When the Derivative Bubble Pops: “The Great Taking”

When the Derivative Bubble Pops: “The Great Taking”

By David Rogers Webb and Melissa Tuggle

Click here to download a PDF version of the book, an HTML version is also available here.

The book is about the taking of collateral (all of it), the end game of the current globally synchronous debt accumulation super cycle. This scheme is being executed by long planned, intelligent design, the audacity and scope of which is difficult for the mind to encompass.

Included are all financial assets and bank deposits, all stocks and bonds; and hence all underlying property of all public corporations, including all inventories, plant equipment; land, mineral deposits, inventions and intellectual property.

Privately owned personal and real property financed with any amount of debt will likewise be taken, as will the assets of privately owned businesses which have been financed with debt. If even partially successful, this will be the greatest conquest and subjugation in world history.

Excerpts from the Book

In chapter 3, the author notes that ‘The greatest subjugation in world history will have been made possible by the invention of a construct; a subterfuge; a lie: the “Security Entitlement.’ Since their beginning more than four centuries ago, tradable financial instruments were recognized under law everywhere as personal property… It may come as a shock to you that this is no longer the case.’

‘You are led to believe that you own something, but someone else secretly controls it as collateral. And they have now established legal certainty that they have absolute power to take it immediately in the event of insolvency, and not your insolvency, but insolvency of the people who secretly gave them your property as collateral. It does not seem possible. But this is exactly what has been done with all tradable financial instruments, globally! The proof of this is absolutely irrefutable. This is wired to go now.’

‘Essentially all securities “owned” by the public in custodial accounts, pension plans and investment funds are now encumbered as collateral underpinning the derivatives complex, which is so large – an order of magnitude greater than the entire global economy – that there is not enough of anything in the world to back it.

The illusion of collateral backing is facilitated by a daisy chain of hypothecation and rehypothecation in which the same underlying client collateral is reused many times over by a series of secured creditors. And so it is these creditors, who understand the system, who have demanded even more access to client assets as collateral.’

‘It is now assured that in the implosion of “The Everything Bubble”, collateral will be swept up on a vast scale. The plumbing to do this is in place. Legal certainty has been established that the collateral can be taken immediately and without judicial review, by entities described in court documents as “the protected class.” Even sophisticated professional investors, who are sure that their securities are “segregated”, will not be protected.’

‘An enormous amount of sophisticated planning and implementation was sustained over decades with the purpose of subverting property rights in just this way. It began in the United States by amending the Uniform Commercial Code (UCC) in all 50 states. While this required many years of effort, it could be done quietly, without an act of Congress.

These are the key facts:

Ownership of securities as property has been replaced with a new legal concept of a ‘security entitlement’, which is a contractual claim assuring a very weak position if the account provider becomes insolvent.All securities are held in unsegregated pooled form. Securities used as collateral, and those restricted from such use, are held in the same pool.All account holders, including those who have prohibited use of their securities as collateral, must, by law, receive only a pro-rata share of residual assets.“Re-vindication”, i.e. the taking back of one’s own securities in the event of insolvency, is absolutely prohibited.Account providers may legally borrow pooled securities to collateralize proprietary trading and financing.“Safe harbor assures secured creditors priority claim to pooled securities ahead of account holders.”The absolute priority claim of secured creditors to pooled client securities has been upheld by the courts.

‘… the objective is to utilize all securities as collateral.’

‘The documentation is absolutely irrefutable.’

‘In March of 2006, the Deputy General Counsel for the Federal Reserve Bank of New York provided a detailed response to questionnaire prepared by the Legal Certainty Group, which was looking to the Fed to tell them exactly how to do it.’

The following are excerpts from that response which is also included in full in this book’s appendix:

Q (E.U.): in respect of what legal system are the following answers given?

The Great Dispossession: Turning Our Property in Financial Assets Into the Property of “Secured Creditors”

A (NY Fed): This response confines itself to U.S. commercial law, primarily article 8… and parts of article 9, of the Uniform Commercial Code (“UCC”)

… The subject matter of Article 8 is “Investment Securities and the subject of Article 9 is “Secured Transactions.” Article 8 and Article 9 have been adopted throughout the United States.

The Q&A goes on to establish that the investor does not have rights attaching to particular securities in the pool, that an investor is always vulnerable to a securities intermediary’s solvency: “if the securities intermediary is a clearing corporation, the claims of its creditors have priority over the claims of entitlement holders.”

[…]

In chapter 5, ‘Collateral Management’, Webb describes how ‘inevitably following “the everything bubble” will be “the everything crash”. Once prices have essentially crashed and all financial firms rapidly become insolvent, these collateral management systems will automatically sweep all collateral to the Central Clearing Counterparties (CCPs) and Central Banks. The trap, into which all nations have been herded, is ready and waiting to be sprung. There will be an epic endpoint to the decades of seemingly out of control financialization, which served no beneficial purpose for humanity, but the devastating effects of which are apparent even now it has been a deliberate strategy executed over decades. This was the purpose of inflating the global bubble entirely out of proportion with any real world thing or activity, which must end in disaster for so many, with no pockets of resilience allowed to remain in any country.’

In chapter 7, Central Clearing Parties, Webb describes how insolvent these clearing houses are.

[…]

Via https://www.globalresearch.ca/when-the-derivative-bubble-pops-the-great-taking/5882967