MF Global Ripple Effect & Crash of 2011 - Why not Spend $630 Million to Bail Them Out

[gunDriller]

MF Global was the commodities brokerage that came up short $630 Million and then went Bankrupt.

It looks like the CME & JPMorgue were business partners of theirs.

Also, MF Global was run by Jon Corzine, former Gov. of New Jersey and also a former Goldman Sachs exec.

Obviously, a well connected man.

He even cried a few crocodile tears and mentioned how "bad he felt" about the MF Global Bankruptcy.


Given that the US Gov. has spent many $Trillions propping up the world banking system, WHY ON EARTH didn't they slip a few hundred $Million to MF Global ? That's a ROUNDING ERROR on the US Gov's financial statements.

It looks like the MF Global bankruptcy is having some major ripple effects, so that it's reasonable to ask - are they the Lehman Brothers of 2011 ? (The Domino that when it falls takes the other dominoes with it).


One commodity brokerage has shut down voluntarily because the MF Global incident has made it clear to them that the CME & CFTC are broken -
http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-mf-global-collapse-presenting-first-mf-global-casualty

"Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator."

http://profile.ak.fbcdn.net/hprofile-ak-ash2/195771_176635589053633_1715486_n.jpg


So what I am wondering is, is this a deliberate collapse that is being initiated ?

[Golden]

MF Glob's Trustee JPM Stooge, Kicked OWS Hornets Nest, USA of Oil

http://www.youtube.com/watch?v=JtPm8d_4Uho
http://www.youtube.com/watch?v=JtPm8d_4Uho
Uploaded by wepollock on Nov 17, 2011
Research reveals that his firm, Hughes Hubbard's largest clients are JP Morgan and Price Waterhouse. Both of his clients and his representation of them represent a substantial conflict of interest. Looks like NYC kicked the OWS hornets nest with protests now in the street complete with NYC police using sonic weapons against peaceful protesters. This movement is here to stay! Will it be ignored as is the case in Greece and Italy; Could US politicos make the US a short-lived mini Saudi Arabia? Are we going to breakdown or can we use our domestic resources in a way to build wealth for the citizens away from the current debt model.

[Libertarian_Guard]

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-mf-global-collapse-presenting-first-mf-global-casualty

[gunDriller]

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function.

From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.


in a nutshell - buy physical commodities & take delivery, because you can't trust Schmuck's like Jon Corzine.

between Europe's woes spreading to Italy - and therefore France - and what's happening with companies like MF Global here in the US ...
A/ Probable major buying opportunity for PM's
B/ Major dis-location in PM pricing mechanism as faith in CME & commodities futures disintegrates
C/ GOOD FOR THE US DOLLAR, in the short term.


odd how the country with one of the worst cases of Economic Venereal Disease is being rewarded with a rising currency valuation.

[JohnWood]

The system is deliberately dismantled by the financial elites..
MF GLOBAL FALLOUT: 'I Will Never Do Business In The United States Of America Again'
http://www.businessinsider.com/i-will-never-do-business-in-the-united-states-of-america-again-2011-11

[gunDriller]

The system is deliberately dismantled by the financial elites..
MF GLOBAL FALLOUT: 'I Will Never Do Business In The United States Of America Again'
http://www.businessinsider.com/i-will-never-do-business-in-the-united-states-of-america-again-2011-11

looks like Ann B. isn't the only one who is seeing the MF Global as something major.

i wonder what percentage of the investing public has been awoken by the MF Global incident to the scammishness of Wall Street & of the US gov.


http://www.zerohedge.com/contributed/bet-bullard

"I would have agreed with Mr. B if it were not for the problem of $600mm of missing client money. There has been a massive effort by forensic accountants and the FBI to locate the loot. As of last night, no one has been able to find it. Three weeks into this and no one can find it? I would call that a crisis in and of itself." (Mr. B is Fed. Reserve Dude Bullard).

i don't believe it.

i think what happened is, they found out where the money went, and they can't tell the public.

which is a strong indicator that the money went to Israel.