The Amsterdam Stock Exchange was the first stock exchange to introduce continuous trade in the early 17th century. The Dutch pioneered short selling and every other “modern” instrument. Until the sixties Government and the Big Companies were controlled by about 200 Rich Dutch Families (including the Royal Family). They controlled Society and took care of Stability.
In the 17th century the Dutch East India Company (VOC) was introduced by the Dutch Government. The VOC was the first multinational in the world and the first company to issue stock. It was the first mega corporation possessing quasi-governmental powers, including the ability to wage war, negotiate treaties, coin money, and establish colonies.
In the 17th century about 200 families, the so called Regenten, were in control of the Netherlands. The families promoted their members in every influential position available.
The Democracy of the Netherlands was in reality an Oligarchy. The “oligarchic way” of decision making, the Dutch Polder Model, is still the most important way to reach consensus in the Netherlands. Everything happens “behind closed doors”.
Until 1917 only the Rich people were allowed to Vote. The Rich Voted with their Money. In the beginning of the 20th century (1917) the universal suffrage for male citizens was introduced in the Netherlands. Two years later (1919) the female part of the country followed.
The Rich not only voted with their money they were also the most important owners of the Stocks. With the power of their stock and their money they helped their families to acquire important positions in the State and the Companies.
Until the Sixties the Rich maintained a very powerful social network based on reciprocity in the Netherlands. This network was not a local network. It was an international network. The influential Dutch Families were connected to comparable networks all over the world.
Around the Seventies the power of the Rich Families went down. They lost their influence in Parliament and in the Companies. The Flower Power Generation took over the Power at every Level of Society. After some time most of them lost their Ideals of Peace and Harmony.
They started to buy houses and shares and were helped by the Rising of the Economic Kondratiev Cycle. In contrary to the Regenten the Baby Boomers acted on their own. They were very Individualistic and never created a Social Network that could support Society.
Around 2000 the stock market started to vibrate and to go down. The same happened in politics. Many voters are now moving from party to party.
Who is controlling Society?
At this moment nobody is controlling Society. Society is taking its own course.
Who is controlling the Stock Market?
At this moment nobody is controlling the Stock Market. The Stock Market is taking its own course.
We have entered the Downfall of the Kondratiev Cycle. During this Downfall the Old Institutions are destroyed and New Institutions take over the Power. We are in an “In Between State”. In this state everything is On the Move. Everything is Moving Up & Down, Left & Right. What many people don’t see that even the Center is Moving. The State and the Stock Exchange are not able to cope with the excessive amount of Movement.
What will happen at the End of the big Shake Up?
There are two possibilities. The first one is the return to an old center. My guess is that we will move back to the State of the Renaissance.
The second possibility is “frightening” for many people. We will jump to an unknown state predicted by many Old Civilizations called the Fifth World or the Golden Age.
The Hopis call our time the “The Fourth Age of Man”. According to them the Earth has been wiped clean 3 times already. First by Fire, next by Ice, most recently by the great Flood approximately 11,000-12,000 years ago. We are now entering the last stage of the Fourth Age called “The great day of Purification“. This stage culminates either in total Rebirth or total Annihilation.
The Degree of Violence will be determined by the Degree of Inequity caused among the peoples of the world and in the Balance of Nature. In this crisis Rich and Poor will be forced to struggle as Equals in order to Survive. The beginning of the Fifth World will be heralded by the arrival of a being known as Pahana, or the lost “White Brother“.
If we believe the Prophecy of the Hopi and many other “Spiritual Movements (Gnostics, Sufi’s)” the only way that will save us from total annihilation is the Creation of Balance. We don’t have much time left. The Great day of Purification will happen . At that time the “Lost White Brother” (The Center) will return.
Is it possible to Balance the Financial System?
Yes, I think so.
The only thing we have to do is to Unite Shareholders, Customers and Workers and give them an Equal Share in a Company. They have to Share the Power, the Profit or Loss, the Spirit and the Soul. They have to become Enthousiastic about What is Happening (Spirit).
They have to take care of Nature and the Other (Soul). If we do this we will recreate the Social Power Network of the Rich on a Different Scale (Earth) with other Participants. If we Help the Other we don’t need a Pension!
I am sure You want to put Your Savings into a Shared Enterprise. I am also sure that You will Never Regain the Money you will invest in Shares at the Stock Exchange. The Era of the Stock Exchange is Gone for Ever.
I left the Banking Industry in 1997 because I did not want to be part of an environment where cooperation and compassion was gone. At that time I expected a major crisis. It took ten years until the crisis of the Banking Industry was very visible to everybody.
Until now I don’t think many people are aware of what is really happening and what will finally happen. We are approaching the End of the Banking System. In this blog I will show you that everybody was aware of the reasons behind the crisis. The reasons are extreme greediness and incompetence.
The solution to the crisis is simple. We are able to create a New System with Ease. It is just a matter of time when this will happen.
Let me start with two citations out of an article of Fortune April 1, 2008: “half the huge gains from 2003 to mid-2007 could be attributed to increased leverage – otherwise known as gambling with borrowed money – that magnified earnings in a boom. If a firm’s portfolio is leveraged at 33 to 1, it takes a mere drop of 3% to wipe out its entire capital“. “The compensation system is a fundamental problem. The system rewards swashbuckling behavior by everyone from traders to CEOs“.
Bankers are Gambling with Your Money. When they Win they get huge bonusses. When they Lose You Pay their Debts. You Pay their Debts because Your Investment has evaporated and/or because You Pay more Taxes.
The Investment Bankers know everything that is happening in the Market months before You know What is Happening. They are not allowed to use this knowledge (Chinese Walls) but Bankers are Humans and Sometimes they Forget to Keep their Mouths Shut.
The Chinese Wall is an ethical barrier between different divisions of a financial institution to avoid conflict of interest. A Chinese Wall is said to exist, for example, between the corporate-advisory area and the brokering department to separate those giving corporate advice on takeovers from those advising clients about buying shares. In spite of Chinese Walls, these conflicts of interest allegedly arose during the heyday of the Dot/Com era, when financial research analysts published dishonest positive analysis on companies in which they, or related parties, owned shares.
The U.S. government has since passed laws strengthening the Chinese Wall concept (e.g. Sarbanes-Oxley Act) with the desire to more carefully formalize and prevent such conflicts.The big problem with procedures is that they are imaginary.
In reality people always find a way to avoid procedures. It all comes down to two things Personal Ethics and Transparent Working Methods implemented in “simple” IT-Systems. As you will see later the Personal Ethics is highly surpressed by the Corporate Culture and the IT-Systems are exceptional Complex.
“The past few years have witnessed the big-money failures of institutions, due to fraud or risky business strategies“”But L. William Seidman, FDIC chairman in the Reagan and Bush administrations, says regulators shouldn’t be judged too harshly. The industry turned in record profits of $105.4 billion in 2002, up 21% from the previous year“. “To go through the stock-market drop we’ve had, 9/11, and everything else without a major banking problem shows the value of having someone looking over your shoulder“.
The Regulators knew and know about the Fraud and Risky Business Strategies but their Theory is simple. When the Banks make a Profit Everything Works Fine. The Banks earned the Profit by Gambling. The Regulators just watch over the shoulder of the Banks and are Very Happy about the Gambling System. It always Cures Itself. Some People Win, Some People Lose. It is all in the Game. Funny Enough the Winners are Always situated in the environment of the Banking Business and the losers are Small Investors.
A few citations out of an articles about Index Funds in The New York Times (May 17, 2008): “It has been long established that even most active fund managers fail to beat the overall market on a regular basis””Stock bubbles are examples of huge inefficiencies, in which prices get completely out of whack for months and even years at a time” “We have people investing tens of billions of dollars in index funds and they are getting drawn into bubbles“.
The Stock Market is a Gambling Machine and the Value of your Stocks has nothing the do with the Real value of Your Stocks. Nobody is able to predict the effects of the manipulations of “Greedy” Bankers on the Market. The only people that really profit are the bankers themselves. They create the Stock Bubbles and Collect the Bonuses. The real value of your stocks is the dividend a company pays to his investors. Many Stocks are Highly Overvalued.
“You’re seeing a very, very inconsistent message to employees,” “It’s, ‘I don’t know when it’s going to happen, it may be tomorrow, it may be next month; we may be able to keep you, we may not.’ “banks are keeping employees in the dark about the size and timing of layoffs”. “She did not return to her office and ended up asking the bank to send her the photos of her son that she kept on her desk”. “many laid-off employees are not allowed to return to their desks, because the banks fear departing employees will try to take valuable colleagues or clients with them” “Euphemisms for layoffs are making the rounds too. Banks do not just fire people anymore. They engage in “head count reduction,” “reduction in force” and “redundancies.” And gallows humor is rampant. One joke: A banker calls a colleague and asks, “Are you busy? Or are you lying?”
Investment Banks use Fear to Manipulate Their Employees. You Never Know if you are able to Keep your Job. When You Live in Fear You never tell the Truth. You are Busy or you are Lying.
When You have to Perform to keep You’re Job You have to take High Risks. You keep you’re mouth about these Risks because in a Fear Based Culture You never talk about Failures. You hide them and Hope Nobody will See. When You tell Somebody about the big problems that could happen You are Fired because Everybody Knows and Nobody Wants To Know. “Après moi, le déluge” (“After me, the deluge”)(Louis XV).
“Few employers want us around for 40 years, so our income is likely to have ups and downs and disappear altogether for brief periods between jobs. Saving for retirement is now mostly our responsibility, too. Health insurance, for those of us who have it and manage to keep it, requires increasingly large amounts of money out of our pockets. The list goes on and on”. “As fewer people have pensions and more retirees live longer, an increasing number of people may need financial help from their children” “Financial planners may not have all the answers, or the best answers, all of the time” “Thankfully, a number of Web communities and blogs have grown up around almost every aspect of spending and saving“.
Many more people will be Without a Pension. They have Lost their Investment at the Stock Market. Perhaps You even have to help you’re Parents. To do this You have to Save Money but You don’t know what to do with the Money You have Saved. The best way to get an independent advice is to use Networks of Experienced Customers. Never Ask a Bank to Give you an Advice.
“The conventional wisdom in financial markets is that the time to move back into bank stocks is just after a slew of rights issues has depressed prices. There are, however, good reasons not to give the banking sector the benefit of the doubt. At the best of times, as Anthony Bolton, the fund manager who ran Fidelity’s Special Situations fund for many years, observes, banks “are the most opaque of all companies”. With a building materials company, you more or less know that, barring fraud, the right amount of stock is there. With a bank, it is much harder for investors to understand the assets on the balance sheet; and in the course of the credit crisis, it has transpired that the banks themselves experienced severe difficulties in this area“.
Nobody Understands the Financial Practises of a Bank. Even the Bankers Themselves don’t Understand what they are Doing. I am not convinced Banks have kept all the Data about You in the Right Order. Someday You will Find Out that You’re Savings are Gone and Nobody Knows Why.
It does not help to create Chinese Walls when Nobody Knows what is really happening. The Controllers are and were unable to understand the complicated financial structures that were created. The Book-Keeping systems are not Covering the Truth. Even very Bright Mathematicians are unable to value the Complicated Financial Transactions. The Effect is that Dealers are able to go their own way without a proper monitoring instrument. This has created many “unexpected” situations where low-level Dealers were able to build High-Risk Positions for a Long Time without the Knowledge of the Management. When the Gambling failed the Bank lost billions.
Reactions of readers to this Column:
“I still think banks are greedy and lack integrety but they will bounce back because they are essential to a capitalist system” How can anyone believe a word they now say? Furthermore they remain in position, collecting their millions”. “It is the real investors namely pension savers and private investors who have no meaningful say and ultimately pay the price for this corrupt state of affairs, deception and lack of accountability” “Don’t let the politicians throw our money at bailing these irresponsible bankers out” “I am suffering in this downturn, and feel worried about the future. But we all have had a hand in this fiasco and we all can be affected by events (floods, droughts, disease, terrorism, earthquakes, storms and wars) which not wanted by anyone, we must plan for“.
The Customers are Powerless and Very Angry but there is no Alternative. We have to Live with the Greedy, non-Ethical Capitalistic System.
It is wrong to associate Banks with the Capitalistic System. Everywhere in the World people are Saving and Borrowing Money. The fundamental principle that was lost is to take Responsibility for what You are doing with the Money of Others. There is nothing wrong when you Gamble with you’re own money but don’t Gamble with the Money of Others. It is as simple as that.
There is Really Nothing that stops Us (the Customers) to start a Bank of our Own. The Technology is there and the Customers are really fed up with the Current System.
There are already Customers who are advising Customers for nothing. It will be very easy to transfer money without the Use of the Banking Payment Systems. If we agree on one principle, “You are trusted until you prove the opposite” it will be very easy to make a loan. There are already Systems Operational who are doing this. They are called Cooperations.
Nobody is taking the initiative to create a new Banking Infrastructure. Everybody is waiting for Everybody.
The Regulators wait and see. They hope the System will recover. I think it has died recently and nothing will help us to revive the dead body.