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Today was what we call a 'technical trade.' The insiders saw an opportunity to make some quick cash by running the market up.
There was no real news underlying the rally, just greed meets opportunity in a light volume market.
As I cautioned yesterday, it is sometimes perilous to short a dull market.
Oracle warned after the bell.
Europe remains a significant risk. The US economy is floundering despite the recent spate of triumphalism in celebrating a 'recovery' while Europe lags. The day of reckoning for Wall Street and Washington lies ahead.
Be careful trading this holiday market. It is highly cynical and given to manipulation to say the least. Use no leverage or time frames as they will be used against you.
No matter what they do to prices in the short run, the longer term trend is intact. The paper markets will continue to diverge from the underlying physical market. The silver market appears to be more strained than any other, even gold. When the market system breaks it will be the result of a wilful fraud.
“The Chinese have continued to take delivery of both physical gold and silver directly from the ETF’s GLD and SLV. They are also going directly to producers. Entities are bypassing the COMEX altogether and going straight to gold mining companies. Every single month producers have a certain amount of gold and silver they sell. Normally they sell it to the bullion banks and the bullion banks, of course, leverage this gold and sell up to 100 times that in paper markets to control prices.
They (bullion banks) hold that little bit of physical gold and claim they are backed up on their position to the CFTC. I have all my large buyers now going to producers and saying to them, ‘Look, don’t sell it to the bullion banks, we’ll buy it from you.’ So we are buying directly from the producers and this includes some sovereign entities which are doing the same thing.
We’re struggling to get the physical out of these guys (producers) because they have so many people banging on their door, saying, ‘Sell it to us direct.’ What these buyers are doing is essentially taking gold out of the system, which means the bullion banks can’t leverage that gold anymore.”
"London Trader," An Historic Bottom in Gold, King World News
Utterly fraudulent rally on light volume.
The wiseguys saw an opportunity to run stocks higher in a dull market as I had cautioned they might yesterday.
This may or may not stick depending on whether the news intrudes into their ponzi Christmas scheme.
But it was a rally based on pure fumes and greed, and nothing more.
I used it to square up and sold into it, and am now holding a paired trade more heavily weighted to the short side. But they could take it higher given the lack of adult participation in the market during the holiday.
P.S. Oracle missed after the bell which is unusual. This is taking the wind out of the NDX after hours.
This is a thinly traded market in Europe and the States. And it will get thinner as the week goes on.
The paper metals market is diverging from the physical bullion market.
The futures have now rolled to the front month of March.
Thin volumes today and they will get thinner as the week progresses.
Keep one eye on Europe. And be careful in 'shorting a dull market.'
They may jam one for Santa.
The bottom line is that apparently some warehouses and bullion dealers are not a safe place to store your gold and silver, even if you hold a specific warehouse receipt. In an oligarchy, private ownership is merely a concept, subject to interpretation and confiscation.
Although the details and the individual perpetrators are yet to be disclosed, what is now painfully clear is that the CFTC and CME regulated futures system is defaulting on its obligations. This did not even happen in the big failures like Lehman and Bear Sterns in which the customer accounts were kept whole and transferred before the liquidation process.
Obviously holding unallocated gold and silver in a fractional reserve scheme is subject to much more counterparty risk than many might have previously admitted. If a major bullion bank were to declare bankruptcy or a major exchange a default, how would it affect you? Do you think your property claims would be protected based on what you have seen this year?
You always have counter-party risk if you hold gold and silver through another party, even if they are a Primary Dealer of the Federal Reserve. As Ben said, the Fed offers no seal of approval.
If a Bankruptcy Trustee can pool your bullion into the rest of the paper assets and then liquidate it at prices that are being front run by the Street, you will have to accept whatever paper settlement that they give you.
The customer money and bullion assets are not lost, or rehypothecated or anything else. This is a pseudo-legal fig leaf, a convenient rationalization.
The customer assets were stolen, and given to at least one major financial institution by MF Global to satisfy an 11th hour margin call in the week of their bankruptcy, even as MF Global was paying bonuses to its London employees.
And in an absolutely classic Wall Street move, they are still charging the customers storage fees on the bullion which they have misappropriated from them. lol.
And so in the great Wall Street tradition they are trying to force the customers and the public to take the loss. The regulators and the exchange are aghast, and are trying to imagine how to resolve and spin this to preserve investor confidence and prevent a run on the system.
'Let them eat warehouse receipts.'
For many this would have been unthinkable only a few months ago. They had been cautioned and warned repeatedly, but chose to trust the financial system. And now they are suffering loss and anxiety, frozen assets, and the misappropriation of their wealth.
How more plainly can it be said? The US financial system as it now stands cannot be trusted to observe even the most basic property rights as it continues to unravel from a long standing culture of fraud.
Get your money as far away from Wall Street as is possible. And if you want to own gold and silver, take delivery and store it in a secure private facility outside the fractional reserve system.
Barrons
The Silver Rush at MF Global
By ERIN E. ARVEDLUND
December 17, 2011
It's one thing for $1.2 billion to vanish into thin air through a series of complex trades, the well-publicized phenomenon at bankrupt MF Global. It's something else for a bar of silver stashed in a vault to instantly shrink in size by more than 25%.
That, in essence, is what's happening to investors whose bars of silver and gold were held through accounts with MF Global.
The trustee overseeing the liquidation of the failed brokerage has proposed dumping all remaining customer assets—gold, silver, cash, options, futures and commodities—into a single pool that would pay customers only 72% of the value of their holdings. In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the value.
That has investors fuming. "Warehouse receipts, like gold bars, are our property, 100%," contends John Roe, a partner in BTR Trading, a Chicago futures-trading firm. He personally lost several hundred thousand dollars in investments via MF Global; his clients lost even more. "We are a unique class, and instead, the trustee is doing a radical redistribution of property," he says.
Roe and others point out that, unlike other MF Global customers, who held paper assets, those with warehouse receipts have claims on assets that still exist and can be readily identified.
The tussle has been obscured by former CEO Jon Corzine's appearances on Capitol Hill. But it's a burning issue for the Commodity Customer Coalition, a group that says it represents some 8,000 investors—many of them hedge funds—with exposure to MF Global. "I've issued a declaration of war," says James Koutoulas, lead attorney for the group, and CEO of Typhon Capital Management.
At stake is an unspecified, but apparently large, volume of gold and silver bars slated for delivery to traders through accounts at MF Global, which filed for bankruptcy on Oct. 31. Adding insult to the injury: Of the 28% haircut, attorney and liquidation trustee James Giddens has frozen all asset classes, meaning that traders have sat helplessly as silver prices have dropped 31% since late August, and gold has fallen 16%. To boot, the traders are still being assessed fees for storage of the commodities...
Gold and Silver bounced today, and that is all that we can call it so far.
Key resistance for gold is 1620. The gold chart has been changed to reflect a repeating formation from earlier this year, on a much larger scale.
A special thanks goes out to my friends at ThirdEyeOpenTrades for reminding me about redrawing the distribution cycle to match that of the beginning of the year. Bob helped me decide to go ahead with this as the primary scenario.
Today was a quad witching day and I wonder how much of the miners smackdown was engineered to take out the call buyers.
See you Sunday evening.
Today was a quad witching day and the SP and Russell are also re-balancing after the bell. So much of the volume today is back end loaded.
Zynga popped at 11 and flopped below its IPO price of 10. Not exactly bullish for US equities.
See you Sunday evening.
This formation, if activated and valid, would target gold to a much higher level than the previous high.
Let's see how this develops. I will be tracking both this and my normal scenario obviously. Both are bullish but this alternative view promises a wilder ride.
The similarity between the big accumulation-liquidation cycle and the previous cycle from March to July is remarkable in many details.
That does not necessarily mean that the next move will be of the same magnitude. But if that pattern holds we get a target of between $2,800 and $3,000 for the next leg up.
I would wait for this to unfold therefore and strongly advise that you not try to get ahead of it. Any successful trader would gladly give up the first ten percent of the next bull move to wait for confirmation to make sure, as Bernard Baruch used to say among others. The first level of key resistance is $1620.
Once the current decline is over and the positions have been liquidated, market participants will be sitting on their piles of paper in fear and trembling of what comes next. And 'what comes next' is the key variable. Will it be a continuation of this pattern, or a repetition of a series of formations in complete recycle?
That is hard to see now, and what might provoke it. Will it be a major quantitative easing in the dollar and euro, or a further liquidation and collapse in the banks and stock markets?
I would prefer a measured bull market move higher, but we must carefully observe and accommodate the changes in the structure of world currencies and the evolution of what we call 'money.'
This is a major engagement in what we have come to call The Currency Wars.
Hermes: 'Alas?' This word of regret the mighty Zeus does not understand.
Prometheus: Time in its aging course teaches all.
Aeschylus, Prometheus Bound
I liked the silver action a bit today, and added back some protective stock index hedges to cover a dalliance into the beaten down silver and gold miners, while adding to the existing bullion positions as well.
This market is as phony as a politician's promise and a banker's smile. The best sector play for most people is 'out.' The further away from Wall Street your money is the better.
The children come home from school for the holidays today, so no more expansive updates tonite. Too busy preparing the fatted calf and all that.
Tomorrow is the Zynga IPO and the Street wants to feed it out to the market which these days is mostly pros and schmoes (daytraders) who flip shares to each other like an egg-tossing contest.
The MF Global story continues to grow more noisome each day.
Watch the action into the weekend. I remain highly defensive in mostly long term holdings, cash, and hedged trading positions.
Perhaps this is why the western Central Banks are so determined to prevent the price of gold from breaking out, and keep putting out disinformation from within a cloak of secrecy about their inflationary policies and money creation.
Negative real interest rates are very bullish for gold, and highly corrosive to the ordinary savings of those who lack the sophisticated financial instruments to otherwise protect themselves.
...Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates.
Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’t doing much better with rates at negative 3.25 percent and the Fed has all but guaranteed rates will remain there. Only Japan has a positive real interest rate among the G-7 and that rate is barely above zero.
Conversely, the most populous nations making up the E-7 have mostly positive real interest rates. However, the grouping’s grandest economic powerhouses, China and India, have negative real interest rates sitting around negative 2 percent.
Frank Holmes, Central Bank Appetite And The Monetary Case For $10,000 Gold, Forbes
So how persistent was Jon Corleone in that private meeting?
Confidence begins with honesty, a sense of fairness, and respect for justice. Not just the letter of the law, but the spirit of the law as well.
"If we desire respect for the law, we must first make the law respectable...Our government teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."
Louis D. Brandeis
If the patience and trust of the American people was a checkbook, you could mark it 'Account Overdrawn.' This is something that the monied interests and their Beltway bandits just do not yet comprehend. Or perhaps they do, but do not have enough respect for the people to care.
Wouldn't it be a hoot if someone outré was elected President and went Andy Jackson on their pampered posteriors? I wonder if Ron Paul has it in him to be greater than himself, the leader of the whole nation and not a narrow slice of ideologues. All the rest look like conmen, cranks, and stooges.
Reuters
A persistent MF Global won NY Fed dealer status
By Sarah N. Lynch
Wed Dec 14, 2011 8:36pm EST
(Reuters) - Now bankrupt MF Global lobbied the New York Federal Reserve heavily to become a primary dealer, eventually succeeding after a delay sparked by a regulator flagging internal control problems.
Thomas Baxter, the New York Fed's general counsel, revealed the regulator's behind-the-scenes dealings with the futures brokerage, including a personal meeting with former MF Global chief Jon Corzine, in testimony prepared for a congressional hearing on Thursday.
The Fed delayed approving MF Global's application for primary dealer status after the Commodity Futures Trading Commission warned the Fed in April 2009 it had uncovered major compliance issues.
Primary dealers are the financial firms authorized to deal directly with the government to help carry out monetary policy and distribute U.S. debt.
MF Global was eventually given primary dealer status in February of this year. Fed Chairman Ben Bernanke has previously said it did not constitute a "seal of approval."
Baxter is expected to face questions at Thursday's hearing by the House Financial Services oversight subcommittee about whether the Fed overlooked problems with the firm.
"We also have concerns with the apparent lack of due diligence conducted by the Federal Reserve Bank of New York in bestowing its primary dealer designation on MF Global - even as the firm consistently lost money," panel chairman Randy Neugebauer said in a prepared opening statement....
Ok, Jill, spill. Don't bogart the 411 and go all Federal Reserve on us.
Where did it go, and when do the customers get it back?
Or do we have to wait until the dirty laundry comes out of the spin cycle?
And how come Bart Chilton says you DON'T know where all the money went?
Oh and if you find that missing money, can you also check and see where the investigation into manipulation in the silver market went? It seems especially timely this week.
Here is my guess.
Reuters India
Regulators know where MF Global funds went
By Christopher Doering
Thu Dec 15, 2011 7:05am IST
(Reuters) - U.S. regulators now have a more complete picture of money transfers in the final days of bankrupt brokerage MF Global, but must sort out which transactions were legitimate before more money can be released to customers, a top official told Reuters on Wednesday.
Jill Sommers, who is heading the Commodity Futures Trading Commission's review of MF Global, said regulators "are far enough along the trail" that they know where the money went.
"Now it's just finding out which ones of those transactions are legitimate and which ones of them are illegitimate," Sommers said.
The CFTC and the trustee liquidating the firm are under intense pressure from lawmakers and customers to provide answers about what happened to hundreds of millions of dollars in customer money that went missing as the firm collapsed.
MF Global officials, including former Chief Executive Jon Corzine, have told lawmakers they simply do not know where the money is, and deny authorizing any misuse of customer money.
"We certainly don't want to lead anyone to believe we don't know what happened. We do know, and we see where all the transactions went," said Sommers, a Republican commissioner, in an interview on Wednesday.
She declined to reveal details on the fund transfers until investigators have determined the purpose of all the transactions. Sommers could not estimate when regulators will complete their investigation, but said "really good progress" is being made.
Fellow CFTC Commissioner Bart Chilton, a Democrat, tempered expectations. Chilton said in a statement after Sommers' remarks were published that a thorough accounting of all customer funds remains a work in progress.
"Based upon the most up-to-date information available, I do not have confidence that we know where all the money went," Chilton said. (Hello? Are these guys playing for the same team? Did Bart forget to pay for a premium subscription to intra-office memos? - Jesse)
MF Global filed for bankruptcy on October 31 after it was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors and customers.
The ensuing search for missing money has sent reverberations through the farm belt and trading floors, and has attracted the attention of the FBI and federal prosecutors.
A trustee liquidating the firm has estimated the shortfall could be as high as $1.2 billion...
Chicago Sun-Times
Regulator: We know where MF Global cash went
By David Roeder
December 14, 2011 6:18PM
The investigation into the collapse of MF Global and its estimated $1.2 billion shortfall has narrowed to a key question: Were any transfers of customer money the firm conducted in its waning days legitimate?
The main U.S. regulator of the brokerage knows where the missing money went and now is trying to determine if the transfers were proper, a top official told the Reuters news agency Wednesday.
Jill Sommers, a member of the Commodity Futures Trading Commission who is heading the agency’s probe, told Reuters, “We are far enough along the trail that we know where all the money went.”
She also was reported to say, “We certainly don’t want anyone to believe that we don’t know what happened. We do know, and we see where all the transactions went.”
Her comments came one day after surprise testimony from the executive chairman of CME Group Inc. provided evidence that Jon Corzine, former MF Global chairman, knew about the transfers from customer accounts. In his own testimony, Corzine has denied ordering anyone to “misuse” customer money....
The US Dollar continued to benefit today from weakness in the euro.
Gold was hit hard, and silver confirmed the breakdown in a determined bear raid.
Intraday commentary on the metals here.
The long bullion - short stocks paired trade continued to work today. I added some metal positions during the battering. And I took off the short hedges, but I may put them back on depending on how things go.
Jim Sinclair had some interesting comments on the gold trade at King World News today.
VIX remains elevated, but relatively low in the current range for the kind of rhetoric the financial press was putting out today.
Let's see if the SP will break down further.
Credit Agricole was lowered by Fitch after the bell but the outlook remains 'stable.'
Perhaps Europe will collapse and the SP will roll over. But I am highly suspicious of this low volume trade. Still it is better not to get in front of it.
This is the reason for the ferocity of this sell off in my judgement, coupled of course with a general liquidation in stocks and other 'risk assets.' I cannot help but notice that despite the message of panic, the SP futures remain in a fairly well defined trading range that goes back to late October. The lower bound of its triangle is around 1180.
Maybe things will fall out of bed, and Europe will topple, but right now I smell a skunk. And it is likely the offspring of BB and TG.
Central Banks were leasing gold for record low rates to the bullion banks like JP Morgan and HSBC. Silver lease rates also fell in sympathy.
As you may recall, LIBOR - GOFO (Gold Forward Offered Rates) = Lease Rate.
As can be seen from the last two charts showing the LIBOR GOFO spread, the lease rates reported in the press are a derived rate and actually represent the amount that can be earned from the gold carry trade.
I do not like to look at just the Lease Rate which is really just a calculated derivative like the 'spot price' based on the present value of the futures front month, but at the two major components that constitute it. Which one is driving the change in the spread, and why?
As an aside, I do not think that the major bullion banks finance their gold leases through LIBOR anymore in these days of excess reserves and quantitative easing, but it is a useful reference for most others. This tends to put a little more emphasis on the nominal level of the Gold Forwards Offered Rate. But this is just my opinion and I could be wrong.
There is an obvious 'chicken and egg' argument embedded in this phenomenon. For example, some might say that the high spread between GOFO and LIBOR makes it difficult for those who wish to short gold to obtain it since the price one pays to finance the deal is quite high. I think this is Tom McClellan's hypothesis as well as some others.
This is an interesting theory, because it seems to suggest that without the ability to borrow gold from central bank holdings and perhaps those others who can lease in large numbers like ETFs and not the spot market, shorting gold is not possible at these prices and the natural tendency of the clearing price is to stay the same or to increase. This suggests more manipulation than market demand and supply.
I tend to think that the spreads widen as the bullion banks must borrow more heavily to support their short positions with some sort of physical backing. When the pain of the spread becomes too great, they have the incentive to throw contracts at the paper price in a desperate effort to break the price and relieve the short term pressures.
The 'informational campaign' by the bankers demimonde that surround these bear raids seems to support this hypothesis of a 'market operation.' The central banks are notorious for rescuing Primary Dealers who are in trouble.
I would tend to categorize this latter theory of mine as the LIBOR-Gold Forwards Pain Index.
But unfortunately I can see both sides of these theories. I would just like to know who is motivated by leasing their gold in order to knock the price for some reason. I know of only two groups like that: the fiat central banks in order to help the bullion banks, and perhaps unallocated ETFs that do not particularly care what the price of gold may be as long as they can collect their fees.
"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
Alan Greenspan, Congressional Testimony on Regulation of OTC Derivatives, 24 July 1998
The bullion banks use this leased gold as collateral for more fractional paper short sales, breaking the price trend and forcing liquidation. Their sales are done in the so-called Dr. Evil manner, of dumping large numbers of contracts on light markets.
There is also the liquidation factor from the collapse of MF Global, and the reluctance of small specs to engage in the futures markets at all because of capital risk and lack of confidence.
This allows the bullion banks to arrange for a big price swing that allows them to cover their short positions and also obtain other assets on the cheap such as mining companies.
Since the leased gold must be returned after a short term period, this is almost always a trading gambit, as opposed to outright net gold sales by the central banks which have virtually stopped in the past couple of years.
This at least is my take on what is happening. If this is correct we could see a repeat of the big market bottom and deep lows with a spring back as we have seen several times before. And the magnitude of these swings may continue to increase as the sorcerer's apprentices continue to meddle with the real economy.
If the CFTC were to do their jobs, as the Europeans had done with banks like Citigroup who employed their 'Dr. Evil' trading strategy there, we would not have this type of harmful volatility in key commodity markets.
On these dips one would imagine that long term buyers are taking advantage of the low prices to acquire bullion and store it as a future hedge. As the bullion banks seek to return the borrowed gold, their demand attracts the momentum trading hedge funds that are now selling, so we see a big rally in the metals. The big rally in the metals causes the LIBOR - Gold Forwards pain to increase, and so the banks cry to be rescued. And so on it goes on, until something breaks.
The obvious artificiality of these price swings obscures the efficient allocation of capital, and the orderly operation of markets, not only in metals but in key commodities significant to the real economy. The CFTC and SEC apparently have the tools to correct this, but they choose not to do anything constructive for whatever reasons. Cronyism and Congressional opposition are two possible motives.
This is not dissimilar from the gaming of the energy markets that Enron made infamous before its collapse. Financial structures based on this sort of artificial con game always collapse, given time and the latitude for their greed made possible by regulatory capture.
That is why the public should have no patience with the commodity market makers like MF Global, a TBTF bank, and even an exchange when they fail because of reckless gambling and market manipulation.
As for any complicit central bankers, regulators, and politicians, justice must be restored and prosecutions made in order to halt the growth of the moral hazard of complicity in fraud and insider trading that is now endemic, if not epidemic.
Bloomberg
Gold Lease Rate Slides to Lowest on Record as European Banks Seek Dollars
By Nicholas Larkin
Dec 8, 2011 10:55 AM ET
The interest rate for lending gold in exchange for dollars plunged to the lowest on record this week as European banks sought ways to secure the U.S. currency amid the region’s debt crisis.
The one-month lease rate on gold fell to minus 0.57 percent on Dec. 6, the lowest according to Bloomberg data going back to January 1998. The rate, derived by subtracting the gold forward offered rate from the London Interbank Offered Rate, was at minus 0.56 percent today and compares with minus 0.23 percent at the start of this year. A negative reading means banks have to pay to have their gold deposits lent.
The rate at which London-based banks say they can borrow for three months in dollars rose to the highest level in almost 2 1/2 years yesterday, even after the Federal Reserve and five other central banks agreed on Nov. 30 to cut the cost of providing dollar funding. Gold has climbed 21 percent in London this year and reached a record $1,921.15 an ounce on Sept. 6 as investors and central banks boosted holdings to protect wealth.
“European banks especially are having liquidity funding problems, which does see a lot of lending of gold and that’s putting downward pressure on lease rates,” Walter de Wet, head of commodities research at Standard Bank Plc in London, said today by phone. “Funding problems will continue for a while.”
All figures in these charts are priced in US dollars and are from the LBMA. The cumulative gold price is the daily change between London PM fixes.
I wonder how the availability of physical bullion is at these prices today.
Stocks were rallying until the afternoon and the FOMC announcement which withheld the QE Christmas candy.
Stocks went down hard led by the banks. Gold was hit very hard by a bear raid sell off down to 1620, while silver maintained some strength.
The stock market rebounded into the close somewhat as did gold. Silver has not confirmed the breakdown by gold out of its symmetrical triangle.
Why is gold going lower, but silver, the metal with a higher industrial component, is proving stubborn? Perhaps it is because the Central Banks don't have any.
"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
Alan Greenspan, Congressional Testimony on Regulation of OTC Derivatives, 24 July 1998
The bulls have their work cut out for them.
The MF Global scandal continues to rot and sicken. After the bell the testimony from CME Chairman Duffy to the Senate indicated that Jon Corzine was perjuring himself when he said he had no knowledge of the customer money transfers. Duffy testified that on Saturday lawyers notified him by phone and email that Corzine knew of the transfers of customer funds and that at all times the people doing the transfers were under the authority of MF Global management
Perhaps now would be a good time for Jonny to cut a deal and throw someone else under the bus and not 'take one for the team.'
As noted intraday, JPM and the Trustee are divvying up the MF Global cash account amongst themselves. The Trustee hopes to pay back the customers out of the company assets 'if possible.'
MF Global is more of a crime scene than a simple bankruptcy. What puzzles me is how MF Global was able to transfer all these customers funds and assets without records in the banking system? What happened to all those anti-money-laundering rules on fund transfers? Are they just for the 'little people' too?
And why is the Trustee Giddens, a private attorney whose firm has long ties to the bank, seem to be calling the shots on the investigation of JPM and their involvement?
And is the judge in the bankruptcy really one of the lawyers for the banks in the Martin Armstrong case?
The interests of the customers seem largely under-represented. Where is the CFTC and the Justice Department in all this again?
If Jon Corleone does cut a deal, and then disappears like the missing billion, will Max Keiser put up a documentary titled Where's Jonny for funding?
There was a big intra-day reversal in stocks as Benny failed to provide any QE Christmas Candy in the FOMC stocking today.
The index fell out of its triangle. The bulls have their work before them to save the day and get the Zynga IPO out the door.
So what is MF Global going to do with that $25 million in cash held in their account at JPM?
Presumably it will be used to pay the Bankruptcy Trustees and lawyers who decided that it belongs to MF Global and not the cheated customers whose accounts have been looted.
JPM apparently cut a deal with the Trustee saying they could have the cash if MFG granted JPM a lien on ALL the company's assets.
So much for the superior claim of the customers as asserted by the CFTC.
This whole notion of the 'missing money' is puzzling because with the new banking laws it seems almost impossible that there is not an electronic trail of bank transfer in any size, much less over a billion. What happened to the anti-moneylaundering provisions?
This is not a routine bankruptcy. This is a crime scene.
P.S. After the bell the CME witness contradicted Corzine's testimony saying that an employee told him he knew of the transfers. This will be interesting.
Bloomberg
MF Global Cash at JPMorgan Presumed Its Own, Freeh Says
By Tiffany Kary
Dec 12, 2011 8:39 PM ET
MF Global Holdings Ltd.’s $25.3 million in cash held at JPMorgan Chase & Co. (JPM) is presumed to be its own, the bankrupt company’s Chapter 11 trustee said in response to customer objections to its bid to use the money.
MF Global Holdings should be allowed to use the cash collateral of JPMorgan, trustee Louis J. Freeh said in papers filed today in U.S. Bankruptcy Court in Manhattan. Customers of the company’s failed brokerage, MF Global Inc., had asserted that the money may have been part of the $1.2 billion believed to be missing from their segregated accounts.
“The customers have failed to provide this court with any actual evidence in support of their position,” Freeh said in court papers. MF Global Holdings owns the New York-based bank account with JPMorgan, and under New York law, it is presumed that funds deposited in an account belong to the account holder, the trustee said.
The company has been in talks with JPMorgan, its largest lender, on the use of cash collateral to pay the costs of its bankruptcy, a lawyer for Freeh said last week. U.S. Bankruptcy Judge Martin Glenn said Dec. 9 that he would reconsider the use of cash at a hearing Dec. 14 after customers objected.
JP Morgan, agent to a $1.2 billion loan, agreed at the outset of MF Global Holdings’ bankruptcy to let it use $26 million, subject to an agreement that gives the bank a lien on all of the company’s assets...
On the other hand they can always queue up with the general creditors.
Bloomberg
MF Global Trustee Seeks Creditors’ Money for Customers
By Tiffany Kary
December 13, 2011, 2:11 PM EST
Dec. 13 (Bloomberg) -- MF Global Inc.’s customers will be refunded from the failed brokerage’s general creditors’ estate if necessary, said James Giddens, trustee for the liquidating brokerage, in a prepared statement to the U.S. Senate.
“If commodity customer claims are not satisfied from the segregated commodity account estate, the remaining claim will automatically go against the general creditors’ estate,” Giddens said in the statement. A spokesman for Kent Jarrell, a spokesman for Giddens, said that the general creditors’ estate is the estate of MF Global Inc. only, and not that of parent company MF Global Holdings Ltd. He couldn’t immediately confirm whether the customers would have recourse to any money from the general estate of the parent company.
Giddens has said he intends to return 100 percent of customer funds if possible...
The MF Global Management: I Know Nothing, NOTHING!
Why WERE all these jokers being paid so much?
What did they actually do to earn it?
They weren't involved with the trades, and they weren't involved with the management of billions of cash, and the customer accounts, their most sacred trust.
Have a Futures Account on the CME? Sleep well.
Your money is in the hands of those who know nothing.
Although organic growth in the real economy is slack, the Fed has managed to maintain about 10 percent growth rate in M2, and around 8.5 percent in MZM.
As you might expect with money growth this high and real economic activity hovering at recession levels, the velocity of money is at record lows.
This is not yet stagflation, but it is the setup for such a condition to develop. The question is 'how pernicious' will it be.
I suspect that without reform, the extraction process of the financial sector and the perverse global trade regime will continue to dampen real economic activity despite the Fed's money supply expansion.
