"Most American investors unaware rehypothecation is widely practiced inside US, but more limited. Rehypothecation will be the problem!
US law permits moving US client accounts from parent company to subsidiaries in other nations,which enables their use as collateral for loans usable to invest in other securities. Now, clients can specify their assets may not be transferable to a foreign jurisdiction.
Jon Corzine used MF Global to transfer US client accounts to a subsidiary entity in London, where UK rules permitted much higher levels of rehypothecation (i.e .leverage up to 4X, US rule less than 1.5X). A iming to build giant enterprise w/other people's money, it blew up."
Dr. Harald Malmgren
"Whoever makes a fortune by a lying tongue
is chasing a bubble over deadly snares.
The soul of the wicked man desires evil;
his neighbor finds no pity in his eyes.
When the arrogant man is punished, the simple are the wiser;
when the wise man is instructed, he gains knowledge.
The just man appraises the house of the wicked:
there is one who brings down the wicked to ruin.
He who shuts his ear to the cry of the poor
will himself also call and not be heard."
Proverbs 21:6, 10-13
Stocks were listless to weak today ahead of the FOMC rate decision tomorrow.
Gold and silver were higher on a sightly weaker dollar.
Housing prices seems to be cooling.
Nike came in better than expected on earnings, and in-line with revenue. The stock was slightly lower after the bell.
Non-Farm Payrolls next week.
Have a pleasant evening.
