{"id":1243929,"date":"2023-10-03T23:04:06","date_gmt":"2023-10-03T23:04:06","guid":{"rendered":"https:\/\/dissidentvoice.org\/?p=144498"},"modified":"2023-10-03T23:04:06","modified_gmt":"2023-10-03T23:04:06","slug":"the-great-taking-how-they-can-own-it-all","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2023\/10\/03\/the-great-taking-how-they-can-own-it-all\/","title":{"rendered":"\u201cThe Great Taking\u201d: How They Can Own It All"},"content":{"rendered":"

\u201c\u2019You\u2019ll own nothing and be happy\u2019? David Webb has gone through the 50-year history of all the legal constructs that have been put in place to technically enable that to happen.\u201d [Oct 2 interview titled \u201cThe Great Taking: Who Really Owns Your Assets<\/a>?\u201d]<\/em><\/p>\n

The derivatives bubble has been estimated to exceed<\/a> one quadrillion dollars (a quadrillion is 1,000 trillion). The entire GDP of the world<\/a> is estimated at $105 trillion, or 10% of one quadrillion; and the collective wealth of the world is an estimated $360 trillion. Clearly, there is not enough collateral anywhere to satisfy all the derivative claims. The majority of derivatives<\/a> now involve interest rate swaps, and interest rates have shot up. The bubble looks ready to pop.<\/p>\n

Who were the intrepid counterparties signing up to take the other side of these risky derivative bets? Initially, it seems, they were banks \u2013led by four mega-banks<\/a>, JP Morgan Chase, Citibank, Goldman Sachs and Bank of America. But according to a 2023 book called The Great Taking<\/em><\/a> by veteran hedge fund manager David Rogers Webb, counterparty risk on all of these bets is ultimately assumed by an entity called the Depository Trust & Clearing Corporation\u00a0(DTCC), through its nominee Cede & Co. (See also Greg Morse, \u201cWho Owns America? Cede & DTCC<\/a>,\u201d and A. Freed, \u201cWho Really Owns Your Money? Part I, The DTCC<\/a>\u201d). \u00a0Cede & Co. is now the owner of record of all of our stocks, bonds, digitized securities, mortgages, and more; and it is seriously under-capitalized, holding capital of only $3.5 billion, clearly not enough to satisfy all the potential derivative claims. Webb thinks this is intentional.<\/p>\n

What happens if the DTCC goes bankrupt? Under The \u00a0Bankruptcy\u00a0Abuse Prevention and Consumer Protection Act\u00a0(BAPCPA)<\/a> of 2005, derivatives have \u201csuper-priority\u201d in bankruptcy. (The BAPCPA actually protects the banks and derivative claimants rather than consumers; it was the same act that eliminated bankruptcy protection for students.) Derivative claimants don\u2019t even need to go through the bankruptcy court but can simply nab the collateral from the bankrupt estate, leaving nothing for the other secured creditors (including state and local governments) or the banks\u2019 unsecured creditors (including us, the depositors). And in this case the \u201cbankrupt estate\u201d \u2013 the holdings of the DTCC\/Cede & Co. \u2013 includes all of our stocks, bonds, digitized securities, mortgages, and more.<\/p>\n

It sounds like conspiracy theory, but it\u2019s all laid out in the Uniform Commercial Code (UCC), tested in precedent, and validated by court rulings. The UCC is a privately-established set of standardized rules for transacting business<\/a>, which has been ratified by all 50 states and includes key provisions that have been \u201charmonized\u201d with the laws of other countries in the Western orbit. The UCC makes boring reading and is anything but clear, but Webb has diligently picked through the obscure legalese and demonstrates that the amorphous \u201cthey\u201d have it all locked up. They can take everything in one fell swoop, without even going to court. Ideally, we need to get Congress to modify some laws, beginning with the super-priority provisions of the Bankruptcy\u00a0Law of 2005. Even billionaires, notes Webb<\/a>, are at risk of losing their holdings; and they have the clout to take action.<\/p>\n

About The Great Taking<\/em> and Its Author<\/strong><\/p>\n

As detailed in the introduction, \u201cDavid Rogers Webb has deep experience with investigation and analysis within challenging and deceptive environments, including the mergers and acquisitions boom of the 80\u2019s, venture investing, and the public financial markets. He managed hedge funds through the period spanning the extremes of the dot-com bubble and bust, producing a gross return of more than 320% while the S&P 500 and the NASDAQ indices had losses. His clients included some of the largest international institutional investors.\u201d<\/p>\n

A lengthy personal preface to the book not only establishes these bona fides<\/em> but tells an interesting story concerning his family history and the rise and fall of his home city of Cleveland in the Great Depression.<\/p>\n

As for what the book is about, Webb summarizes in the introduction:<\/p>\n

It 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 and 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.<\/p><\/blockquote>\n

You might have to read the book to be convinced, but it is not long, is available free on the Net<\/a>, and is heavily referenced and footnoted. I will try to summarize his main points, but first a look at the derivatives problem and how it got out of hand.<\/p>\n

The Derivative Mushroom Cloud<\/strong><\/p>\n

A \u201cfinancial derivative\u201d is defined as<\/a> \u201ca security whose value depends on, or is derived from, an underlying asset or assets. The derivative represents a contract between two or more parties and its price fluctuates according to the value of the asset from which it is derived.\u201d<\/p>\n

Warren Buffett famously described derivatives as \u201cweapons of financial mass destruction,\u201d but they did not start out that way. Initially they were a form of insurance for farmers to guarantee the price of their forthcoming crops. In a typical futures contract, the miller would pay a fixed price for wheat not yet harvested. The miller assumed the risk that the crops would fail or market prices would fall, while the farmer assumed the risk that prices would rise, limiting his potential profit.<\/p>\n

In either case, the farmer actually delivered the product, or so much of it as he produced. The derivatives market exploded when speculators were allowed to bet on the rise or fall of prices, exchange rates, interest rates and other \u201cunderlying assets\u201d without actually owning or delivering the \u201cunderlying.\u201d Like at a race track, bets could be placed without owning the horse, so there was no limit to the potential number of bets. Speculators could \u201chedge their bets\u201d by selling short \u2014 borrowing and selling stock or other assets they did not actually own. It was a form of counterfeiting that not only diluted the value of the \u201creal\u201d stock but drove down the stock\u2019s price, in many cases driving the company into bankruptcy, so that the short sellers did not have to cover or \u201cdeliver\u201d at all (called \u201cnaked shorting\u201d). This form of gambling was allowed and encouraged due to a number of regulatory changes, including the Commodity Futures Modernization Act of 2000\u00a0<\/a>(CFMA), repealing key portions of the Glass-Steagall Act separating commercial from investment banking; the Bankruptcy Law of 2005, guaranteeing recovery for derivative speculators; and the lifting of the uptick rule, which had allowed short selling only when a stock was going up.<\/p>\n

Enter the DTC, the DTCC and Cede & Co.<\/strong><\/p>\n

In exchange-traded derivatives, a third party, called a clearinghouse, ensures that the bets are paid, a role played initially by the bank. And here\u2019s where the UCC and the DTCC come in. The bank takes title in \u201cstreet name\u201d and pools it with other \u201cfungible\u201d shares. Under the UCC, the purchaser of the stock does not hold title; he has only a \u201csecurity entitlement\u201d, making him an unsecured creditor. He has a contractual claim to a portion of a pool of shares held in street name, assuming there are any shares left after the secured creditors have swept in. Webb writes:<\/p>\n

In the late 1960\u2019s, something called the Banking and Securities Industry Committee (BASIC) had been formed to find a solution to the \u201cpaperwork crisis.\u201d It seemed the burdens of handling physical stock certificates had suddenly become too great, so much so, that the New York Stock exchange had suspended trading some days. \u201cLawmakers\u201d then urged the government to step into the process. The BASIC report recommended changing from processing physical stock certificates to \u201cbook-entry\u201d transfers of ownership via computerized entries in a trust company that would hold the underlying certificates \u201cimmobilized.\u201d<\/p><\/blockquote>\n

Thus was established the Depository Trust Company (DTC)<\/a>, which began operations in 1973, after President Nixon decoupled the dollar from gold internationally. The DTC decoupled stock ownership from paper stock certificates. The purchasers who had put up the money became only \u201cbeneficial owners\u201d entitled to interest, dividends and voting rights, leaving title of record in the DTC. The Depository Trust and Clearing Corporation<\/a> (DTCC) was established\u00a0in 1999 to combine the functions of the DTC and the National Securities Clearing Corporation (NSCC). The DTCC settles most securities transactions in the U.S. Title of record is with DTC\u2019s nominee Cede & Co. Per Wikipedia<\/a>:<\/p>\n

Cede and Company\u00a0(also known as\u00a0Cede and Co.\u00a0or\u00a0Cede & Co.), shorthand for \u201ccertificate depository\u201d, is a specialist United States financial institution that processes transfers of stock certificates on behalf of\u00a0Depository Trust Company<\/a>, the\u00a0central securities depository<\/a>\u00a0used by the United States\u00a0National Market System<\/a>, which includes the\u00a0New York Stock Exchange<\/a>, and\u00a0Nasdaq<\/a>.<\/p>\n

Cede technically owns most of the publicly issued stock in the United States.\u00a0Thus, most investors do not themselves hold direct property rights in stock, but rather have contractual rights that are part of a chain of contractual rights involving Cede<\/em>.\u00a0Securities held at Depository Trust Company are registered in its nominee name, Cede & Co., and recorded on its books in the name of the brokerage firm through which they were purchased; on the brokerage firm\u2019s books they are assigned to the accounts of their\u00a0beneficial owners<\/a>. [Emphasis added.]<\/p><\/blockquote>\n

Greg Morse notes that the dictionary definition of \u201ccede\u201d is to \u201crelinquish title.\u201d For more on \u201cbeneficial ownership,\u201d see the DTCC website here<\/a>.<\/p>\n

\u201cHarmonizing\u201d the Rules<\/strong><\/p>\n

The next step in the decoupling process was to establish \u201clegal certainty\u201d that the \u201canointed\u201d creditors could take all, by amending the UCC in all 50 states. This was done quietly over many years, without an act of Congress. The key facts, notes Webb, are these:<\/p>\n