I MF Global'd (i.e. embezzled) this video from http://www.zerohedge.com/ this morning. For those who have not watched it yet, it is a great explanation of why there will be a massive move higher in silver at some point in the near future (don't ask me for a timeframe).
We know the market for large deliveries of physical silver is getting very tight per the Sprott Asset comments that they have to wait several months for delivery when they buy a large amount of silver. It certainly calls into the question the reliability of the "reported" silver inventories on the Comex. Currently the U.S. Mint is producing enough silver to meet investor demand. But all of the silver used in silver eagles has to come from U.S.-based mines. The annual demand for silver eagles is getting close to exceeding the annual output of U.S. silver. Once this happens, I expect all hell to break out in the price of silver. Silver mining stocks will move up many multiples in price in just a few days. Here's the video (about 4 mins.):
Sunday, December 11, 2011
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Dave, are you sure when you buy today freshly minted eagles gold and silver, they are actually contain 99.99% of the precious metal?
ReplyDeleteI thought that the Mint only had to buy domestic silver if it was available at the necessary quality.
ReplyDeleteI think the modern uses of silver make the historical gold/silver ratio of 1:16 no longer valid. 1:10 or better is possible.
ReplyDeleteI cheer for the Grey Mare.....
ReplyDeleteThanks Dave
Saturday, December 10, 2011
ReplyDeleteExtremely Important: More Fallout on Re-Hypothecation: physical gold/silver rehypothecated
I sent this down to the CFTC last night:
I think I have a good handle on what happened at MF Global as Corzine re-hypothecated 1.2 billion dollars of investors assets to purchase 6.2 billion dollars of Euro bonds on a repo to maturity purchase. MFGlobal collapsed because of the massive margin calls on the bonds as they had not matured yet.
The headquarters for re-hypothecation is London England and the BIS reports that leverage is around 4: 1
In MF Global case it is 5 to one. And it certainly explains why the money is missing. It simply evaporated into thin air as the collateral was multi-used.
Although this is bad enough, I feel that the CFTC has a real headache with respect to the case of HSBC vs MFGlobal where we are dealing with physical material that cannot be replicated 5 or 10 times over. HSBC is claiming that it is the owner due to the multiple re-hypothecation and that is impossible.
The replication of a bar using identical bar numbers and weights is of course criminal behaviour to the highest.
What is most concerning to me is the knowledge that Gary Gensler had as he was well aware of this practice of rehypothecation as Corzine was lobbying him on this issue. The fact that he know recuses himself is very troubling.
If this is not corrected immediately the whole financial world will implode. Paper gold will disappear from accounts. Even the GLD at the London vaults are probably hypothecated.
-END-
I think on Monday we will have a "bank run" on GLD as everybody vacates this fraudulent vehicle for safer funds like Sprott and Central Fund of Canada.
I know that many of you are questioning how on earth the gold and silver are settling at the comex without any metal arriving at the dealer's doorsteps. I have been writing the CFTC and the SEC for quite some time explaining that the only way that I see settling occurring was through the GLD and SLV paper and that multiple owners have claims on the same asset. The holders of gold and silver at registered comex vaults may have only unsecured paper claims on that same bar of gold that HSBC claims is theirs as well as the trustee of bankruptcy James Giddens and Mr Fane and.....
now you see the problem.
http://harveyorgan.blogspot.com/2011/12/extremely-important-more-fallout-on-re_6521.html
Sure would do wonders for my positions in HL and EXK...
ReplyDeleteSilver is the 'new gold'
ReplyDeleteIn the past few years buyers from Russia and China have emerged as major Vault customers.
Royalty also frequent the Vaults, with Mr Feldman adding that a gift for the marriage of Danish Crown Prince Frederik to his Australian-born wife Mary, was bought from his shop.
"We have got a big following of people from all over the world," he said.
"It was mostly Americans (buying) 50 years ago, now Russia and China are among the biggest markets."
Many of the outlets offer bespoke silver priced at the mercy of the market, but nevertheless Adam Langford - whose family business was a founding member of the Vaults - said cost and the financial climate had had little impact on sales.
"The financial crisis has been good for us in a way," he said.
"People want to invest their money in something tangible. Money in the bank is not necessarily a good option at the moment and good quality silver I think has been an area people have moved to.
"I think people have been going more toward the higher quality goods. For many years people would buy anything in silver but now they will buy three or four pieces for their home but they will be higher quality and more likely to increase in value over time."
http://au.news.yahoo.com/thewest/lifestyle/a/-/habitat/12320036/silver-is-the-new-gold/
Ok this video reminds of the crap that shady pump and dump site call national inflation association produces, i believe Jonathan Lebed is one of the founding member...their website even more shady and suspect, trying to hide behind the guise of protecting individual investors. How much of the information provided is even verifiable and which source can you trust in that video? Also, I'm sure they're pumping up juniors stocks that super thinly traded. Seen this scam before...shit is there anybody doing an honest living anymore?
ReplyDeleteBy late 2015, silver will be selling for $3500 per ounce, UNLESS hyperinflation has kicked in by that time---in which case it will be in the tens of thousands of $ per ounce or higher.
ReplyDeleteSilver today is the best ten year investment in the history of the world.
If you own paper gold or silver you are a fool and will get what you deserve.
A share of a gold or silver ETF has roughly the same investment value as a cracked bottle of piss.
"The Inmates Don’t Know It’s An Asylum"
ReplyDeleteToday, the “movers and shakers” of the financial world abound in such useful idiots. It has been a long road from the 1930s Keynesian mantra that “we owe it to ourselves” to today’s masters of the universe with their incomprehensible computer “algorithms” fueled by the ability of modern computers to crunch almost unlimited sequences of “1s” and “0s”. The entire road has been paved with one goal in mind. To convince the “people” that the only road to financial “safety” is to give up their thinking processes and “delegate” them to those who claim to know what they are doing.
http://www.zerohedge.com/news/inmates-don’t-know-it’s-asylum?
Sellers will be sorry...
ReplyDeleteIndians increasingly monetize gold as collateral for loans
More than Rs 50,000 crore worth of gold is likely to be pleged this year to procure loans in a rapidly expanding gold loan market, allowing India's favourite hoarded asset to re-enter financial markets and provide a boost to the economy.
According to industry estimates, around 200 tonnes of gold have been used as collateral to raise loans by end November in 2011-12 fiscal.
A back-of-the-envelope calculation shows nearly Rs 55,000 crore worth of the yellow metal has been pledged to raise loans to buy goods, real estate or fund short-term farm credit, providing some momentum to slowing economy.
That stacks up well with about Rs 2.5 lakh increase in commercial bank credit in credit over April-November. "Gold loans help unlock value that is normally lying idle," said Siddhartha Sanyal, chief India economist at Barclays Capital.
"The organised gold loan market is just developing in India and can potentially be a source of liquidity, particularly for the middle- and upper-middle-class category," he added.
http://gata.org/node/10764
December 11, 2011 20:24
ReplyDeleteZimbabwe: Forget the US dollar, what about the Chinese yuan instead?
For years, Zimbabwe has been using the US dollar. But now that the dollar is plummeting, the Chinese yuan may be the next currency du jour.
http://www.globalpost.com/dispatch/news/regions/africa/zimbabwe/111211/zimbabwe-forget-the-us-dollar-what-about-the-chinese-yu
Supreme Court Takes a Look at Medical Patents
ReplyDeleteThe world, it appears, is determined to turn me into a full-fledged libertarian. What with SOPA, PIPA, the NDAA, software patent trolling, police violence, and now patents on how doctors provide treatment to their patients, it’s becoming more and more clear how pernicious the law can be when it’s designed for powerful special interests, national security hawks, and big corporations.
There may indeed be a place for patents, but the way they’ve been used to stifle competition and innovation in software shows how limited their utility really is – at least for the majority of people. A small handful of patent-entrepreneurs make loads of money. They just don’t produce anything in order to make that money. It’s a sort of legal banditry. Loophole highwaymen waiting to waylay the unfortunate software engineer or doctor.
http://www.forbes.com/sites/erikkain/2011/12/08/supreme-court-takes-a-look-at-medical-patents/
The Fed, MFG and Reg. T
ReplyDeleteI think there is sufficient evidence today to conclude that Re-Hypothecation is at the root of the customer losses at MFG. This Reuters story started the discussion on re-hypothecation. There have been several additional articles on this at Zero Hedge, (link, link) and FTAlphaville (link, link). Let me add one additional bit of info.
The Canadian customers of MFG got their money back within 10 days of the MFG bankruptcy. The accounts that have lost money are either USA or UK based. In Canada, re-hypothecation is not permitted. I got these comments from a Canadian MFG account holder:
The trustee where segregated MF Global Canada customers' funds were held was RBC Dominion Securities. I don't think any of these funds ever left the trustee in Canada. Likelihood is if they left, the Canadian government would have made the parent Royal Bank of Canada eat up the losses and make full restitution.
We shall see in the coming weeks if, in fact, re-hypothecation is the cause of the problems. I’m convinced it is.
The rules on broker's ability to A) Hypothecate and B) Re-hypothecate in the USA are spelled out in Reg T. This set of rules has been established by our good friends at the Federal Reserve Bank. Let me provide some telling words on this re Reg. T rule 15c3-3: (emphasis mine/Link)
• Except as otherwise agreed in writing by the OTC derivatives dealer and the counterparty, the dealer may repledge or otherwise use the collateral in its business;
• In the event of the OTC derivatives dealer's failure, the counterparty will likely be considered an unsecured creditor of the dealer as to that collateral;
• The Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) does not protect the counterparty.
http://www.zerohedge.com/contributed/fed-mfg-and-reg-t?
ETF and Central Bank Gold Lent to Banks Being Relent Into Market?
ReplyDeleteIf this is the case it will raise further concerns about the possibility of double accounting of gold and concerns that much of the gold investments in the market are in fact ‘paper gold’ and not backed by physical as is believed by investors.
It will add to deepening concerns about the emerging scandal of rehypothecation where some banks, brokerages and dealers have been reusing the collateral pledged by its clients as collateral for their own borrowing.
Owners of gold exchange traded funds (ETFs) would be surprised and worried to discover that certain banks might be lending out gold that they have bought and believe that they own.
The leading gold ETF, GLD has been criticized by many analysts for its extremely complex structure and prospectus. Critics have also pointed out the possible conflict of interest in its relationships with HSBC and JPMorgan Chase which are believed to have large short positions in gold and overall lack of transparency.
If as has been suggested, European banks are lending gold into the market that has come from exchange traded funds then this would validate the many concerns raised about the gold ETF market. Questions would again be asked as to whether many of the ETFs are fully backed by the gold that they claim to own in trust on behalf of clients.
Already some hedge funds managers and investors have liquidated their ETF positions in favour of allocated physical bullion and we would expect that trend to accelerate as prudent investors rightly seek to avoid counter party and systemic risk.
http://www.goldcore.com/goldcore_blog/etf-and-central-bank-gold-lent-banks-being-relent-market
They have a problem with the f word? fuck'em
ReplyDeleteWealthy Patriots Wage Class War
Audience Calls for Integrity
Michael Moskow, current vice-chairman and senior fellow on the global economy at CCGA and former head of the Chicago Federal Reserve, stood at the podium as Robert Shiller took questions from an upset audience. One attendee noted in an email to me that questioners were professionals, "not the Occupy Wall Street crowd who were accused of inciting 'class warfare' at the podium."
During the brief Q&A two men, one a former long-term Wall Street professional, asked questions about how we move forward when there is so little confidence. They cited the lack of integrity in the global financial markets.
After that, I asked how one creates a futures index (as Shiller proposed) in which one can have confidence without acknowledging the existence of fraud and vigorously prosecuting fraud. There was fraud by loan originators, fraudulent securitizations, and even fraud in the residential mortgage backed securities (RMBS) that backed a different hedging instrument, the ABX index.
The first time the word "fraud" was uttered that evening was when I posed my question.
Shiller himself never used "fraud." The most he would say in his so-called response was "some people aren't very nice." Really? It sounded rehearsed, and it struck most people in the audience as a shameful cop-out. If this is what economists are teaching students at universities, students should demand a refund of their tuition. Kindergarten children are given better warnings about strangers with candy.
Robert Shiller and Michael Moscow, the retired head of the Chicago Fed, appeared smug to me about this anonymous struggling working man's plight.
They seemed to be promulgating what Elizabeth Warren calls the "myth of the immoral debtor." Yet being in debt or even going bankrupt is not a crime in the United States. Loan originators' submission of fraudulent documents is a crime. Securities fraud is a crime. Foreclosure fraud is a crime.
Class Warfare
Alumni of the Federal Reserve, corrupt politicians, and willfully blind academics would be correct to say that evening was a case of "class warfare." Well-heeled U.S. patriots declared war on the lack of class demonstrated by their financial peers.
http://www.huffingtonpost.com/janet-tavakoli/wealthy-patriots-wage-cla_b_1142946.html?
True genius...the pension supply the $ and the managers become billionaires with an annuity on a locked value...and everyone complains about gold not paying..lol...keep selling your gold jerkoffs...
ReplyDeleteAbout half of all institutional private equity investors have a stake in a “zombie fund” where unsuccessful managers with no hope of getting a bonus are holding on to the investments as long as possible to live off the management fee, a global survey shows.
The findings are yet another strong sign of difficult times for private equity as many groups struggle to cope with the fallout from the credit-fuelled takeover binge in the run-up to the financial crisis.
Private equity trapped in ‘zombie funds’
The situation is most prevalent in North America, where 57 per cent of the investors said they had capital locked in an underperforming fund, according to the Global Private Equity Barometer, due to be published on Monday by Coller Capital.
http://www.samachar.com/Private-equity-trapped-in-zombie-funds-lmlsMbdjgjf.html
Unlimited is a pretty big number....
ReplyDeleteMatt Stoller: How the Federal Reserve Fights
Grayson actually got an amendment with Ron Paul through the House requiring the Treasury Secretary grant permission before the Fed could open said swap lines. In the conference committee, one of Dodd’s staffers took it out at the behest of the Fed.
This staffer told us on the phone that there was simply no way any central bank would ever default. And thus, the Fed can now lend unlimited dollars to foreign banks through the ECB without any checks from the executive or legislative branch.
http://www.nakedcapitalism.com/2011/12/matt-stoller-how-the-federal-reserve-fights.html
I guess everything is fantastic?
ReplyDeleteJefferies Said To Demand Bonus Clawbacks From Terminated Bankers
the actual number of people is roughly 65 or so, but the worst news is that Rich Handler will demand a 1 year clawback from the departees, in the form of bonus refunds for both cash and stuck. While this has been isolated to Jefferies for the time being (which has other liquidity concerns of its own, most of which are quite well known), we are certain that now that this practice has a "case study" other banks, especially of the B-grade variety, will implement comparable clawback strategies. This approach, once adopted broadly, will likely cause a substantial dent in banker spending patterns, as rarely if ever before have termination without cause been accompanied by demand for money back.
http://www.zerohedge.com/news/jefferies-said-demand-clawbacks-terminated-bankers?
So much for John Embry's religious experience for the shorts! Instead its the longs.
ReplyDeleteIt never really is different in a fear based panic situation. Fiat is still king - even Felix Zulauf and those people recommend it.
It's really the same as 2008 - its not worth it. So physical Gold only for less volatility and physical Silver if you want a "stock like" performance at the end.
How can even these guys still say that cash is the lowest risk with the credit collapsing which should make the banks insolvent. So where do I put the cash?
Its called a shakeout, fake out, breakout...this is the shake out part
ReplyDeleteNotes From Underground: Exchange Controls Building a Stairway to Haven?
There’s talk abound about the possibility of exchange controls. The ability to slow the inflow and outflow of funds is being discussed from Greece to Germany and Switzerland. It is no secret that many citizens in the peripheries are moving EUROS out of their domestic banks and into German, Swiss ans British domiciled entities. The German paper HANDELSBLATT had an article during the weekend suggesting that the SNB and Swiss government are readying a plan to undertake exchange controls and a true negative interest rate regime.
When EXCHANGE CONTROLS ARE IMPLEMENTED IT WILL BE A POSITIVE FOR GOLD AS IT WILL REPLACE EURO DEPOSITS AS THE ULTIMATE STORE OF VALUE. CURRENTLY, GOLD IS FAILING TO RALLY. I HAVE DISCUSSED THIS A BEING THE RESULT OF A LARGE HOLDER OF GOLD LIQUIDATING A MASSIVE POSITION TO RAISE CASH FOR POSSIBLE SHORT-TERM LIQUIDITY NEEDS.
http://yrah53.wordpress.com/2011/12/11/zeppelin/
Dave,
ReplyDeleteThe gold stocks have broken the neckline on the head and shoulders formation and are headed south. I feel like selling all my shares. Not wanting to ride out another 6 to 7 point drop as is anticipated. Are you still in? Is there any point in holding the shares? With this manipulated market it could be years before the gold stocks come back.
re gold stocks:
ReplyDeletehead n shoulders formation in the HUI? Not sure any technician would classify the chart pattern I think you are referring to as a "head n shoulders" formation. That said, the metals and mining stocks, because of the manipulation, tend to usually defy traditional chart analysis. That is, you almost ALWAYS want to buy the "fishing line" drops and sell the "rhino horn" run-ups. Those the terms Sinclair uses and he's write. You the support breaches and sell the break-outs.
I'm holding and we are selectively adding to positions right now in the fund.
Make sure you make it easy for the future MF'ers...keep your assets in cash!
ReplyDeleteCME won't guarantee remaining missing MF Global funds, COO says
CME Group Chief Operating Officer Bryan Durkin said on Monday that the exchange will not guarantee the remaining one third of funds missing from customer accounts at bankrupt brokerage MF Global.
Such a move would be "unwise" and the CME has a "fiduciary responsibility" to its shareholders, he said at a National Grain and Feed Association conference on Monday.
CME Clearing's Financial Safeguards System
CME Group is vitally aware of its role in international financial markets and believes that its $8 billion financial safeguard system, designed for the benefit and protection of both clearing members and their customers, is second to none.
Functions of the Financial Safeguards System
Risk management and financial surveillance are the two primary functions of CME Clearing's Financial Safeguards system.
CME Clearing helps to avert default by any participant in the clearing process, and thereby protects all clearing members and their customers from the consequences of any default.
http://www.youtube.com/watch?v=OsW92eWaenA&feature=colike
btw. jon says thanks...
Mr. Parasite Goes To Washington
Time for Corzine’s Law
The greatest con men and hucksters crave interaction with those they
are swindling. Like an executioner who really likes his job, these
sociopaths really like to look deeply into their victims’ eyes and
witness the moment when they’ve won. Corzine testified to Congress
without his attorney sitting next to him. No quick chats with counsel
– no coaching in front of the cameras. No – Corzine wanted to shove
the hearing in the faces of those who had the temerity to subpoena
him. So the staging was raw, bold and risky, but the answers were
finely pre-parsed to leave his accusers with nothing. In my opinion,
the man is as sociopathic as they come – his career has been built on
finding suckers and taking them for a ride – as a trader, as a
partner, as a Senator, as a Governor, as a CEO and now as a witness. I
think Corzine got off on leaving Congressmen befuddled and slack jawed
as he related a narrative in which he, as CEO, was in no way
responsible yet deeply apologetic.
http://wallstreetexaminer.com/2011/12/11/mr-parasite-goes-to-washington/
Did you miss him?...
ReplyDeletePosted at 08:30 AM ET, 12/12/2011
Overkill on Internet piracy
In short, this is not a fight between protectors of copyrights and Internet anarchists. Rather, there is a legitimate policy dispute about how broad and how disruptive government enforcement powers should be when core First Amendment rights are at issue. No doubt the Motion Picture Association of America, headed by disgraced former Connecticut senator Chris Dodd, has spread plenty of money around Congress to try to give the government the bluntest, heaviest weapon to fight piracy. But that doesn’t make it good policy. And it sure doesn’t make for constitutional legislation.
http://www.washingtonpost.com/blogs/right-turn/post/overkill-on-internet-piracy/2011/12/11/gIQA9TK6nO_blog.html
MF Global execs say they don't know where the money is
ReplyDeleteWASHINGTON | Mon Dec 12, 2011 4:36pm EST
(Reuters) - MF Global executives will tell lawmakers on Tuesday they do not know what happened to hundreds of millions of dollars in missing customer funds, echoing what their former colleague Jon Corzine told Congress last week.
MF Global Chief Operating Officer Bradley Abelow and Chief Financial Officer Henri Steenkamp are due to testify on Tuesday alongside Corzine, who resigned last month after the brokerage filed for bankruptcy.
In prepared testimony, both executives say they are distressed by the search for the funds.
"I unfortunately have limited knowledge of the specific movement of funds at the U.S. broker-dealer subsidiary, MF Global Inc., during the last two or three hectic business days prior to the bankruptcy filing," Steenkamp said, according to remarks obtained by Reuters.
http://www.reuters.com/article/2011/12/12/us-mfglobal-execs-idUSTRE7BB1XV20111212?
The Shadow Banking System Knows
http://www.youtube.com/watch?v=uMlRpN8ANrU&feature=colike
paper sellers firing power?
ReplyDeleteThe $30 Trillion "Problem" At The Heart Of Shadow Banking - A Teaser
Why was it $30 trillion? Simple: because at its heart, the "shadow banking" system has a $30+ trillion diabolic funding mechanism, where when one cuts out all the fancy nomenclature, acronyms, abbreviations, and jargon, the bottom line is that there are increasingly less and less hard assets (i.e., cash-flow generating), funding ever more and more liabilities, and where one's assets are another's liabilities in a "fractional reserve" recursive loop, and which in that shadowy sub-center of modern banking - London (because New York is just for regulatory diversion)- the loop can go on literally in perpetuity.
http://www.zerohedge.com/news/30-trillion-problem-heart-shadow-banking-teaser?
BIS: Derivatives Dealers Have Transferred Credit Risk To Shadow Banks Since 2010
ReplyDeleteLONDON -(Dow Jones)- Derivatives dealers have transferred large amounts of credit risk to opaque and largely unregulated parts of the financial system, often using instruments that were themselves opaque, the Bank for International Settlements said Sunday in its quarterly report.
The BIS's findings come against the background of an exhaustive initiative by the Financial Stability Board to cast light upon, and regulate, the shadow banking sector, a broad swathe of financial institutions that act like banks but are so set up as to avoid being regulated like them.
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201112111607dowjonesdjonline000210&title=bisderivatives-dealers-have-transferred-credit-risk-to-shadow-banks-since-2010
Small in relation? ~Yiddish Proverb said: "A half-truth is a whole lie"
I lived in NJ and when Corzine was the Governor. I really thought of him back then as the grim reaper -funny how that works !
ReplyDeleteExplosive Interview Jim Willie "JP Morgan Crashed MF Global to Avert COMEX Failure, they stole all the accounts that were going to take delivery"
ReplyDeleteThis is an absolutely Explosive Interview Silver Doctors has that Jim Willie of the Golden Jackass did with Bull Market Thinking.
Silver Doctor has allowed me to reproduce the transcript of what they have on the page in regards to what Jim Willie said about MF Global.
If this is true then this is completely Explosive and the Comex and JP Morgan stole everyone's money to avoid a default! But don't expect the government to hold them accountable, especially since the Judge assigned the trustee for MF Global that is a counsel for JP Morgan.
http://sherriequestioningall.blogspot.com/2011/12/explosive-interview-silver-doctors-with.html#comment-form
but,but,but...deflationary pressures are our main concern....unless there is no supply...hmm..?
ReplyDeleteNorway butter shortage threatens Christmas treats
An acute butter shortage in Norway, one of the world's richest countries, has left people worrying how to bake their Christmas goodies with store shelves emptied and prices through the roof.
The shortfall, expected to last into January, amounts to between 500 and 1,000 tonnes, said Tine, Norway's main dairy company, while online sellers have offered 500-gramme packs for up to 350 euros ($465).
http://www.timeslive.co.za/world/2011/12/12/norway-butter-shortage-threatens-christmas-treats
Parkay... http://www.youtube.com/watch?v=IVWQYeiB6JI
Listen to it...
ReplyDeleteAnn Barnhardt - Gold Silver - Near Future, "Monumental Market Disorder?"
Warren Pollock interviews Ann Barnhardt of Barnhardt Capital Management. Ann shut the doors of her brokerage because she felt customer capital was no longer safe. Ann gives us her opinions on gold and silver, the stability and conduct of markets, regulators, potential for systems and currency collapse, the failure of regulators. Other cutting topics not previously covered include the need to barter as the system fails and the mathematical impossibility of correcting the over-leveraged financial mess now coming to conclusion thereby creating a future full of "monumental market disorder"
http://www.youtube.com/watch?v=LPPxOP3na5o&feature=colike
No government, any more than an individual, will long be respected without being truly respectable.--MADISON.
ReplyDeleteCME to Customers: Drop Dead
ReplyDeleteHuh? First, we don’t know exactly what happened. Therefore the CME’s confident claim that it was blameless is premature. Second, it admits the process WAS defective. If the overseer did everything right and you have an MF Global level disaster, the system failed. I’m actually amused at this NewSpeakish formulation “We’ll admit to a damning fact set but maintain everything was fine.”
Now there is a possible out for the CME: that MF Global staff mislead auditors and/or filed inaccurate regulatory reports. Given that the firm unraveled quickly, it would not be fatal to the CME if it were hoodwinked for a while by doctored information. But that in turn would imply a real conspiracy by MF Global staff. So a scenario that is favorable to the CME argues for throwing the book at MF Global.
But back to the bigger picture. Here we have the CME taking a hit in trading volumes, and it acts as if it can just ride it out. I don’t see why customers would or should get over their shell shock quickly. We see the same behavior in the securitization market. Investors know damned well they were had. The FDIC put forward a proposal of reforms in a Advanced Notice of Proposed Rulemaking in early 2010 which looked to be a pretty good set of measures designed to get investors back in the pool. But the sell side refused to consider it, and so we remain with pretty much the entire mortgage market on government life support. And the worse is that the media continues to parrot the bank/originator line that it is “market conditions” that are keeping investors away from private label deals, when it is in fact the industry’s own intransigence.
Here the CME does not have (to my knowledge) the prospect of a government guarantee to boost business. And on top of that, futures traders and fund managers are far more aggressive and outspoken than their mortgage brethren, who have been remarkably slow to stand up to abuses. So it would seem to have far less reason than the mortgage industrial complex to be confident that it can stare its customers down.
But maybe I’m out of touch with the zeitgeist. Or perhaps the iron law of institutions is at work, and people at the CME are all working to preserve their posts, with little regard for what it does to the organization. Maybe in this brave new world of rule by banks, not ceding any ground is more important than profit. If you were really paranoid, you might wonder about whether any individuals here were confident a tough stand in this battle would lead to rewards elsewhere.
All I know is that self regulatory bodies can work in the wake of a 1929 level wipeout, when even more than forty years later, securities trading still had an unsavory air about it. That gave industry incumbents a big incentive to embrace tough standards. Now, with members operating almost entirely with other people’s money and looting a widespread phenomenon, the time for firm, outside oversight is long overdue. How we get that with DC largely captured by banks is an open question, but letting the industry mind itself is no longer a desirable option.
http://www.nakedcapitalism.com/2011/12/cme-to-customers-drop-dead.html
FT's John Dizard: Gold borrowed from governments or ETFs may be propping up European banks
ReplyDeleteJust in case you think you own gold when you own ETF shares. ...
It appears that the faulty plumbing connections in the euro-area banking system are now creating something I have never seen before: a crisis of confidence in a monetary system that leads to a frantic selloff in gold.
The partnership between the Federal Reserve and European Central Bank to provide hundreds of billions of relatively low-cost dollars for euro-area banks should have relieved the pressure to come up with greenbacks. Yet gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks. There's not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks or by gold exchange-traded funds.
As James Steel, a gold market analyst for HSBC Securities (USA), says: "Until the funding difficulties at European banks are resolved, it is difficult for us to see any near-term halt in gold lending. This may help keep gold prices on the defensive."
http://gata.org/node/10771
Tough Questions for MF Global, Conflicted Trustee Giddens & SIPC President Harbeck
ReplyDeleteEB: And now, from the lengthy statements filed by the liquidation trustee James W. Giddens and his counsel James B. Kobak, Jr., both of the law firm Hughes Hubbard & Reed LLP (HHR), where many pages are spent revealing the firm's limited exposure to JP Morgan, glossed over is the most relevant fact: that MF Global's auditor, PriceWaterhouseCoopers, is not only a material revenue center for HHR ($21 million over two years), but HHR's very auditor! If this is not grounds for a determination of "interestedness", then we don't know what is, especially in light of the MF Global offerings that were conducted backed by PwC opinions. (See Teri Buhl's "Jefferies Bond Trader Claims MF Global Lied to get Bonds Issued".)
Statement by Giddens:
Statement Corrected Trustees Statement - Mg Statement
Statement by Kobak:
Declaration of James B Kobak Jr in Sup - Main Document
And the memorandum of law filed by the completely useless SIPC, where we learn that the entity (whose sole mandate is to resolve failing brokers) had done exactly nothing until the day of the MF Global bankruptcy itself. Citing exigency as cause for selection of a liquidation trustee (Giddens) on the heals of an OIG report that found his fees in the Lehman liquidation were excessive, will not fly. Exactly why Giddens would then be placed on the SIPC reform committee is another question to be answered (presumably so he could recommend his hourly rate be lowered from $891 to $819).
http://www.zerohedge.com/contributed/tough-questions-mf-global-conflicted-trustee-giddens-sipc-president-harbeck?
Excellent Point Being Made In Ag Committee on MF Global
ReplyDeleteSenator Harkin is making an excellent point: Prior to the CFMA of 2000 customer funds could not be invested in other than municipal or US Government debt fully guaranteed by the US Government.
And the Republicans want less regulation, not more, and they are not calling for people to go to prison and every dime missing taken back from the executives who ran the company so the customers are made whole.
Yep.
As it stands right now any account you hold at any brokerage can be effectively stolen through being lost via the same mechanism. Got that? Good. Your 401k, IRA, anything -- all at risk.
http://market-ticker.org/akcs-www?post=199057