MF Global Domino Effect

There is a major financial hurricane coming and today's failure of MF as much as meaningless to the general media is a further tile falling on the board which could have big repercussions.




Reuters reports that "U.S. regulators are unhappy with the failure of MF Global Holdings Ltd to provide them with the required data and records, a source close to one regulator told Reuters on Monday. "So far they've been very disappointed with the cooperation in the fulsomeness of records and data from MF," the source said, noting regulators have been working with the firm since late last week. "They were supposed to be able to show us their books and they're supposed to be able to tell us what's what and where their customer funds are and how they've been segregated and protected and to date we don't have the information that we should have," the individual told Reuters." whatever MF is hiding is not something that will hurt it or much less its stakeholders.
After all the company is already dead. Whatever is on its books has huge impacts to those either behind the corporate veil, read Mr. Corzine or more probably other banks and Primary Dealers. And with even one simple affidavit still to be filed in Bankruptcy Court, the panic behind the scene is palpable.

From Reuters:

MF Global, which filed for bankruptcy protection on Monday, is the biggest U.S. casualty of Europe's debt crisis, and the seventh-largest bankruptcy by assets in U.S. history.

Regulators had expressed "grave concerns" about the viability of MF Global, which filed for bankruptcy only after "no viable alternative was available in the limited time leading up to the regulators' deadline," the company's chief operating officer, Bradley Abelow, said in a court filing.

U.S. regulators held a series of calls on Monday related to MF Global.

The Financial Stability Oversight Council, which is headed by the Treasury Department, received "a series of oral reports" from the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Reserve, according to one Treasury Department official.

No other details of the calls were provided.

So: just what secrets is the corpse of MF about to reveal?

Student loan debt explained

Student loan debt, now at $830 billion, has surpassed credit card debt—a statement unheard of 20 years ago. Student loans, unlike any other form of debt, CANNOT be forgiven via bankruptcy—these loans MUST be repaid. 



Via: HealthcareAdministration.com

How Italy tricked its entry into the Euro

Image via Wikipedia

The recent gold price escalation and the possible manipulation of the gold market has some interesting similarities with the LTCM collapse which risked in 1998 to derail Italy's qualification for the Euro.

LTCM was a hedge fund founded by bond guru John Meriwether which suffered a spectacular collapse in 1998 and was subsequently bailed out by consortium of banks at the behest of the U.S. Treasury and Federal Reserve. Fed and Treasury officials argued at the time that the bailout was necessary because the collapse of LTCM posed systemic implications for the global financial system. Here’s why:


When sovereign gold is lent / leased – it is generally sold into the market to raise cash balances.

The Italians were lending / leasing their sovereign gold and investing the proceeds with LTCM. Italy was no doubt attempting to reverse their sagging fortunes with their substantial sovereign gold holdings due to the reality that their gold holdings were only losing value over that time frame.

The declining gold price was effectively preventing Italy from qualyfing for the Euro by negatively impacting the value of their reserves.

This would have made the Italians highly agreeable to any proposal to help reverse or alleviate that reality.

Thinking that LTCM was infallible – owing to them having a couple of Nobel laureates on staff and also being predisposed to playing fast-and-easy with their gold accounts – Italy still wasn’t done. Next up was a gold loan / lease – arranged by bullion bankers [like Goldman Sachs]. The proceeds were invested in LTCM in the belief they would earn the ‘magical gains’ that LTCM had been delivering to their investors.

When LTCM failed, they had to be bailed out because a public bankruptcy would have:

A] exposed the Italian manipulation of their sovereign gold [which did aid and abet in a wider – globally coordinated - gold price suppression]

B] that Italy was playing “financial accounting tricks” to qualify for the Euro