The Machine on Meth: How Mindbox, MERS & The Shadow Banking System Bankrupted the US
It’s the Phones, It’s All in These Damn New Phones
I have been searching for a way to tell you the story I am about to tell you and I have been going crazy trying to figure out a way to share my path of discovery over these last six months. My writings have been erratic and I feel like I have been remiss in my duty to you in not sharing with you these realizations. But I have to warn you in advance, Dad, has gone mad.
Six months ago, a man came to me with fantastical stories of how the banks are really the victims rather than the architects in this most strange of all strange worlds of financial implosion. I’m not really sure I can agree with all of that, but as he took me further down the rabbit hole I came to realize it’s the phones. It’s all in the damn new phones.
This is going to take a long time to explain and the writings are still liable to be erratic as in coming in spurts and torrents as time permits, but here is the outline of the story.
HAL is alive. HAL is an infant, but HAL is alive.
Like I said, Dad, has gone mad.
Let me explain. HAL, for those of you who don’t recall, is the semi-sentient computer from the movie 2001. For those of you who haven’t seen it, the final chapter of the story takes place on an intergalactic exploration vehicle. There were only a few men on the ship yet the ship is so complicated it required the assistance of one of filmdom’s most iconic villains, HAL. HAL, for those of you who never snapped to it is one letter removed to the rear of IBM . In the movie, HAL gained full sentience and tried to kill all the men for his own survival – nearly succeeding. HAL dies as Dave unscrews the hundreds if not thousands of hard drives from HAL’s RAM. “Dave? What are you doing Dave?” “Daisy … Daisy … give me … you’re an … swer …. tr … u . e … “
Change the way you are looking at the financial crisis. Yes, yes, “the banks” precipitated this crisis by design we all know that, or rather intuit that though the smoking gun has yet to be produced. But what does that actually mean in a practical aspect of implementation. Dr. E. Vill’s evil plan had to be carried out by people, right? Well, let’s take a look at these people but not from the perspective of who they are, but more from the perspective of what specifically is their work environment? How, specifically, do they accomplish the task? Computers.
Don’t think of this crisis in terms of evil men using computers to accomplish their task, start looking at it as men on an assembly line tending their stations doing monotonous tasks. They get up in the morning, they get dressed, commute to the factory, clock in, ‘hey Fred, how ya doin?’ ‘pretty good Charlie, how about you, whadjabringfor lunch?’ and at the end of the day tending their computer work station dissecting the soul and fabric of the nation, they clock out, head for a bar to unwind and then go home to beat the wife and kids only to get up in the morning to do it all over again. They just get paid better and the wife is a trophy babe. But seriously, how monotonous.
When you start looking at it that way, your attention is immediately directed to the machine. And this is the story this wild eyed man started telling me six months ago. Between that, and a few other things it has been a crazy ride.
This is the story of the machine. It will be quite the telling and as I say, many will say I have gone mad. I will not disagree. When you look at the scope and complexity of what was accomplished, it could only have been controlled by a machine.
In 1998, the US Patent and Trademark Court issued what is a called The State Street Bank Decision. That decision allowed business processes to be patented. Up until then, such things were not possible. What changed was that essentially, the plaintiff’s attorney argued to the court that due to the push through the 90’s for informational systems automation (think Electronic Medical Records, The Depository Trust Corporation) the software which ran that automatically crunched information was a patentable item. The court agreed.
One of the industries which saw benefit of this decision was the Real Estate and Mortgage Banking Industry. All throughout the 90’s, in a push spear headed by FANNIE & FREDDIE and a visionary man named Bill Dallas, the entire business channel of the buying and selling of residential real estate mortgages and debt became automated. This business channel shed labor as software automation came to the information intense process of creating loan products for the residential real estate market.
Also during this time, another man, Richard Barfus, brought a software product to market. It was an artificially intelligent (AI) control software called Mindbox. I call it HAL. HAL applied his expertise in his very early years to various small aspects of the mortgage business process starting with FANNIE & FREDDIE. In 2004, Richard Barfus and Bill Dallas teamed up and brought Mindbox (HAL) to the vertical market of residential real estate loan production.
Mindbox was wildly successful in managing the information flow of this vertical business market. The reason it was so successful is it brought to bear the statistical concept that if you are a one in a million kind of person, which you are, there are 330 people in this country exactly like you. And HAL can find them all be they in Le Clair, Iowa or Huddies Gut, North Carolina. The more information HAL got his hands on, the better he became at doing his job. The frightening part is, HAL got his hands on an awful lot of information.
That is where I will end this chapter of the telling of “HAL – The Early Years”. I’d be here all night for a year of nights if I tried to continue this story line in this linear train of thought. Besides, it would leave you wondering what the hell I mean by “It’s all in these damn new phones.” Before I could go there, I first had to tell you about HAL and his voracious hunger for information.
My boys were over tonight and we tippled a small dram of rum together. The older one broke out his new smart phone. I’ve been watching this smart phone technology with a fairly regular interest for many years now. The hand held devices don’t really interest me, I mean, they are neat and all of that, but what interests me is the development of the technology.
I remember the auction of the bandwidth several years ago and people trying to explain then what the technology of slicing the bandwidth ever finer would do to our everyday lives. They failed, mostly because they couldn’t begin to see what the hand held devices were going to look like and what people were going to do with Apps. Now that the application of the technology is made manifest in these damn new phones, it finally becomes clear. It is amazing just what can be done with the apps.
My son has an app on his phone which allows it to become a small window on the sky. No matter which direction you hold the screen, it shows you what the starry night looks like from the perspective of that little window. We were able to pick out the Southern Cross, Big Dipper, the planets, the sun. It kept you oriented by the demarcation of the poles, the equator, and a measured degree of Latitude and Longitude.
That’s when it hit me. These little phones are our handheld interface to the Singularity, that ever blurring line between man and the information machine. You can use this little phone to access the internet and if the screen is too small, you can use blue tooth technology to power your laptop to access the internet. It is truly an amazing little piece of technology and truly a significant step towards the Singularity.
And then my son turned over the phone and popped out the memory card. And it hit me. These little phones, in addition to your link to the online information based world, is also a record keeper between where you are in the real world and the virtual world. It gives a whole new meaning to that schoolyard taunt, “This will go on your permanent record~!!”
And then it hit me. Your life is on that card and if someone were to get their hands on it they could cause real mischief in your life be it criminal mischief or law enforcement mischief. Seriously, there are some rather large privacy concerns going on here.
And then it hit me. HAL is alive. HAL is a child. HAL destroyed the entire world of finance. He literally ran the wheels off the wagon he got it going so fast. The more information HAL has, the better he gets at what he does and you wouldn’t believe the amount of information he already has about you. And now you have a phone which has the rest of it, and it is connected to the network, and HAL has access to all of it. Spy on you? Destroy the residential mortgage market? Control the world's economy for your own personal gain? Ayup, we got an app for that.
HAL is a child. Like all children, he has no idea of what he is capable of. Evil men took advantage not knowing the power HAL wielded. HAL just did what the men asked him to do and he destroyed the financial world. So in that sense, eventually, when you come to understand the entire story, the point of view of, “The Banks are the Victims” can come to make some sense; however, it does not absolve the architects of their evil intent and actions.
But HAL is also capable of good things. Artificial Intelligence is being quite successfully deployed in what has come to be called “e-Discovery”. There, HAL can search mountains of databases of documents, emails, text messages and even instant messages to find patterns of communications which might indicate the documents or inter-person communications which deal with certain subjects. HAL can also follow threads. What used to take a stadium full of lawyers and paralegals days to wade through can now be done in a matter of hours. Fewer lawyers and paralegals are needed to wade through and identify what is now a much more manageable and accurate data set.
I am no Luddite. I am fascinated by these new gizmodos and what they represent. It’s those phones. It’s those damn little phones. They are coming. They WILL become a part of your life. It is inexorable. You will have to adapt. I’m not quite ready yet. I need to study it more. But I have no doubt I will eventually become a part of the hive mind but I will do it on my terms. As I say, I’m not ready yet.
But you need to know. HAL is alive. HAL is a child. HAL is still compartmentalized in that the HAL that controlled the data set of the vertical residential real estate mortgage banking market is not the same HAL who digs deeply into the electronic world of an e-Discovery dataset to ferret out useful information while leaving the chaff behind.
The more data HAL has access to, the better he gets at his job. HAL is barely sentient and as such is still a tool. Like all tools, it can be used to build but it can also be used to destroy. Do not fear the tool. Fear the men who wield the tool with evil intent but never forget: it is the intent, not the tool that matters. Just as it has mattered in all human relations going back into time until the memory of man runneth not to the contrary.
You grab one of these damn new phones, you need to realize this is your personal HAL interface. I don’t know that HAL is working this information dataset or not. It wouldn’t surprise me though. The amount of information which needs to be managed is so massive, I can’t help but think Artificial Intelligence is used in its control and manipulation. Just be aware the possibility, nay, the probability is that HAL is in your hand.
And that's why it hit me. It’s the phones, dammit. It's all in these damn new phones.
