Schneier on Security

JonKnowsNothing • March 5, 2023 10:16 AM

@Clive, @Winter, cmeier, All

re: deliberately create a commons as a money trap, that they will then clean out rapidly

This is a very common method to transfer wealth. Often it’s done upfront in your face style and sometimes it’s more hidden. Regulation may or may not help or even reduce the practice.

RL tl;dr

iirc(badly) A long time back, it was normal for business and charities to have A Plan. Current Expenses and maybe a 5 Year Outlook or Goal. At that time, businesses would allocate funds to cover whatever the business needed: research, employees, facilities etc. Everything was intended to be 100% covered except for current operating expenses that were paid out of current revenues. In this system, companies and charities had assets that were saved up for bigger future expenses. Having the future expenses covered was GOOD Management.

Then came the era of Asset Stripping.

This system is designed to take all available assets TODAY and leave nothing for the future. That’s why Pension Systems have collapsed because they were no longer “fully funded”. A Death-Game-Estimate (1) was played to guess how many pensioners would die before collecting benefits or how many workers would not cross the vesting period, with increasing longer vesting time frames, to collect their retirement supplement. This new “truer guess” of what the company would owe in the future, was what was funded and backed by corporate promises to borrow future funds to meet any short falls. Sometimes this was hidden as an “investment by the pension fund” into the parent company. The Saved Funds were then transferred into the Corporate Asset Stripping system, which primarily financed Upper Management, Board Members, Private Equity Participants and Class A stockholders. Not much trickles down to the OTC W$ stock owners, their rewards are smoke and mirrors.

So on the the RL example:

Cemeteries in the USA are large land holders. They have large areas of manicured gardens and landscape to maintain. The physical aspects of digging graves is done by large expensive equipment and not so much by shovel. It’s a large expense to keep the place looking peaceful and keeping the weeds out. There’s the trappings of the buildings where ceremonies take place. The long term clients don’t complain but the living expect a certain level of “OH, nice fountains”, when visiting.

Some cemeteries are owned by religious organizations. Generally only people who belonged to that organization are buried there. Being an asset for the religious organization, a revenue generator, triggers Asset Stripping.

In this case, the cemetery had cash-in-bank assets to fully fund maintenance needed over a 30yr period, perhaps longer. Roofs need replacing and they had their Roof Fund fully funded.

Roofs cost a good deal of money, and if you have a lot of roofs, that sum appears large. Large enough to fund an extension on a church building in another part of town and also within control of the overseer religious hierarchy.

So, what do you do with a Fully Funding Roofing Maintenance Account?

• keep it to repair and replace roofs for the cemetery which generated the cash?
• build an extension to a church, not too well designed, certainly not The Sistine Chapel, and leave the roofs to rot and fail over 30 years?

This eventually Got Noticed but by then it was Too Late Charlie. You can never make up for Lost Compounding Periods using the Original Cash Inflows. The cash was gone, all used up. Another set of roofs was added to the lucky Church’s Roof Replacement accounts, without a revenue stream to fund it. New loans were needed to fix roofs, increasing costs and adding debt previously not needed, reducing the revenue stream significantly even below the amount needed to cover current operating costs.

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1) Death Game Estimate: a normal aspect of government and business economic forecasting. Lots of global government complaints about age demographics are based on such estimates. I’ve made posts about these estimates were used for COVID-19 policies under the title of Bank of Mom and Dad, some of which are in the archives and some may be on the way back machine, detailing how these economic funding models are the basis of health care policies from 2019-2022 or there about. ymmv