Plan B – How to loot nations and their banks legally

Today I was looking at USAWatchdog where a post by M Smith caught my eye.

Greg, I ran into these two articles & thought both were worth sharing!
www.golemxiv.co.uk...[/url]. On the same page on the right hand side you will see, “A new reserve currency to challenge the dollar & what is going on in the straits of Hormuz! Both make you say um! It sad/bad enough that congress have been bought off by the bankers & their massive lobbying efforts, they made it possible to be the first to get paid or place their hands on assets when a broker/dealer like MF Global went under. Armstrong was right, NYC Courts are stacked with crooked judges and DC is full of crooked politicians who have made it all possible to steal at will & have the courts stacked by adding amendments to a bill!

Well, I searched on this fourm and I did not see it anywhere. This article was written on December 15, 2011. I am astounded by the revelations within this paper. This guy is saying that the banks have had special bankruptcy protection given to the banks. It is a ver lon article and he suggests that the banks already have the laws set up so when one bank goes bankrupt ... well I'll just quote hime .. anyway the banks have set up a system where they go bankrupt; then the other banks get the bankrupt banks assets before anyone... I am not a bankster and it is complicated to put in my own words but this guy nailed it!

In the MF Global collapse what ZeroHedge, and following them, I and others wrote about, was the way in which not only did MF Global go bankrupt, but so also did some of their clients when they found the money they thought MF Global was holding for them, went unaccountably missing. Client’s money went missing because it was ‘mingled’ with the brokerage’s money when it should not have been. Brokers should keep them separate. But it seems in the ‘re-hypothecation’ of assets it was mingled. Former CEO of MF Global, Mr Corzine has sworn under oath he knew nothing about his co-mingling nor the irregularities with his company’s re-hypothecation. It has been rumoured the client’s money may now be, possibly, in the hands of JP Morgan.

The answer to all these questions lie in a change to Bankruptcy laws that happened around the world between 2002 and 05. This might seem like a detour into nerd city but it is not. It is the key.

When a company declares bankruptcy there is what the Americans call an ‘automatic stay’, which means all the assets left in a company at the moment it goes bankrupt are protected from the rush of creditor’s demands until appointed auditors can sort out who should get what. The automatic stay prevents a first come first served disorderly looting where those with the most muscle getting everything and everyone else getting nothing. As we are all painfully aware now, there is a legal pecking order to who gets paid before who, with Senior bond holders at the top. But, in America culminating in 2005 with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) the order was changed. And that change is the crucial event.

What was this ammendment? The ammendment exempted repos (and hypothecated and re-hypothecated assets) and a whole range of derivatives from the automatic stay. It also allowed lower quality assets to qualify for the exemptions.

Which means,

The special bankruptcy treatment given repos and derivatives means that repo lenders and parties to derivative contracts can keep the collateral if their trading partner becomes insolvent. This exempts them from the “automatic stay” rule in bankruptcy, which prohibits most creditors from trying to collect ahead of others.

Or as the official report from the US Financial Crisis Inquirey Commission said,

under a 2005 amendment to the bankruptcy laws, derivatives counterparties were given the advantage over other creditors of being able to immediately terminate their contracts and seize collateral at the time of bankruptcy. (p. 48)

So when a bank goes bankrupt, BEFORE even the most senior bond holders, the repo lenders and derivatives traders can remove, or keep all the assets pledged to them.

and here he lays open the naked truth!

Let us say you are a bank or broker that has bought up a lot of European bank and sovereign bonds from Italy, Spain and Greece for example. You would be very exposed to great losses should those countries or their banks default. You are relying on the politicians forcing their tax payers to bail out you and the other banks you trade with. What if they don’t?

One solution would be to sell as many of those bonds as you could accepting the inevitable losses as being better than a much larger loss if the banks or nations or both, defaulted. The other solution, counter-intuitively, would be to do more business with them. But make sure it is repo lending and derivative trading. Specifically offer the banks in troubled nations CDS insurance on their own bad debts and currency swaps. How would this help?

First, lets keep in mind that the trade in both these types of derivatives did increase by 18% in the first 6 months of 2011 precisely as the Euro crisis has worsened.

If a bank or nation was to default on you as a mere bond holder, you would have to wait in a the queue of creditors to see what you were going to be given back. And some ‘hair cut’ would be likely. But if you had done rather a lot of derivatives trading (CDS insurance and currency swaps are both derivative trades) then you would not have to wait. You would seize all the collateral the bank had pledged to you for repo lending or derivative trading and walk away. Now you will say that if you had done CDS insurance then you might well have to pay back out the money you had seized. Except that possession is nine tenths of the law. While lawyers set about arguing about what you owe, the critical fact is that in the mean time, in the height of the crisis you HAVE the money. JP Morgan allegedly has MF Global money while other people’s lawyers can only argue about it.

so now that the banks can bankrupt each other while they keep the promised assets before the creditors even get a shot at them!

smooth...

I am still working my way through the article which is fantastic!

I'll save the end for you to read!

They've covered all their bases, that's for sure. It's just a waiting game now to see how long the theft can continue and how low can we go, before an inevitable collapsed system.

Got metal?

reply to post by SunnyDee


silver and gold ... silver and gold as the song goes

and I work on foreclosures and I have been gathering a wide variety of stuff like wire; boards; some steel; books of all sorts; propane gas tanks; refrigerators to convert to solar ovens;

Just this past week I got a whole college book series about engineering and tool & die making; two sets of emergency care text books; fundementals of fire fighting .. last month a complete series of college text books from a woman who became an RN .....

and that surprises you How ... I have to ask (?)

institution 'A' fails and is ultimately bought up or bought out by institution 'B' .... looking to realize and find a means by which to 'profit or gain' from the same assets and losses they've since acquired from "A".

'B' fails, whether due to overextending themselves by purchasing 'A' or by overextending their physical or liquid assets otherwise, and are ultimately bought up or out by 'C' ... who does the same ... wash-rinse-repeat.

A 'process' and 'situation' which has far exceeded the letters in the alphabet time and again, exponentially.

When it finally comes down to those 'who are to big to fail' ... Well, you get what we've seen and have here today

TaxPayer dollars used to Prop Up Failed Corporate Banking Interests and 'Investments'. ? ?


Too Big Too Fail ... has always seemed akin to me as that of a male dog's literal/physical 'connection' to his mate until well after the deed's been done, completed and accomplished in full.

.. unfortunately, at least that typically results in a cute pup ...and not some bastardized mongrel with partisan interests and 'instinctive' affiliations or desires. > :shk:

pathetic, it is.

reply to post by 12m8keall2c


No, It really doesn't surprise me that they have a plan .... I just watched AL Bartlett's presentation about the basics of the exponentional function. I thought that parts 2-7 were the most interesting when he was talking about the doubling factor and how it pertains to population and energy.

Al Bartlett home page

some of his stuff has been on here before

Back on topic. I found the article inetresting when you look at it as another piece of the puzzle and what is a coordinated effort to hobble the USA ...

and it is working!

It is interesting to hear that there has been a change to the pecking order of bankruptcy. Is it right to say that the investment banks how now taken top position from the preferred shareholders?