Note: So much has been happening so quickly of late – almost as if we’re in the final 5 minutes of a stadium-filling exponential function – that we’re currently swamped with content. I’d like to be sure that my regular subscribers know that we’ve got Finance U, Off The Cuff interviews, and scouting reports all stacked up from this week, as well as more to come out over the coming days. My services as an information scout are in high demand…
The Great Taking kicked off a huge round of inquiry for me. I dove in a read federal laws and titles and who sections of the Uniform Commercial Code (UCC) all in an effort to answer the question “Was what David Rogers Webbb wrote about true?”
The answer is “yes.”
The laws that place an enormous array of opaque and vaguely defined financial securities ahead of your own weak “security entitlement” claims were put in place over the past 20 years.
Worse, these specifically include derivatives, the subject of this special episode.
Even more troubling is that if your broker or a security clearing intermediary enters bankruptcy, nobody and nothing can prevent an outside party with one of these many ‘senior claims’ from reaching in and taking money or any other assets.
While your account would be locked up until the final resolution of the failed company’s finances, the big players and their derivative bets can simply reach in and take what they believe to be theirs.
You end up with the scraps.
So how big of an issue is this?
Well…here’s where it gets a little scary. Derivatives are now best measured in the quadrillions of dollars. While they all net out to zero, some would say (which is true), they also operate like risk insurance that works perfectly until and unless it’s actually needed.
That is, derivatives both keep the system stable but become the reason for systemic failure during market panics. Derivatives remain a massive threat to our entire financial system.
Tune in to find out the gory details!
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