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These fellows in New York, Washington, and London hate to see any amateurs engaging in deceptive financial practices without an official license or the right markings.
When the Iranians get good enough to move past merely practicing deception into the big leagues of world class professional fraud, and start playing ball with the big boys maybe the Iranian central bank can sign up for the primary dealer slot recently vacated by MF Global.
It is hard to imagine that Iran even has any assets remaining in the US or in any of their foreign branches.
The repatriation of assets and gold overseas is starting to gain some momentum, based on a fresh wave of vaporization concerns. Unless you're talkin about German gold which is on semi-permanent loan to Wall Street.
Bloomberg
Obama Freezes Iranian Government, Central Bank Assets
By Indira A.R. Lakshmanan
February 06, 2012, 11:47 PM EST
Feb. 6 (Bloomberg) -- President Barack Obama ordered a freeze on all Iranian government and central bank assets held in the U.S. or any foreign branch of a U.S. entity, the White House said today.
The president cited “deceptive practices” of the Iranian central bank and an “unacceptable risk” to the international financial system from Iranian activities.
Previously, only assets belonging to sanctioned Iranian entities or individuals were frozen. The order, signed by the president yesterday, blocks all property and interests in property belonging to the Iranian government, its central bank, and all Iranian financial institutions, even those that haven’t been specifically designated for sanctions by the U.S. Treasury.
Longstanding U.S. regulations already prohibited American citizens or entities from virtually all direct and indirect transactions involving Iran or its government, aside from those exempted under general licenses for transactions involving food, medicine, remittances and humanitarian relief.
The measure was mandated as part of Iran sanctions legislation that was passed by Congress and signed by the president Dec. 31.
“I have determined that additional sanctions are warranted, particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks to conceal transactions of sanctioned parties, the deficiencies in Iran’s anti-money laundering regime and the weaknesses in its implementation, and the continuing and unacceptable risk posed to the international financial system by Iran’s activities,” Obama said in his congressional notification...
The margin call was predicted here about day two as I recall. The question in my mind is the extent that JP Morgan and any of their other bankers and credit line holders played in this.
It will be interesting to see how this case progresses from the Giddens-Freeh bankruptcy team and into the hands of the regulators and Justice Department.
So far (for the past three years) the Obama Administration has been adverse to looking too far into these sorts of cases before throwing a waiver or settlement without admission of any guilt on the table.
Bloomberg
MF Global’s $310 Million Margin Call Exceeded Its Market Value
By Matthew Leising
February 06, 2012, 8:33 PM EST
Feb. 7 (Bloomberg) -- MF Global Holdings Ltd., the futures broker that filed the eighth-largest bankruptcy in October, faced a $310 million margin call on its final day that exceeded its market value.
Calls for payments tied to bets MF Global made on European sovereign debt increased Oct. 24 and continued through Oct. 31, the day the futures broker formerly run by Jon Corzine filed for bankruptcy protection, according to a report yesterday from James Giddens, a trustee overseeing the brokerage’s liquidation. MF Global had a market value of $198 million on Oct. 28 as it held $6.3 billion in European sovereign-debt trades.
After tracing 840 transactions of $327 billion in the company’s final days, Giddens is still analyzing where some of the $1.2 billion in missing customer money “ended up,” he said in the report. Corzine’s firm failed after credit-rating downgrades, a record quarterly loss and revelations about its $6.3 billion European debt trade unnerved investors. The missing money has sparked Congressional hearings and former customers have said it undermined confidence in the futures industry.
“For three months, our investigative team has worked to understand what happened during the final days of MF Global when cash and related securities movements were not always accurately and promptly recorded due to the chaotic situation and the complexity of the transactions,” Giddens said in a statement.
The trustee didn’t disclose the identity of the counterparties making the margin calls. The trades were cleared through LCH.Clearnet Ltd., according to an MF Global contingency plan drafted before its failure. In the plan, which was designed to address the effects of a credit-rating downgrade on the company’s solvency and liquidity, MF Global questioned whether it should move the debt trades out of LCH.Clearnet.
“How will LCH respond, how much in excess margin will be required, time period, can/will they force us out?” the brokerage questioned in a section of the plan titled “immediate decision making required.” The undated plan indicated the company could move some of the cleared positions to the over- the-counter market, where it could get more favorable terms.
Congress, the Commodity Futures Trading Commission, Securities and Exchange Commission and the Justice Department are investigating events surrounding the collapse of MF Global, including the disappearance of the customer funds...
Gold was hit hard by a selling flurry around 3 AM Eastern Time, with most of the selling timed to events in London.
Check out the plunge in gold lease rates on 2 February in the last chart.
Silver proved to be more resilient.
If and when the metals brokers and their pyramid of leverage breaks, be careful about any holdings you may have that are mingled with theirs, otherwise your victory may be marred by a loss of funds related to the collateral damage of a default and a financial reorganization.
I hope for the best, but if there is another financial dislocation in the markets it is going to be quite ugly. They are running a little low on scapegoats and patsies, and the pain to be distributed will be great.
Another light volume day saved the market from rolling over, which it seemed ready to do early on.
I think it is time now to take a maximally defensive position, which for me at least means hedged gold bullion positions and cash. The bullion hedge is to guard against a liquidation event as opposed to an equity correction.
If volumes stay light the wiseguys can keep lifting this up, burning the shorts. So do not get ahead of this, but keep your powder dry if you trade, and if not, start packing up in advance of a move to higher ground.
