CORPORATE
MALFEASANCE,DERIVATIVES,
AND THE BLACK HOLE
The roaring Nineties (1993 to 2000) saw people all over the world throw their life's savings and retirement nest eggs into the bourses and stock markets of the world only to lose most of it in the final frenzy of the Twentieth Century. Where did some thirty trillion dollars go?
The Great Ponzi Scheme of the Nineties: The Looting of People's Life Savings
On the earth plane we saw a scheme to take some 30 trillion dollars from people's retirement accounts and life savings. The scheme started with the coming into being of the Internet and the personal computer. Both these inventions were inspired by the Great and Holy Master St. Germain as the tools upon which the New Age would be built. They are still to be used for this purpose but only until the wheat and tares have been separated.
Investment banks throughout the world began capitalizing Internet and so-called dot.com companies to exploit the potential of these two inventions. The investment banks brought these newly-formed companies "public", that is, they sold shares of these new companies on the stock markets in the major financial capitals of New York, Hong Kong, London, Frankfurt, Paris, Taipei. Through their associate stock brokerage firms, the shares of these untried companies were hawked to the general public even though these new companies had never had any business experience nor had any track record of profitability much less viability.
The general public poured their life savings into investments of this sort through an unregulated form of investment grouping called the Mutual Fund. These funds come under no government scrutiny or regulations. They just popped up in the thousands, each one promising potential investors a high percentage of return on their money and vast earnings for their retirement. The so-called baby boomers flush with their newly-acquired inheritances and savings, transferred trillions of dollars into these unregulated funds in the hope of accumulating a substantial return for a comfortable retirement.
In order to give their investors the high return they expected and keep the funds flowing in, these mutual funds and investment banks engaged in the classic Ponzi Scheme. In other words, when the shares of the new Internet companies appeared on the market, they rushed in to buy them at a low price. One fund would buy off these shares at an agreed higher price, then in turn would sell it to another fund for a higher price and so forth. The effect was to force the price of these worthless shares sky high, as much as a few hundred times their fair value. And so share prices went, up, up, up, until these mutual funds ended up holding highly inflated shares of companies that had never before even made a profit.
The more people saw prices escalate, the more they emptied their savings and retirement accounts into the hands of these mutual funds. The mutual funds, having pushed prices of these new, worthless companies to their limit, then moved into the traditional manufacturing sectors and so-called blue-chip stocks and the prices of their shares rose to over-inflated values.
Shareholder paper millionaires sprouted up over night, and the financial capitals rejoiced that a new era of prosperity had arrived. Individual investors loaded with paper profits leveraged their share holdings and bought more shares at the peak of the market hoping it was going to go even higher. On the sidelines brokerage analysts cheered the investors on to buy more, promising the doubling and tripling of the stock indices and prosperity for all. New York, London, Taipei, Hong Kong etc. boomed. Brand name designer shops sprouted out of nowhere. Cafes, restaurants, discos, exclusive hotels, luxury cruises, and berthed airliners popped up everywhere to cater to this new class of paper millionaires.
Stock brokerage firms wallowed in cash as mutual funds and individual investors dove into the market to buy overvalued stocks riding on the media-created hope that the good times would last forever and that these stocks would rise even higher. This was their perception of the New Age, the new economy, a new system that was about to toss out old theories of supply and demand and profit and loss and bring in prosperity for all.
After taking their share of commissions, stock brokerage firms and investment banks handed huge sums of cash to these unviable "new economy" corporations, often headed by inexperienced starry-eyed youngsters, who instead of creating a profitable business squandered the money on incidentals or rolling the dice back in the stock market. Why work so hard at the business? Why not just take this capital and reinvest it in the stock market and make a profit?
As we see in the news today, while the public focused on the hype in the dot.com boom, the telecom, energy, finance, entertainment, publicity, banking, and pharmaceutical sectors were busy inventing ways to grab some of the savings and retirement funds pouring into the mutual funds. The financial bubble expanded and the Directors in the boardrooms, their CEO's, their Chief Financial Officers, and their auditors plotted to stuff their pockets with billions.
These manipulators of finance and corporate thieves are part of the Dark Forces for they are the attractive ones placed in these top corporate positions to draw in the money, breaking potential investors' resistance with their charm and media exposure. These icons are but the front line of a scheme, so insidious and, we have to admit, of high intelligence, that the world will be left ever poorer for it.
Indeed, today the government regulators, always too late and reacting to situations rather than anticipating them, are "cracking down" on corporate malfeasance. These front line CEO's, Directors, and CFO's are merely the pigeons fed to the public to satisfy their need to blame someone for the trillions they have lost. In essence, trillions more will disappear while the public's attention is focused on the trials corporate culprits and thieves. The public will vent their wrath on the corporate culprits but one thing is certain, the public will not get its money back. Again, where did this money go?
The next victims of public ire will be directed toward the mutual funds. These mammoth institutions, totally unregulated by any government authority, promised the public an unrealistically grand and prosperous future in order to draw in their money. Again, watch while the public storm rages against these funds which have lost and continue to lose trillions of their investors' funds, the money continues to flow out to somewhere, for on the earth plane, for every dollar lost, there is a winner. Where is the money going? This is the big question no one dares to pose.
Instruments to Direct the Flow of Money Outward: Derivatives
Many remember the rogue trader who by betting on instruments called derivatives brought about the downfall of one of the oldest banks in England.
Derivatives are relatively new financial instruments invented by Wall Street and the major world stock exchanges to draw more cash money into the market place. By purchasing these derivatives the investor is essentially standing on the sidelines and making side bets on the direction of prices on a variety of commodities such as agricultural products from pork bellies to wheat, gold and other precious metals, oil, gas, sugar, coffee and more ephemeral bets on the direction of the stock indices. By placing a bet, i.e. buying or selling a futures contract, they bet on whether the price will go up or down. If they are right in either direction, they win. Some bet on both directions as once to hedge their losses. Investors can also protect themselves from big losses by purchasing call or put options on the futures contracts. In other words, buying options allows you to sit on the back row of the horse races and bet on who in the front row will win or lose money on the race.
Suffice it to say, investing in derivatives is purely a paper bet for money. What is important to remember here is that for every winner in these so-called "cash markets" there is a loser in this game and vice versa. That is the key to elucidating for you where all the money is going.
Corporations and Derivatives:
Corporations, flush with money from the raging stock markets, thought less of building a business with viable products that met demand. Scores of corporations, financial institutions, pension funds, and banks, pumped up their profits with paper revenue from the derivatives, i.e. bets that stocks would go up, to the tune of billions and billions of dollars. They hid their real losses by transferring them to foreign subsidiaries. With inflated and doctored balance sheets, they attracted even more greedy small-time investors who purchased their inflated shares with the hope of joining the mad rush for never-ending profits. It was like a dream come true.
Why bother with the business for which the business had been established. Why not just use the capital gained from the sale of their stock to the mutual funds and play the derivatives game. This way their balance sheets would look wonderful and more innocent but ignorant people would place their money into their stocks, even at inflated prices. Even the large conservative corporations and banks, seeing the delirious profits their competitors or clients were making in this free-for-all, joined the fray, pumping billions into the derivatives game. Balance sheets looked ever rosier and the new millennium promised a life of luxury for all who joined in the fray.
The Crash and the Coming Economic Depression
The party ended in March 2000. The first panic selling began. The more intelligent investors suspected that such a party could not last forever and perhaps, just perhaps, they were holding worthless paper. The more ignorant investor, the one following his greedy instincts rather than reason, kept his money in the market waiting for nirvana to come back. The stock market crashed, wiped out the dot.com businesses, and continues like a tidal wave to wipe out profits and send even the bluest of the blue to the brink or actual bankruptcy. Millions of investors have lost trillions and those who hang on with the slightest thread of hope the markets will recover, will lose even more.
The world's stock exchanges struggled to regain their worth and create an illusion that all was fine, that a recovery from this nightmare was around the bend. Yet the economies of the world continued down the slippery slope into reality. Then came the attack on the World Trade Center and again the stock markets tanked all around the world. Trillions more were lost. Trillions more are to be lost as the stock markets around the world plunge into the abyss.
At this printing the markets are still seriously overvalued and there will be more crashes into the abyss. The world is heading for a deep, deep economic depression.
The Black Hole
In today's world, money is never lost unless you are insane enough to deliberately set fire to the paper bills. During the days of the gold standard, you could even melt down a gold coin and it still would retain its value. In other words, money is indestructible. It just goes from hand to hand. You lose money when someone robs or swindles you. When you are the loser, there is a winner. It's quite simple because money is a manifestation of cosmic energy that is indestructible.
You use money to purchase things. In the case of shares or securities, you purchased a piece of paper called a stock certificate issued by a corporation. Many of these corporations and banks reinvested your money and billions more in the derivatives market. Now, when the market tanked, these corporations and banks lost trillions of dollars. Remember now, for every one of these corporate or individual losers, there were winners. Somewhere out there, recipients have reaped in trillions.
Granted, some companies spent billions on infrastructure such as underwater broadband cables stretching around the world, high tech buildings, satellites, etc. Company executives looted their firms with grossly inflated salaries, redeemed stock options, dumped worthless stocks for the public to buy, made illegal loans to themselves, and transferred huge sums to offshore corporations, and this, with the complicity of highly-paid auditors fudging the accounts books to dupe the public. Yes, these obvious crimes against the investor should be enough to close down the stock markets forever. Stockholders are fighting back now, lawsuits are flying against crooked law and brokerage firms, against corporate criminals and malfeasance, and against the people who were supposed to protect the public, the auditors. Everyone is in a fury, and rightfully so. But, my friends, we wish to point out again, that this is just a carefully planned and orchestrated sideshow to divert your attention from the real crime being carried out.
From our perspective, we see trillions are being transferred through the derivatives markets to somewhere (we know where but it's still up to humanity to wake up and see this egregious activity). Yet this massive transfer of wealth takes place under the public's nose while the authorities squabble about corporate malfeasance and attempt to lay blame on something or someone tangible for political purposes.