November 16, 2011
MF Global Steals from NIA's Friend Gerald Celente
NIA's most popular guest who has been featured in many of NIA's previous documentaries is Gerald Celente, President of the Trends Research Institutute and editor of the Trends Journal, which you can subscribe to by going to http://www.trendsresearch.com. Celente has been bullish on gold for a long time and has been trading gold since 1978. His strategy is to accumulate gold futures until he owns enough to take delivery of the physical gold. He then holds on to the physical gold for the long-term in order to preserve the purchasing power of his savings.
Celente has a futures account with Lind-Waldock, a division of MF Global Inc. Celente had been accumulating December gold futures and was planning to take delivery of the physical gold next month. Last Monday, Celente received a call from his broker informing him that he had a margin call on his gold futures. Celente thought this was impossible because he knew that he had plenty of funds in his account to meet the margin maintenance requirements. His broker then told him that his money was with the Trustee now and unless he immediately sent over a large amount of cash, his positions would be liquidated.
The Trustee, in coordination with the CFTC, SIPC, and the CME, transferred over 17,000 customer accounts from MF Global to R.J. O'Brien. However, the Trustee only transferred about $1.55 billion or approximately 62% of the $2.5 billion in collateral that MF Global clients had. According to R.J. O'Brien, the accounts they received had only 75% of the margin maintenance requirements related to their accounts. This meant that every single MF Global client was now faced with a margin call and had to deposit additional funds to bring their accounts above R.J. O'Brien's initial margin requirement.
Many gold investors are buying gold to protect themselves from hyperinflation, which could hit the U.S. as soon as next year. Most of these people only keep enough of their wealth in U.S. dollars to pay their short-term bills and aren't in a position to wire over a huge amount of cash the next day. Therefore, most former MF Global clients have seen other people enter into their own personal accounts and sell their assets in recent days.
MF Global's CEO for the past two years was Jon Corzine, who made his fortune as CEO of Goldman Sachs and went on to become governor of New Jersey. Corzine should know a thing or two about taking major risks. After all, Corzine was one of the Wall Street CEOs that helped orchestrate the bailout of Long-Term Capital Management (LTCM) in 1998 after LTCM borrowed 97% of the money that they invested heavily into Russian sovereign debt that Russia defaulted on.
MF Global, with Corzine at the helm, invested $6.3 billion into the bonds of Italy, Spain, Belgium, Ireland, and Portugal. These bonds were set to mature next year and Corzine thought that as long as none of these countries defaulted on their debt, MF Global would make a large profit. Corzine apparently agreed with NIA's viewpoint that the ECB is likely to bailout any large eurozone countries and rescue them from default.
Unfortunately, Corzine made the same mistake LTCM did and used leverage of over 40 to 1. MF Global had over $40 billion in assets, but had less than $1 billion in equity. Last month after it was disclosed that FINRA forced MF Global to increase their net capital backing its European sovereign debt position, ratings agencies downgraded MF Global's debt, clients pulled funds from their accounts, and shareholders sold their positions, forcing the company to file for bankruptcy.
There is now $600 million missing from the accounts of MF Global clients. Any brokerage firm is legally required to segregate their funds from the personal funds of clients so that if the firm goes under, their clients' money is safe. It is amazing how absolutely nobody in the mainstream media is accusing Corzine of doing anything wrong, when $600 million in funds is still missing weeks after MF Global filed for bankruptcy. It is impossible for this to have been an honest accounting mistake. These funds are not just going to turn up anytime soon.
Obviously, there must have been some kind of criminal wrongdoing by Corzine. Most likely, this money was used by Corzine to back their European sovereign debt positions as money was flowing out of the firm in its final hours and more funds were needed to be put up to prevent forced liquidations. It is insane how after every news story about MF Global in the mainstream media, they almost always say, "Corzine hasn't been accused of any wrongdoing." You can bet if somebody like Ron Paul was CEO of MF Global, who is against the unconstitutional actions of the Federal Reserve, he would've already been arrested for using the funds of clients. However, if somebody like Ron Paul was CEO of MF Global, not only would he not have used clients' funds for corporate purposes, but his first step after taking over as CEO of MF Global would have been to reduce their leverage and get the firm out of debt.
Corzine is without a doubt directly responsible for the $600 million in missing funds, but because he regularly has $35,800 per plate fundraisers for Obama, he remains free while Celente and other MF Global clients are left wondering if they will ever see their money again. Interestingly, when MF Global had their latest bond offering, it said right in the prospectus that if Corzine was appointed by Obama to become Treasury Secretary and confirmed by Congress, those MF Global investors would receive 1% in extra interest on their bonds. The only good thing that will come out of MF Global's bankruptcy is that Corzine now has no chance of becoming Treasury Secretary and bankrupting our country in less than two years like he did to MF Global and almost did to the State of New Jersey. Unfortunately, the U.S. will likely experience hyperinflation in less than two years no matter who is Treasury Secretary, because we are at a point where our debt can only be paid back through monetization by the Federal Reserve.
|If you would like to be the first to see 'Occupy Wall Street the Documentary' coming soon, simply enter your e-mail address to receive the free NIA newsletter!