I should also have referenced more detail about how ALL securities being easy to confiscate:
  • Ownership of all 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.
  1. All securities are held in un-segregated pooled form. Securities used as collateral, and those restricted from such use, are held in the same pool.
  2. 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.
  3. “Re-vindication,” i.e. the taking back of one’s own securities in the event of insolvency, is absolutely prohibited.
  4. Account providers may legally borrow pooled securities to collater- alize proprietary trading and financing.
  5. "Safe Harbor" assures secured creditors priority claim to pooled securities ahead of account holders.
  6. The absolute priority claim of secured creditors to pooled client securities has been upheld by the courts.
In summary...
  • 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.
  • 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 were assured that their securities are “segregated”, will not be protected.
  • Account providers are legally empowered to “borrow” pooled securities, without restriction. This is called “self help.” As we will see, the objective is to utilize all securities as collateral.