on, it all depends on Russian intelligence. They have been surveying/tracking everything that happens in Ukraine 24/7. In the next 72 hours, after poring over a lot of tracking data, using telemetry, radar and satellite tracking, they will know which type of missile was launched, where from, and even produce communications from the battery that launched it. And they will have access to forensic evidence.

Unlike Washington – who already knows everything, with no evidence whatsoever (remember 9/11?) – Moscow will take its time to know the basic journalistic facts of what, where, and who, and engage on proving the truth and/or disproving Washington’s spin.

The historical record shows Washington simply won’t release data if it points to a missile coming from its Kiev vassals. The data may even point to a bomb planted on MH17, or mechanical failure – although that’s unlikely. If this was a terrible mistake by the Novorossiya rebels, Moscow will have to reluctantly admit it. If Kiev did it, the revelation will be instantaneous. Anyway we already know the hysterical Western response, no matter what; Russia is to blame.

Putin is more than correct when he stressed this tragedy would not have happened if Poroshenko had agreed to extend a cease-fire, as Merkel, Hollande and Putin tried to convince him in late June. At a minimum, Kiev is already guilty because they are responsible for safe passage of flights in the airspace they – theoretically – control.

But all that is already forgotten in the fog of war, tragedy and hype. As for Washington’s hysterical claims of credibility, I leave you with just one number: Iran Air 655.



1. Missile Downs Malaysia Airlines Plane Over Ukraine Killing 298, Kiew Blames Rebels, Washington Post, July 18, 2014.


Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).


He may be reached at pepeasia@yahoo.com



Evidence Continues to Emerge #MH17 Is a False Flag Operation


July 18, 2014

Examining the Evidence

Key Information in Reverse Chronological Order




#15 – Dissecting the Fake Intercept Disseminated by SBU (Ukrainian Security Service)



Note: Half of the Post Translated; The Remaining Half is Speculative

Complete Original of the Post (in Russian) Can Be Found at Eugene-DF LiveJournal

In the disseminated intercept, the place from which the missile was allegedly launched is clearly indicated: the checkpoint at the settlement of Chernukhino.

Pay close attention at the Alleged Map of the MH17 Catastrophe.

As you can see, the distance from the point of launch to the point of the fall is 37 kilometres. At the same time, the elevation of the plane was 10-11 kilometres. For the Russian BUK M2 this distance is, in fact, achievable (although with a very important caveat discussed below).

However, Ukraine does not, and cannot, have modern digital high-tech Anti-Aircraft systems in its arsenal. What it does have, at best, is the older version BUK M1. The system itself is not too bad, and could even fit the stated distance. Except for the caveat that was mentioned.

The thing is that most short to medium range Anti-Aircraft systems work extremely poorly in a “pursuit” mode. There are a number of reasons for this, and I do not intend to belabor the point, but you can take it as an axiom that when the launch is made in “pursuit” of the target, the maximum distance of the launch that successfully hits the target is at least half of the advertised maximum distance (in reality, it even worse, but let’s leave aside the sad part). Accordingly, the real distance of a “pursuit” launch for BUK M1 is 16 kilometres. What’s more, the last 3 kilometres are purely “God willing” and “without guarantees.”

And, so, we have the background. Let’s see how the picture unfolds:

The launch is alleged to have been made from Chernukhino. The maximum distance of the launch is 16 kilometres. The aircraft fell between Snezhnoye and Torez. That’s 37 kilometres, which is 20 kilometres more than the maximum possible point at which the plain could have been hit. You know, even a plane with turned-off engines can’t glide like that. But the trouble is that the aircraft was not whole.

According to the pattern of the spread of fuselage fragments and bodies, the plane was ruptured practically with the first shot. Here it must be mentioned that the high-explosive/fragmentation warhead of the rocket has a mass of approximately 50 kilograms (by the way, Ukrainians have an outdated modification, which is only 40 kilograms).

Overall, that’s not too little; however, it must be understood that it detonates not when it sticks into an airplane, but when it is still at a certain, and fairly significant distance. Moreover, the main strike factor is not the blast wave, but far more significantly – the stream of fragments. These fragments are previously prepared rods (and in the earlier versions – little cubes, if I recall correctly). And yes, for a jet fighter, that, in itself, is more than sufficient.

However, here we are dealing with a huge airliner. Yes, one rocket will rip the casing, cause depressurization, and will kill a lot of passengers. But it will not break up the airliner into pieces. Given certain conditions, the pilots may even be able to land it. And, in fact, there have been precedents (to be provided in future posts). For example – the very same An-28, which is alleged to have been the first victim of a BUK system; even though it was done for, but the crew was able to successfully catapult out. Which, in some way, symbolizes. An An-28, by the way, is far smaller than a Boeing.

Nevertheless, this has relation to the next part of our analysis. For now, let’s accept as a fact the break-up of the aircraft in the air, at a significant height (which is, in essence, what was observed. Allow me to remind you: “fragments spread over a radius of 15 kilometres.” The key here is that this means the following: the aircraft (or, more precisely, the core of the aircraft) fell literally at the point where the rocket impacted it. Clarifying: as soon as the aircraft turned into a host of fragments of different mass, the separation of these fragments began due to air resistance and the difference in inertia. The densest fragment flew a further 3-6 kilometres, falling more and more steeply. The lightest – spread out and, due to gliding and air currents, fell somewhere within a 10 kilometre radius. The medium ones (primarily pieces of casing with high sail-effect and the victims’ bodies) – fell almost vertically.

In other words, the rocket caught up to the plane no closer than 25 kilometres away from Chernukhino. Which is absolutely impossible for a BUK system.

By the way, we can’t overlook the fact that, at maximum distances, BUK can be used only provided there is support from an external radar installation for location and guiding purposes. In other words, even if a rockets flies far, BUK’s mobile radar does not cover its entire distance.

Accordingly, if SBU’s video above is not fake, then, to our surprise, we discover that it was literally impossible for the aircraft to be shot down by the rebel’s BUK. By the way, what exactly this BUK was doing in Chernukhino with the Cossacks is pretty much inexplicable. It is 60 kilometres whether you go to Donetsk or to Lugansk from there, and this BUK would be unable to protect the skies over either of the key cities. Nor are there any hostilities in the area. It’s also strange for the Militia to expect enemy planes there – it’s not like the pilots are their own enemies to make such detours over the enemy’s territory, is it? Well, all right. As I already stated, let’s accept, for the moment, that the intercept is not fake.

And that is what is so strange here: SBU literally offers evidence that proves that that the Militia had no part in the shooting down of the Boeing! The fact that they blame themselves in the recording is quite understandable. Unlike the fascists, they have a conscience, which takes its toll until you are sure it was not you who did it.

Ok. But somebody did, in fact, shoot down the plane?

Of course it was shot down. And here we have another question: what if this recording is a falsification through and through? Then it had to have been prepared somehow? And then disseminated?

That’s when smoke starts to clear, and mirrors – to break.


That’s the problem with tricks.





#14 – An Industry Outlet Confirms Carlos (@spainbuca) as ATC at Borispol Airport in Kiev


Original: EturboNews (ETN Global Travel Industry News) – July 17, 2014


ETN received information from an air traffic controller in Kiev on Malaysia Airlines flight MH17.

This Kiev air traffic controller is a citizen of Spain and was working in the Ukraine. He was taken off duty as a civil air-traffic controller along with other foreigners immediately after a Malaysia Airlines passenger aircraft was shot down over the Eastern Ukraine killing 295 passengers and crew on board.

The air traffic controller suggested in a private evaluation and basing it on military sources in Kiev, that the Ukrainian military was behind this shoot down. Radar records were immediately confiscated after it became clear a passenger jet was shot down.

Military air traffic controllers in internal communication acknowledged the military was involved, and some military chatter said they did not know where the order to shoot down the plane originated from.

Obviously it happened after a series of errors, since the very same plane was escorted by two Ukrainian fighter jets until 3 minutes before it disappeared from radar.

Radar screen shots also show an unexplained change of course of the Malaysian Boeing. The change of course took the aircraft directly over the Eastern Ukraine conflict region.

Some tweets received suggest this may have been a secret military uprising against the current Ukrainian president under the direction of formerly-jailed Prime Minister Timoshenko.

According to other rumors, the black box for this crashed Malaysian Airlines flight was taken by Donetsk separatists. A spokesperson for the rebel group said this black box would be sent to the Interstate Aviation Committee headquartered in Moscow.

The First Deputy Prime Minister of the self-proclaimed People’s Republic of Donetsk, Andrew Purgin, stated that the flight recorders of the crashed aircraft will be transferred to Moscow for examination.

Sources say the Rebel group leadership hopes this would confirm the Ukrainian military actually shot down this aircraft. This was reported by the news agency Interfax-Ukraine.

ETN statement: The information in this article is independently confirmed and based on the statement of one airline controller and other tweets received.




What Did US Spy Satellites See in Ukraine?


Exclusive: The U.S. media’s Ukraine bias has been obvious, siding with the Kiev regime and bashing ethnic Russian rebels and Russia’s President Putin. But now – with the scramble to blame Putin for the Malaysia Airlines shoot-down – the shoddy journalism has grown truly dangerous, says Robert Parry.


July 20, 2014

by Robert Parry



In the heat of the U.S. media’s latest war hysteria – rushing to pin blame for the crash of a Malaysia Airlines passenger jet on Russia’s President Vladimir Putin – there is the same absence of professional skepticism that has marked similar stampedes on Iraq, Syria and elsewhere – with key questions not being asked or answered.

The dog-not-barking question on the catastrophe over Ukraine is: what did the U.S. surveillance satellite imagery show? It’s hard to believe that – with the attention that U.S. intelligence has concentrated on eastern Ukraine for the past half year that the alleged trucking of several large Buk anti-aircraft missile systems from Russia to Ukraine and then back to Russia didn’t show up somewhere.

Yes, there are limitations to what U.S. spy satellites can see. But the Buk missiles are about 16 feet long and they are usually mounted on trucks or tanks. Malaysia Airlines Flight 17 also went down during the afternoon, not at night, meaning the missile battery was not concealed by darkness.

So why hasn’t this question of U.S. spy-in-the-sky photos – and what they reveal – been pressed by the major U.S. news media? How can the Washington Post run front-page stories, such as the one on Sunday with the definitive title “U.S. official: Russia gave systems,” without demanding from these U.S. officials details about what the U.S. satellite images disclose?

Instead, the Post’s Michael Birnbaum and Karen DeYoung wrote from Kiev: “The United States has confirmed that Russia supplied sophisticated missile launchers to separatists in eastern Ukraine and that attempts were made to move them back across the Russian border after the Thursday shoot-down of a Malaysian jetliner, a U.S. official said Saturday.

“‘We do believe they were trying to move back into Russia at least three Buk [missile launch] systems,’ the official said. U.S. intelligence was ‘starting to get indications … a little more than a week ago’ that the Russian launchers had been moved into Ukraine, said the official” whose identity was withheld by the Post so the official would discuss intelligence matters.

But catch the curious vagueness of the official’s wording: “we do believe”; “starting to get indications.” Are we supposed to believe – and perhaps more relevant, do the Washington Post writers actually believe – that the U.S. government with the world’s premier intelligence services can’t track three lumbering trucks each carrying large mid-range missiles?

What I’ve been told by one source, who has provided accurate information on similar matters in the past, is that U.S. intelligence agencies do have detailed satellite images of the likely missile battery that launched the fateful missile, but the battery appears to have been under the control of Ukrainian government troops dressed in what look like Ukrainian uniforms.

The source said CIA analysts were still not ruling out the possibility that the troops were actually eastern Ukrainian rebels in similar uniforms but the initial assessment was that the troops were Ukrainian soldiers. There also was the suggestion that the soldiers involved were undisciplined and possibly drunk, since the imagery showed what looked like beer bottles scattered around the site, the source said.

Instead of pressing for these kinds of details, the U.S. mainstream press has simply passed on the propaganda coming from the Ukrainian government and the U.S. State Department, including hyping the fact that the Buk system is “Russian-made,” a rather meaningless fact that gets endlessly repeated.

However, to use the “Russian-made” point to suggest that the Russians must have been involved in the shoot-down is misleading at best and clearly designed to influence ill-informed Americans. As the Post and other news outlets surely know, the Ukrainian military also operates Russian-made military systems, including Buk anti-aircraft batteries, so the manufacturing origin has no probative value here.

Relying on the Ukraine Regime

Much of the rest of the known case against Russia comes from claims made by the Ukrainian regime, which emerged from the unconstitutional coup d’etat against elected President Viktor Yanukovych on Feb. 22. His overthrow followed months of mass protests, but the actual coup was spearheaded by neo-Nazi militias that overran government buildings and forced Yanukovych’s officials to flee.

In recognition of the key role played by the neo-Nazis, who are ideological descendants of Ukrainian militias that collaborated with the Nazi SS in World War II, the new regime gave these far-right nationalists control of several ministries, including the office of national security which is under the command of longtime neo-Nazi activist Andriy Parubiy.[See Consortiumnews.com’s “Ukraine, Through the US Looking Glass.”]

It was this same Parubiy whom the Post writers turned to seeking more information condemning the eastern Ukrainian rebels and the Russians regarding the Malaysia Airlines catastrophe. Parubiy accused the rebels in the vicinity of the crash site of destroying evidence and conducting a cover-up, another theme that resonated through the MSM.

Without bothering to inform readers of Parubiy’s unsavory neo-Nazi background, the Post quoted him as a reliable witness declaring: “It will be hard to conduct a full investigation with some of the objects being taken away, but we will do our best.”

In contrast to Parubiy’s assurances, the Kiev regime actually has a terrible record of telling the truth or pursuing serious investigations of human rights crimes. Still left open are questions about the identity of snipers who on Feb. 20 fired on both police and protesters at the Maidan, touching off the violent escalation that led to Yanukovych’s ouster. Also, the Kiev regime has failed to ascertain the facts about the death-by-fire of scores of ethnic Russians in the Trade Union Building in Odessa on May 2. [See Consortiumnews.com’s “Burning Ukraine’s Protesters Alive.”]

The Kiev regime also duped the New York Times (and apparently the U.S. State Department) when it disseminated photos that supposedly showed Russian military personnel inside Russia and then later inside Ukraine. After the State Department endorsed the “evidence,” the Times led its newspaper with this story on April 21, but it turned out that one of the key photos supposedly shot in Russia was actually taken in Ukraine, destroying the premise of the story. [See Consortiumnews.com’s “NYT Retracts Ukraine Photo Scoop.”]

But here we are yet again with the MSM relying on unverified claims being made by the Kiev regime about something as sensitive as whether Russia provided sophisticated anti-aircraft missiles – capable of shooting down high-flying civilian aircraft – to poorly trained eastern Ukrainian rebels.

This charge is so serious that it could propel the world into a second Cold War and conceivably – if there are more such miscalculations – into a nuclear confrontation. These moments call for the utmost in journalistic professionalism, especially skepticism toward propaganda from biased parties.

Yet, what Americans have seen again is the major U.S. news outlets, led by the Washington Post and the New York Times, publishing the most inflammatory of articles based largely on unreliable Ukrainian officials and on the U.S. State Department which was a principal instigator of the Ukraine crisis.

In the recent past, this sort of sloppy American journalism has led to mass slaughters in Iraq – and has contributed to near U.S. wars on Syria and Iran – but now the stakes are much higher. As much fun as it is to heap contempt on a variety of “designated villains,” such as Saddam Hussein, Bashar al-Assad, Ali Khamenei and now Vladimir Putin, this sort of recklessness is careening the world toward a very dangerous moment, conceivably its last.


Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s


Russian Military Says Detected Ukrainian Su-25 Fighter Plane Close to MH17 Before Crash


July 21, 2014

RIA Novosti


MOSCOW, – An Ukrainian combat jet was detected in close approach to the Malaysian passenger plane shortly before it crashed in eastern Ukraine killing all 298 people on board, the Russian military said Monday.

An altitude gain was detected for a Ukrainian combat jet, supposedly a Su-25, flying at a distance of 3-5 kilometers [1.8-3.1 miles] from the Boeing,” Lt. Gen. Andrei Kartapolov, the head of the Main Operations Directorate of the HQ of Russia’s military forces, told a media conference in Moscow.

The presence of the Ukrainian combat jet can be confirmed by video shots made by the Rostov monitoring center, Kartopolov stated.

The Su-25 (NATO reporting name Frogfoot) ground attack aircraft can hit a target at a distance of five kilometers (3.1 miles) as it’s equipped with air-to-air missiles, the head of the Main Operations Directorate said.

“We would like Kiev to explain why a combat jet was flying almost at the same altitude and the same time with a passenger plane along the route dedicated for civilian air traffic,” the general underlined.

In addition, MH17 crashed within the operating zone of the Ukrainian army’s self-propelled, medium-range surface-to-air Buk missile systems, Kartopolov added.

Malaysia Airlines’ Flight MH17 en route from Amsterdam to Kuala Lumpur crashed on July 17 near Donetsk in eastern Ukraine. All 298 passengers on board the airliner died, including 283 passengers and 15 crew members.

Ukrainian government and militia have been trading blame for the alleged downing of the airliner ever since reports suggested foul play, with independence supporters saying they have no required technology to shoot a target at altitude of 10 kilometers (6.2 miles).

Commenting on the crash, Russian President Vladimir Putin said it was vital to abstain from hasty conclusions on the case before the international investigation was over.

The UN Security Council late on Sunday night completed the text of its resolution regarding the Malaysia Airlines crash. Russia introduced its own draft resolution to the UN Security Council calling for an impartial investigation into the circumstances of the crash.


Obey: Pentagon research indicates social media can be used to control people like robots


Millions of Americans use social media every day, and the Pentagon wants to know how to how the information they see might be used to control their behavior as if they were robots.


July 18, 2014

by Douglas Ernst

Washington Times


The Department of Defense has spent millions of dollars in recent years on research aimed at harnessing the power of social media to direct human behavior on a large scale. The Air Force even published findings on the subject in February titled “Containment Control for a Social Network with State-Dependent Connectivity,” the technology website Ars Technica reported Thursday.

“A less investigated problem is once you’ve identified the network, how do you manipulate it toward an end,” Warren Dixon, director of the University of Florida’s Nonlinear Controls and Robotics research group, told Ars Technica. Mr. Dixon, who holds a doctorate in electrical and computer engineering, was the principal investigator on an Air Force Research Laboratory-funded project.

In short, researchers found that large populations of social media consumers can likely be controlled by using mathematical principles, Ars Technica reported. Mr. Dixon and his fellow team members believe that a sound mathematical formula would allow an entity like the Department of Defense to influence behavior toward a desired result.

“There’s a group of leaders, each of which has their own objectives, and they have their own topic of emphasis,” Mr. Dixon told the website of his previous work. “The goal is to have those people change the opinion or coerce the group of followers — people [who are] in the social group of these people but don’t know the high level objective.”

Mr. Dixon essentially said smaller groups of influential individuals can be used to sway much larger populations, and social media can be manipulated to leverage their influence even further.

Unlike Facebook, which recently had to publicly apologize for real-world tests it did in conjunction with Cornell University, Mr. Dixon’s team only ran simulations, Ars Technica reported. Facebook and its researchers manipulated the data streams of its users, something the Pentagon did not do.

“The problem is, how do you perform a closed-loop experiment? That’s something [the Pentagon] has struggled with,” Mr. Dixon told the website.

In response to Facebook’s infamous study, the Defense Advanced Research Projects Agency (DARPA) went out of its way to state that its studies are different.

“DARPA does not support research programs that aim to deceive unwitting people to see how they react (as the controversial Facebook study did). DARPA funds research on how groups form and influence each other and related dynamics — similar to social science research that has been conducted for decades with other kinds of communication,” the agency said in a statement, Ars Techica reported.

“DARPA funded studies that have involved sending potentially deceptive information to see how people react have been conducted with closed groups of enrolled individuals who have volunteered/consented to be in social media studies,” the statement continued.





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