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This is taken from the book 'The Great Taking'. The author states that any security worldwide is no longer truly owned. To illustrate the absurdity of this, he uses the analogy of a car (to be clear he is not saying that this applies to cars but to securities):

"Let’s say that you have purchased an automobile for cash. Having no debt against the vehicle, you believe that you now own it outright. Despite that, the auto dealer has been allowed by a newly invented legal concept to treat your car as his asset, and to use it as collateral to borrow money for his own purposes. Now the auto dealer has become bankrupt, and your vehicle along with all of the others sold by the dealer are seized by certain secured creditors of the dealership, with no judicial review being necessary, as legal certainty was previously established that they have absolute power to take your car in the event of the bankruptcy of the dealer."

Is this true in your country? #asknostr

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Discussion

DataNostrum 2y ago

I know that in many (all?) countries, when you deposit money at the bank, the bank effectively takes ownership of the money, i.e. it is no longer yours, and you are not first in line to get it back in the event of the bank's bankruptcy. Insanely, if you take out a mortgage from a bank, and put the money on an account in the same bank, then in the event of the bank's bankruptcy, your money can go up in smoke while your mortgage remains intact, i.e. they don't get cancelled out.

I was not aware that the same thing applies to securities. Any people here who know about such things?

#asknostr #nostrplebs

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Josua Schmid 2y ago

The cantonal banks in Switzerland can not go bankrupt without the state going bankrupt as well. That called state guarantee here.

In practice a lot of other banks seem to have non-formal state guarantees as well, because they‘re bailed-out.

Regarding securities:

There‘s just a legal order in which creditors are refunded during bankruptcies. Biggest creditors first. So Blackrock will probalby get back their securities but not you.

DataNostrum 2y ago

The absurd thing is, why tf should a custodian be allowed to use my stocks as collateral in the first place. How does it make any sense, and how are the people who enabled this not under constant public outrage?

Josua Schmid 2y ago

It makes kind of medieval sense to me. If you rented cattle from your neighbor and went bankrupt, I would just take the cattle and make you reliable for the loss. You control it, so it‘s your problem. This may not work anymore for corporations, because you cannot really go after legal bodies with limited liability.