Here's an interesting rant on the revocation of the Glass-Steagal Act and its implications.
More of what's coming under Amerika, Inc., as espoused by our current white house squatters.
This is what matters, not who dingled who. Wake up.
By the way, I've read this poster some, and he's a right winger. When they start getting upset about complicities in the takeover of the government by corporate influence, watch out........... :
prudentbear.com
5/2/01 SPECIAL ISSUE
U.S. MARKETS
The Glass-Steagal Act, which set up a wall between banking and the brokerage industry, among other things, was effectively rescinded with the
passage of the Gramm Leach Bliley Act (GLB) in 1999, which allowed banks into the brokerage industry. The Private Securities Litigation
Reform Act (PSLR) of 1995 was passed to discourage frivolous lawsuits that legitimately challenge fraudulent activities that injure
shareholders. In other words both frivolous and solid lawsuits were discouraged.
What the PLSR is really about is that liability holders in the firm, that is those holding bank debt and bonds, will be favored over shareholders in
the future and a new view of ownership will emerge. The argument of the liability owner or debtor is that listed companies get little benefit if any
from the money people who invest in their shares.
The company only gets direct benefit from stock prices when they issue new shares, which in turn dilutes the investment of the existing
shareholders. The new feeling and attitude is that money that now goes into the purchase of stock in the market should instead by given directly
to the firm to fund its growth. In the event of financial misfortune befalling the company liability holders already have first
rights to assets. Some legal opinions suggest under PLSR that these liability holders, who only get contracted fixed returns should get more in
the future, such as a bonus if the firm does well. Due to the fact that banks, through bank holding companies or trust brokerage subsidiaries,
now can become large holders of shares under the GLB we expect strong moves in establishing the proprietary rights if liability holders over
shareholders. Then the banks will have it both ways and control companies they invest in, although being a liability holder is the stronger and
more profitable position. The flooding of the US economy with aggregates and the rigging of interest rates has allowed
banks to have it both ways. They profit from loans and bond holdings, but the market and the FED have also bailed them out of their mistakes.
This is not apparent to investors or Wall Street professionals. They simply never thought of it that way.
Financial Holding companies, such as Citigroup, which if you remember I discussed almost three years ago, as having broken the law, were let
back into the business they were thrown out of in 1932. The PLSR language allows banks to gain back what they lost when companies in
recent years pulled in massive amounts of funds through the equity
markets and $2 trillion in options. The banks lost all that business and they were not happy about it. Major firms such as Microsoft raised funds
through equity offerings and the exercise of stock options. They also cut their costs related to salaries and wages. Now you know why Microsoft
was attacked by the Justice Department and had to spend
millions defending itself. If banks become their largest investors they'll dictate how cash is raised and you can be sure it won't be in the equity
market, it will be from the banks. Banks will have a say in running firms, a big say, and if banks under the legislation do not get a "reasonable
return", which under law is not defined, then the banks
could start taking over the companies. Banks are and will continue to try to get investors into their mutual funds accumulating huge amounts of
capital with which they'll buy shares and control companies. If companies don't cooperate the bank's funds can short their stocks. Under new
decimal reporting it is much easier to get an up tick to short.
Short executions will rise from 6.8% to 40%. These bank funds along with the sale by them of bond portfolios is what caused the Dow to move
from 9,107 to 10,900 a move of 1,7800 points in four weeks. This is unheard of. This type of rally is similar to that which occurred after the crash
of 1929.
The arsenal that banks now possess has allowed them to take over the brokerage and insurance industries and control major corporations,
through bank holding companies or trust brokerage subsidiaries, all of which we predicted in issues several years ago, but as usual no one
was
listening. Our government is controlled by the owners of these banks and others. The elitists and sociopaths recognize that with the right
legislative backing, money is the most powerful weapon known to man. Sociopaths don't need lethal weapons if they have money and the rule
of
law (laws they make, and I do not mean Justice ? laws need not have any component of justice to be actionable). Take away the guns; base law
on money and the pain and pleasure of the minions will be under your control. Money is the greatest weapon known to man and the only
remaining enemy of money that I can see is still guns and gold. They,
the bankers, elitists, sociopaths, etc., were responsible for the run up in the market since 1992 and they have just created another sucker rally
to draw more of the public's funds into the market before they take it down again. They'll sell their long positions to the public and go
short. That will denude the public of its wealth. People will have to work harder, for less and put off retirement. Who has to worry about wage
increases during a depression and you can bet real productivity will rise. The banks have also arranged in the legislation that firms can buy
back more of their own stock during market drops, previously it
was strictly limited. They did this to end up controlling corporations.
The result is people lose their money in investments. Prices on goods are raised so they can't save money. The market declines and stays at
some level and moves sideways. The new prevailing thought will be the bankers, company managements, lawyers, etc., will be more important
than
shareholders and that it is wrong to believe that a firm should be run for its shareholders. It should be run for the benefit of the company and the
liability holders. We predict this will become part of future securities legislation. This legislation will deprive shareholders and
employees of legal redress against a corporation. This will be a new case law.
Government legislation, bought and paid for by elitists, along with the markets and economy they control, will cause major changes in the
market and the role of banks and corporations in our society. This sort of society was an experiment of Adolph Hitler in Germany in the 1930s.
This
is corporatist fascism. It is planned and executed by the same people who have caused every market panic and war for the last 1,000 years. We
consider this piece one of the most important harbingers of the future we've ever written. |
