MF Global: Was it a hit?

[pmbug]

Gerald Celente wasn't the only big time investor to get burned on the MF Global deal. Lawrence Lepard, a high net worth individual, theorizes that MF Global must have been a deliberate effort to undermine the commodity futures trading complex:

Imagine you are Ben Bernanke, or on the Board of Governors of the Federal Reserve. The time frame is July and August of 2011 and the price of gold is on a tear. Commodities inflation has been persistent and is breaking out everywhere. Your prediction that inflation “is contained” and is a “temporary phenomena” are beginning to look absurd. What do you do?

Simple. Hint that QE3, the primary drive of inflation, is coming and then fail to deliver at the September FOMC meeting. That takes care of the price of gold and the gold stocks. Ah, but those pesky commodities speculators keep making money and trading against what you want the markets to do. So what is to be done there? Hey Jon Corzine, how about you tank the largest broker for the small commodities punters in the world, and we let them twist in the wind? That will serve them right. Teach them to bet against the government approved scenario.

Think it did not happen? Well think again. All of the pieces fit. It sure is convenient that all those commodities speculators are now out of the box. Also, who will want to speculate on commodities in the future given customer funds are no longer protected. Furthermore, commodities speculators are not a very “All American” group. From the authorities point of view they can say: screw them, who will feel sympathy? Hell, James Bullard, Fed Governor, in an interview on CNBC yesterday said the MF Global collapse proves that the system works. Yes it does Jim, for you. Personally, I have $90,000 at MF Global and I would like to have my honestly earned money returned. Unfortunately, the odds of that happening any time soon seem slim. In part because when MF Global entered bankruptcy the judge appointed a Trustee whose law firm has done substantial work for JP Morgan, a deeply interested party. We will probably never find out what happened here. But for those of us whose eyes are open the results speak for themselves.

This whole mess stinks to high heaven. I am with Gerald Celente, if the largest commodity broker in America can go bankrupt and nothing is done, then where can you put your money and expect it to be safe? I, for one, do not accept that Jon Corzine is stupid enough to lever up MF Global 40:1 and use the proceeds and customer money to bet on European sovereign debt. This was a hit, pure and simple. That is why there is no resolution to the problem, and it is just another example of the deeply corrupt US political/financial axis. It may take money away from a bunch of commodities speculators, and it may cool down the perceived inflation, but it is just another hole in the dike which is The US Financial System. A dike whose life can probably now be measured in months, not years.

Original source: http://www.ronpaulforums.com/showthread.php?331161-MFing-Global.-My-thoughts.

 

[ancona]

Is it a hit?

I do not believe it was a set up. Corzine was just greedy, plain and simple. Since he gets a significant cut of any profits, he [wrongly] bet that Europe would never let anything negative happen to all the banks holding sovereign debt. He got third degree burns on Euro periphery bonds when the Greek Haircut was negotiated and he had to do some quick moves to cover margin. He got caught with his hand in the cookie jar, and mommy slammed the lid down on his fingers. Now, we'll see what regulators do about it. I think it is high time for someone like Corzine to spend a lot of time in the gray bar hotel, contemplating thirty years to life and suffering daily recreational prison rape.

But that's just my opinion.

 

[DoChenRollingBearing]

I read Jim Willie's column yesterday (at 24hgold.com (note the "h" in there) and other places too, including his own goldenjackass.com). Jim Willie is perhaps the world's most growlingest bear. He suggests that MF Global might have been taken down so that their master JP Morgan could feast...

I of course would not know.

MF Global going down (and taking a breath-taking $600,000,000 of clients' money) is a BAD SIGN that things not only have gone horribly wrong, but that the storm is likely to get WORSE.

 

[ancona]

Agreed. Things are going to get much worse. Just watch as the end game is played out across Euroland, with Italy being the latest country top be taken over by the banksters minions. Will they get away with it? Maybe for a while, at leas until the bleary eyed walmartians come out of their credit card induced stupor and realize they are now slaves to those to whom have title to their debts.

One need only to look as far as the lobby that successfully convinced CONgress that student loaned should not be discharged in bankruptcy. Really? What a crock of shit. So let me get this straight; Joe Student takes out a hundred grand to get a degree in lizard husbandry, finishes school with honors and, naturally, cannot find work. Now, Joe is screwed because he has to work at Pizza Hut making minimum wage tossing dough to pay his loans [for ever] and live in mommies basement.

This is playing out all across the country folks, and it 'ain't going away without a revolution.

 

[swissaustrian]

Video recorded right after Corzine became CEO of MFG.
The body language is very suspicious. Look at the eyes. Constantly directed downwards. Typical sign of lying.
Why did a former Goldman CEO have to join a second tier broker?
This stinks.

 

[ancona]

I agree Swiss. Corzine is a shifty eyed monney grubber of the highest order. These inbred fuckers are rife at the top of the financial food chain, and there isn't an insecticide powerful enough to get rid of them short of revolution. This 'tard will never see the inside of a jail cell. Soem low level lackey will be scapegoated quietly, and will be rewarded with a nice fat job after two or three years in some white collar country club playing raquetball and learning the fine art of cake decorating.

Excuse me, I need to go throw up now.

It is nearly impossible for me to not go off on a thousand word rant about how I feel. I am beyond furious. I am beyond having any feeling for these bacteria whatsoever.

 

[DCFusor]

A sniper was once asked, "what do you feel when you shoot a terrorist". He answered "recoil".

I'd better disclaim that as "only kidding"....

 

[pmbug]

Another refrain on this song:

...
As we began discussing the MF Global collapse, Jim articulated his belief in a financial slight-of hand originating from “notice to deliver” requests for gold and silver submitted through MF before the collapse, which had the potential to cause a Comex delivery default. “Comex was ready to default on gold and silver in November, and rather than honor the notices for delivery, JP Morgan stole the funds in the accounts that were calling for delivery…notices for delivery were replaced by stolen accounts.” The evidence of this according to Jim is that, “JPM increased the amount of silver in their registered vaults by precisely the amount that was suppose to be delivered…JPM effectively averted both a Comex default and a European Sovereign Debt implosion.”
...

More (including link to .MP3 audio interview): http://bullmarketthinking.com/exclu...-least-1-million-private-accounts-are-stolen/

 

[pmbug]

Silver Doctors have been highlighting the stolen silver story for a while now. Their latest:

...
Once again, suddenly NO MENTION OF THE CME OF THE MISSING 1.4 MILLION OUNCES OF REGISTERED SILVER!

As a strangely coincidental supply turned up in JPMorgan vaults almost simultaneously as the MFGlobal clients phyzz went missing, until the CME provides an update of what happened to this stolen inventory, The Doc will continue to provide the last available info on this from the CME ...

http://silverdoctors.blogspot.com/2011/12/comex-silver-inventory-update-1262011.html

This issue was first mentioned on pmbug here: http://www.pmbug.com/forum/f3/comex-silver-games-202/

 

[ancona]

It won't be long before these guys become targets. People will allow only just so much before they completely snap. Even sheep can become violent if prodded once too many times.

 

[DSAbug]

It won't be long before these guys become targets. People will allow only just so much before they completely snap. Even sheep can become violent if prodded once too many times.

I think the people are still a few years away from really understanding what's going on.

Much like governments, people react after a crisis, not ahead of it.

 

[swissaustrian]

Wouldn´t surprise me if the JPM story is true :doodoo:
I don´t think that the silver story was the main motivation to let MFG fail. It was probably just an opportunity to steal the silver.

 

[swissaustrian]

An auditor with CME Group was told that former MF Global chief Jon Corzine knew about loans backed by customer segregated accounts that were made to a European affiliate of the firm, a CME executive said on Tuesday.
CME Executive Chairman Terrence Duffy said his company has provided this information to the Justice Department and the Commodity Futures Trading Commission.
Duffy, testifying to the Senate Agriculture Committee, said a CME auditor participated in a phone call during which an MF Global employee indicated that Corzine knew of the lending, which was likely made in the last couple of days prior to MF Global's Oct. 31 bankruptcy.
The loan was for roughly $175 million, Duffy said.

http://www.chicagotribune.com/business/sns-rt-uk-mfglobal-corzinetre7bc2cr-20111213,0,4497935.story

 

[pmbug]

In other news, Terrence Duffy found dead in a chartered plane accident...

 

[swissaustrian]

It´s the typical prisoner's dilemma:
It´s either you or him or both.

 

[swissaustrian]

Seems like the SEC played their role, too.
Martin Armstrong, founder and former head of Princeton Economics International Ltd.

Corzine, I know from (an) inside source at the SEC, there were going to be rules to prevent them from doing exactly what they are doing.
... “Corzine went down (to the SEC), met with Mary Schapiro, she personally revoked it. That’s information I have from inside the SEC. So the whole thing is a joke. When I speak to people on the (Capitol) Hill, they even say the SEC is bought and paid for. If they (Congress) ask them (the SEC) for documentation, they resist. Just like the Fed resisted opening the books to Ron Paul.

http://kingworldnews.com/kingworldn...Money_is_Fleeing_the_US_Financial_System.html

 

[ancona]

Hey!! Don't be a hater!!

Remember, he's the "Honorable John Corzine" and that means something [apparently......to someone.....I guess]

 

[DoChenRollingBearing]

Slightly O/T but not much.

I read a few days ago that instead of some $2 - $3 trillion, that MF Global´s total number might be much higher... Up to $7 trillion.

ZH had an article yesterday about the whole shadow banking system (concepts like Dark Pools and others I vaguely understand at best) having an impressive $30 trillion on the hook / missing / whatever.

And then the inimitable Ann Barnhardt (bless her pink AR) was just interviewed somewhere (sorry I have no references or links , maybe Max Keiser?), she said it would take $100 trillion to just BEGIN to fix Europe...

It´s like every few days the Grand Total Theft quadruples. If ANY of this is even remotely true, uhm, uhm, uhm, uh, uh, uh...

Looks like another article for my blog. How quaint it now feels that just 2 weeks or so ago it looked like Proton Bank (Greece) and MF Global stole only some $3 trillion between them. You know, the Gold Old Days when a lousy trillion or two was imaginable...

Thanks, DCFusor for bring this edition´s Smilie:

 

[pmbug]

None of that money "fixes" anything - just repairs the derivative credit bubble so it doesn't completely implode.

 

[pmbug]

ZH (quoting another source) weighs in on the conspiracy theory:

... Which bring us to a rather disturbing theory proposed by Walter Burien of CAFR1.com who has floated the rather the chilling idea, and what some may call an outright conspiracy theory, that by scuttling MF, Corzine effectively helped some shell company (or companies) which were controlled by a "cabal" of his closest confidants (we will let readers come up with their own theories who the former CEO of Goldman Sachs may have been close with) to make the offsetting profit that resulted from the accelerated and massive losses borne by MF's stakeholders in the vicious liquidation. As Burien says: "A government and media cover up would just focus on MFG's loss. A true and open investigation would be focused on "who" took the other side of the coin; the profit." And now that we know that Corzine allegedly lied to the Senate, just how much deeper does his transgression go, and did his really hand over the company on a silver platter to some anonymous "Hold Co" by taking on massive risks he knew were going to blow up in his face, albeit knowing the "other" side of the trade would compensate him for it? After all, Corzine's legacy may have been forever tarnished, but if there was one thing the man knew after all those mostly successful years at Goldman, it was risk. So did he really blow up MF on a idiotic risk miscalculation bet within two years of joining, purely by mistake, or is there something more?
...

More: http://www.zerohedge.com/news/was-collapse-mf-global-premeditated-conspiracy-theory

 

[pmbug]

JS Kim weighs in:

Did bankers use the MF Global bankruptcy to suppress gold and silver prices and create the panicked appearance of collapsing precious metals to give themselves additional precious time to delay the crash of the Euro and the US Dollar? As crazy as this sounds, a closer investigation of some key data seems to imply this possibility. ...

More: http://www.theundergroundinvestor.c...sh-mf-global-to-crash-gold-and-silver-prices/

 

[ancona]

WOW! Just......WOW!

This is big stuff, and if what they wrote comes to fruition, gold, silver and palladium group metals will likely become nearly unobtainable by commoners such as myself, because they will become far too dear in price. Imagine if the paper markets became completely irrelevant over a short timeline......say one year. All of that money, which I imagine to be in the hundreds of billions of dollars, that is sitting in paper accounts worldwide, will want to actually own physical metal. We all know of course, that there simply is not that much metal in existence, even if one counts what is in "deep storage" in un-mined formations underground. The price of silver could go to three or four thousand dollars an ounce.

 

[swissaustrian]

MF Global sold assets to Goldman before collapse: sources
MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co (JPM.N), one of the sources said.
The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd (MFGLQ.PK) filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.
At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.
JPMorgan spokeswoman Mary Sedarat said the bank did not withold money because of the line of credit. She declined further comment on details of the transactions.
JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global's assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan's interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.
The hastily crafted transactions and the seeming inability of MF Global to recoup some of the money in the sale to Goldman may start to explain why so much money remains unaccounted for at the futures firm.
It is unclear what type of assets Goldman bought from MF Global, but the securities were worth hundreds of millions of dollars, the former employees said. The sources spoke on the condition of anonymity.
The Wall Street Journal previously reported that George Soros' fund was a buyer of securities sold by MF Global, scooping-up some of its European sovereign debt at a deep discount. Panic among investors and clients about MF Global's $6.3 billion bet on European sovereign bonds led to its demise.
Corzine, who was CEO of MF Global at the time of the collapse, headed Goldman Sachs from 1994 to 1999 before being ousted after a power struggle with co-CEO Henry Paulson.
Corzine and other top MF Global executives reached out in desperation to Goldman Sachs Group Inc (GS.N) and JPMorgan, as well as Jefferies Group Inc (JEF.N) Barclays Plc (BARC.L), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE), Macquarie Group Ltd (MQG.AX), State Street Corp (STT.N) and Wells Fargo & Co (WFC.N), as potential buyers in its final days as the firm teetered toward collapse, Reuters earlier reported.

http://www.reuters.com/article/2012/01/04/us-mfglobal-goldman-idUSTRE80301V20120104
:doodoo:

 

[DSAbug]

You beat me to it. Any time goldman is involved, you know something shady was going on.

 

[swissaustrian]

You beat me to it. Any time goldman is involved, you know something shady was going on.

Goldman <-> JP Morgan <-> George Soros
an evil triangle

 

[ancona]

.......And no one will ever see the inside of a prison. Each and every one of these predators will live out their lives in extreme luxury, retaining the social status that their millions buys them.

 

[DoChenRollingBearing]

@ swissaustrian

Great reporting! I definitely agree that the psychopaths are running the asylum now. Just today, my friend John R brought me an article by William D. Cohan at Bloomberg suggesting that corporate psychopaths triggered the financial crisis. The article cites Clive R. Boddy, a professor in England, and his research.

@ ancona

I agree, I doubt that ANY of the big fish go to jail. Psychos sticking together...

I loved your tale of woe re your neighbors on the other thread!

 

[swissaustrian]

 

[pmbug]

Oh man... If I were a Gerald Celente type - sitting on a mountain of assets and burned by this fool - I would go scorched earth on him (legal system) to extract my pound of flesh.

 

[swissaustrian]

Now we'll see if the Obama crew protects him till the bitter end.

 

[swissaustrian]

 

[pmbug]

MSM running with the story (surprisingly):

Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co. (JPM), according to a memo written by congressional investigators.

Edith O’Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was “Per JC’s direct instructions,” according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.

O’Brien’s internal e-mail was sent as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify at the hearing after being subpoenaed this week.
...

http://www.bloomberg.com/news/2012-...rdered-funds-moved-to-jpmorgan-memo-says.html

Is lying to Congress bad? Was I not supposed to do that? /Corzine

ZH has the memo posted:

http://www.zerohedge.com/news/corzi...ormer-mf-global-ceo-ordered-jpm-fund-transfer

 

[pmbug]

I don't know anything about the source for this story, but I'll mention it here for posterity:

Breaking reports state that JP Morgan received a $200 million margin call on London's LIFFE exchange 3 days prior to the MFG Bankruptcy over naked euro put options. The margin call came when the Dallas Fed refused to offer JPM a line of credit due to JPM's use of TARP funds to write euro derivatives. The report alleges that a panicked Jamie Dimon called Tim Geithner, Ben Bernanke, and Gary Gensler demanding the problem be taken care of and within the hour, the CME re-issued the $200 million margin call to the counter-party on the derivatives trade (MF Global), and the rest is history.
...

More detailed explanation: http://silverdoctors.blogspot.com/2012/03/report-jpm-received-200-million-margin.html

 

[swissaustrian]

 

[pmbug]

Hopefully she works out a deal that allows her to tell the truth and give up the bigger fish(es).

 

[swissaustrian]

Corzine should be in jail for stealing customer funds at MF Global.
Instead, he's collecting funds for Obama:

Barack Obama's reelection campaign has released the most recent list of names of fundraising bundlers. On that list is Jon Corzine, the former governor of New Jersey and embattled money man, the former head of MF Global:

Corzine, according to the Obama campaign, has once again helped raise more than $500,000.
(He was likewise named a bundler in January, when the Obama campaign last released the names of their money men.)

"MF Global and its brokerage sought Chapter 11 bankruptcy after a $6.3 billion bet on the bonds of some of Europe’s most indebted nations prompted regulator concerns and a credit rating downgrade. Corzine quit MF Global Nov. 4," Bloomberg reported.
As ABC reported, "President Obama once hailed [Corzine] as an 'honorable man' and one of his 'best partners' in the White House." Since that time, Obama has tried to distance himself from Corzine, who at one point was considered for the treasury secretary slot.
But apparently Obama is still willing to use campaign funds from the embattled Corzine.

http://www.weeklystandard.com/blogs/jon-corzine-still-bundling-obama_640493.html

 

[pmbug]

It was probably some MF Global customer funds that he sent Obama's way.

 

[swissaustrian]

Good deal for JPM, bad for MFG:

JPMorgan, MF Global Inc trustee reach $546 million settlement
(Reuters) - JPMorgan Chase & Co has reached a $546 million settlement with the trustee liquidating the failed broker-dealer unit of MF Global Holdings, a court filing showed, an amount that will help repay the brokerage's customers.

As part of a settlement reached with James Giddens, the trustee who is tasked with liquidating MF Global Inc, JPMorgan will pay $100 million that will be made available for distribution to former MF Global customers.

JPMorgan will also return more than $29 million of the brokerage's funds held by the bank, while releasing claims on $417 million that was previously returned to Giddens.

"The settlement agreement resolves claims by the trustee and customer representatives against JPMorgan that would otherwise result in years of costly litigation between the parties with an uncertain outcome," Giddens said in the filing.

JPMorgan was the lead on a $1.2 billion loan to MF Global, and was also one of its primary clearing banks before the broker-dealer went bankrupt. The bank had previously retained claims on some of the collateral posted by MF Global that led to the legal tussle.

Giddens will also request the bankruptcy court to authorize distribution of $250 million to former MF Global Inc customers who traded on U.S. exchanges and $50 million to customers who traded on foreign exchanges, according to the filing.

MF Global declared bankruptcy in 2011. Commodity traders with personal accounts lost millions of dollars when, according to Giddens, the firm improperly used client money to cover corporate transactions as the firm sank. MF Global customer accounts were frozen in the wake of the bankruptcy.

The case became a political firestorm when regulators discovered an estimated $1.6 billion hole in the trading accounts of the broker's trading customers.

The case is In re: MF Global Inc, case No. 11-2790, in U.S. Bankruptcy Court, Southern District of New York.

(Reporting by Sakthi Prasad in Bangalore; Editing by Paul Tait and Miral Fahmy)

http://www.reuters.com/article/2013/03/20/us-jpmorgan-mfglobal-idUSBRE92J03N20130320