I expect there are none today not recognising the fact, debt is the biggest pressure we face for the future, and, that debt always leads to a shift in control of assets as people swoon to the best offer of debt relief, (more credit) and payment reduction. Under this strategy it then requires a level so far above the debt bubble, that they alone (BIS) are in the position to offer such relief which positions the same as the eventual winner on the path to monopoly.
In the United States the largest players in a strategy coming out of the city, would be JP Morgan and Goldman Sachs, yet still in the US there are rules limiting the amount banks and brokers alike can use the stratagem known as re-hypothecation, while in the city of London there are no limits to the use of this system, a system so vital to the money kings who are the benefactors of the city and its global web. This of course presents a different reason David Cameron opted out of the EU cash crisis, not to protect the British economy but to protect the loophole allowing the continued use of re-hypothecation method.
So we need to understand this system in order to better formulate a way out of the madness we suffer in the financial meltdown, bad though it is, it is set to get a whole lot worse if we do not stop this serious fraud in its tracks.
This is the system best known to the average man as the mortgage. A borrower (you), pledges collateral to secure a loan called a mortgage. The borrower retains ownership of the collateral, or the house, but the whole contract is said to be hypothecated in that while ownership belongs to the house owner, control hypothetically, of the contract, belongs with the creditor who can re-possess the property if the owner defaults on the loan issued in order the property could be purchased. This format is the basis of all loans secured on some form of collateral, be this a car, a commercial premises or as we have seen, your home or business property.
If the above fails to expose what is basically a win win scam for the tip of the scheme, then the next part of this tale will.
Re-hypothecation occurs when the bank or broker then re-issues the collateral posted to the creditor by the initial borrower, (you), to act as collateral for their own trades or further borrowing. Should the initial client, (you), uphold the mortgage to the creditor and the creditor invests well, then the debt levels remain controllable though expanding, but if the initial borrower defaults on the mortgage and the money recoup-able by the creditor upon the collateral defaulted does not cover the debt the creditor as accrued on the back of your collateral, then big problems begin to arise, problems that cannot be undone from the initial loan and collateral that went with it, (the repossessed property). The initial default then affects the creditors portfolio spreading the toxicity to the other assets and stocks held by the creditor to whom the debt is in default.
Re-hypothecation as a share in the global economy runs in the trillions of pounds and is legal under corporate statute. Brokers and financiers of all levels justify hypothecation as a sound strategy with the claim, it is a capitol efficient means of financing their own operations. What they fail to present is the fact such efficiency is good for them because liability lies with the borrowers as they will be the ones in court in order as much money can be recouped as possible, meanwhile the brokers and banks continue to play the game of re-hypothecation and the debt expands.
Back to those ultimately at the top of this pyramid scheme we go as it is they who declare it to be a capitol efficient way of financing their operations, and down quite a few notches on that pyramid the game indeed goes on, but at the bottom the debt has reached maximum insanity and so slowly the toxicity rises back up the pyramid as we saw in the breakdown of such institutions as Northern Rock and the RBS. As the toxicity heads higher still, then economies become victim to the debt as the bailouts position the taxpayers and thus the economy as liable for the debts of the banks and institutions.
The initial borrower of course signed for their collateral to be used in the system, re-hypothecation, without being told this was so, and so in the eyes of this system it is down to the ignorance of the initial borrower and they carry on blinded off the glare of their own egos.
The trade in derivatives has also operated the re-hypothecation system which means the higher you go in the pyramid the less you have to pay for you’re trading, they just keep on re-hypothecating, but as with all pyramid schemes, the lower you are the more you lose in order those higher can still play the game.
This situation places the city as a loop hole for serious international traders and brokers, banks and property holdings to by pass any restriction on re-hypothecation they find their own economic statutes limiting, so in effect, Cameron and his veto is a move not in the upholding of British interests, but in the interests of global casino commerce. You can call me old fashioned, but¦ how does this situation serve the constitutional realm to which all offices under oath operate?
In the use of this serious fraud in the city, we can see the cause of the financial meltdown and the reason Britain or more correctly the corporation, the UK, finds itself with a huge deficit between debt to GDP and manages to continue on, they just keep on re-hypothecating the collateral and making loans against it. On that basis future default is not a possibility, it is absolute.
According to the IMF up to the period 2007, US banks were in receipt of some $4 trillion based on a collateral platform of around $1 trillion, much of which came from the city.
This system and fraud has been kept under wraps with re-hypothecation transactions being kept off the balance sheets, and is responsible for the meltdown of AIG, Lehman Brothers, the Berni Madoff scandal and the more recent MF Global collapse.
But just when you think it can get no worse, we find hyper-re-hypothecation to be going on as more and more big business jumps on the kamikaze strategy with the largest player today being JP Morgan with an estimated half a trillion dollars in this stuff.
And the band played on.
Inner City of London
From Rome to the Templars, to Freemasonry, We Face the Same Enemy
Tags : Banking Debt, Goldman Sachs, Hypothecation, Inner City of London, JP Morgan, Monopoly, Northern Rock, RBS, Re-hypothecation, The City