Republicans, Democrats, and Wall Street Fraud or: Who’s the MF Now?
Jon Corzine’s MF Global is missing $600 million of customer money, and the bankruptcy trustee has no idea when it might be found or when investors might be paid back, if ever. The New York Times today says that the investigation points to the conclusion that the firm simply misappropriated (that is, stole) customer money to back up failing bets on the distressed bonds of failing European governments.
The former head of Goldman Sachs and Democratic governor of New Jersey presided over a firm that may turn out to have been a criminal enterprise. Maybe the Occupy Wall Street movement should shift venue to the headquarters of the Democratic Party, which has a long pattern of involvement in outright corruption.
If this is the case — and I will patiently await the results of investigation by the proper authorities before coming to any conclusion — the only proper thing to do would be to throw the book at Corzine and his colleagues and put some people in jail for a very, very long time. In response to corporate malfeasance and Wall Street’s misbehavior in the advent of the 2008 crisis, we have had a raft of new legislation and regulation — Sarbanes-Oxley, Dodd-Frank, the Volcker rules, and more minutiae than the battery of corporate lawyers hired by the banks can follow. My few friends still employed in the investment banking industry are making a fraction of what they once did, but their lawyers are getting fat. The last hiring bubble in Wall Street, I’m told, is in risk management and legal services. Remember what Mother used to say: “You can’t have any new laws until you use the old ones!”
There is overwhelming documentation that key Democratic Party figures used government sponsored enterprises — the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) — to corrupt Congress on a grand scale in order to pay themselves spectacular sums. Last year Gretchen Morgenson and Josh Rosner told the sordid story in their book Reckless Endangerment:
The authors, Gretchen Morgenson, a Pulitzer Prize-winning business reporter and columnist at The New York Times, and Joshua Rosner, an expert on housing finance, deftly trace the beginnings of the collapse to the mid-1990s, when the Clinton administration called for a partnership between the private sector and Fannie and Freddie to encourage home buying. The mortgage agencies’ government backing was, in effect, a valuable subsidy, which was used by Fannie’s C.E.O., James A. Johnson, to increase home ownership while enriching himself and other executives. A 1996 study by the Congressional Budget Office found that Fannie pocketed about a third of the subsidy rather than passing it on to homeowners. Over his nine years heading Fannie, Johnson personally took home roughly $100 million. His successor, Franklin D. Raines, was treated no less lavishly.
To entrench Fannie’s privileged position, Morgenson and Rosner write, Johnson and Raines channeled some of the profits to members of Congress — contributing to campaigns and handing out patronage positions to relatives and former staff members. Fannie paid academics to do research showing the benefits of its activities and playing down the risks, and shrewdly organized bankers, real estate brokers and housing advocacy groups to lobby on its behalf. Essentially, taxpayers were unknowingly handing Fannie billions of dollars a year to finance a campaign of self-promotion and self-protection. Morgenson and Rosner offer telling details, as when they describe how Lawrence Summers, then a deputy Treasury secretary, buried a department report recommending that Fannie and Freddie be privatized. A few years later, according to Morgenson and Rosner, Fannie hired Kenneth Starr, the former solicitor general and Whitewater investigator, who intimidated a member of Congress who had the temerity to ask how much the company was paying its top executives.
The quotes above are from a New York Times book review by the Clinton administration’s most left-wing cabinet member, Robert Reich. Congress subsidized Fannie Mae and Freddie Mac, the two agencies skimmed a third of the subsidy, and used it to pay their executives and lobby Congress. The master manipulator in the Morgenson-Rosner story is James A. Johnson, Mondale’s 1984 campaign manager and a top Democratic Party player for decades, who became FNMA chairman in 1990 and created the lobbying behemoth.
Mr Goldman, my sister’s husband lost his money in a commodities trading account with MF Global. Is there any recourse, for example, a civil suit against Corzine & his cronies?
I really don’t know. Until the investigation comes to a conclusion regarding the missing customer funds, there’s probably nothing to do.
It wouldn’t hurt to sue.
Try to sue Corzine PERSONALLY, and not in his capacity as leader of MF Global.
Try to garner as much press coverage as possible, make as much noise as possible, and maybe Corzine’s lawyers will advise their client to reach into his vast personal cache and make this guy “go away.” Lawyers advise payouts all the time, just to make somebody who has become a nuisance go away.
Another thing to do is lawyer up, reach out to Corzine’s lawyers PRIVATELY, and tell them he’s about to be sued personally, but if he settles privately, without public fanfare, for the amount that was lost, then he won’t be sued PUBLICLY.
Corzine might have a strong reason to try to keep people from suing him personally.
I’m an attorney. There are things that can be done. Especially in this case, where the target is stupendously rich himself.
This all, of course, depends on how much money is involved. The more money, the more it’s worth it to hire a lawyer, but the more money, the less likely a quiet settlement is.
Im guessing that someone will file for, and be granted class action status on this. Probably sooner rather than later.
Would Corzine be forced to liquidate all his assets if indeed MF Global used customer funds? Back in the day someone like Corzine would of been expected to become a pauper to pay off MF Global’s debt and then put a gun to his head. But these days I am sure he will still be invited into the White House even if he has to enter the back door and I am sure he has a nice pension from his days in elected office.
“But these days I am sure he will still be invited into the White House even if he has to enter the back door and I am sure he has a nice pension from his days in elected office.”
If Obama doesn’t win next year, watch for a January 19, 2013 pardon.
That’s part of the turn to this particular trick—Obama will be re-elected, . . . if he dies in office, there can be no pardons—right?
Terry, Hope these are helpful -
http://newsandinsight.thomsonreuters.com/Legal/News/2011/11_-_November/The_legal_landscape_for_MF_Global_s_Jon_Corzine/
——————————————————
” MF Global Trustee Can Transfer $520 Million to Customers
Some of MF Global Inc.’s commodity customers can get an immediate distribution of $520 million, or about 60 percent of their cash collateral, a judge ruled.
U.S. Bankruptcy Judge Martin Glenn yesterday approved a request to transfer the funds from James Giddens, the trustee overseeing the liquidation of the brokerage. The distributions may begin by Nov. 24, said Kent Jarrell, a spokesman for Giddens. The parent, MF Global Holdings Inc., filed for bankruptcy to apportion returns to creditors. Nov. 24 is Thanksgiving Day in the U.S.
At least 22,000 customers who only had cash in their MF Global accounts as of the time of its bankruptcy on Oct. 31 will get 60 percent of their $869 million on deposit. The transfers will now include investments considered ‘‘cash equivalents,’’ such as Treasury bills. Glenn urged the trustee to seek a similar solution for customers who have a mix of cash and open positions in their accounts.
The cash distribution approved yesterday follows a first transfer of around $1.5 billion in 14,500 customer accounts to other commodities futures merchants, and the total number of commodity customer accounts is around 38,000, according to Jarrell.
About $593 million of MF Global customer funds, or 11 percent, are unaccounted for, according to a person with knowledge of probes of the firm’s collapse. Some customers had objected to yesterday’s motion, saying they should get closer to 80 percent distributions given the alleged 11 percent shortfall.
Separately, Scott D. O’Malia, a CFTC commissioner, said MF Global’s frozen funds have affected confidence in the markets and customers in Australia, Canada, Germany, Singapore, the U.K. and other countries. Although the trustee has been working to return funds faster, it still hasn’t happened quickly enough, he said.
‘‘The livelihood of market participants has been dangling by a thread for over two weeks,” O’Malia said, according to a speech posted on the CFTC’s website.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan). ”
http://www.bloomberg.com/news/2011-11-18/fdic-nominee-investor-fraud-mf-global-sandoz-compliance.html
Thank you, much appreciated.
Shabbat Shalom.
Terry, hope this helps – a court filing on November 15:
http://dealbook.nytimes.com/2011/11/15/mf-global-trustee-seeks-approval-of-customer-claims-proceedings/
and an interpretation of it:
http://www.reuters.com/article/2011/11/16/mfglobal-idUSL3E7MG0GP20111116
Thank you, much appreciated.
And Shabbat Shalom to you.
Just an off-topic note to say how very much I am enjoying How Civilizations Die. I will insist that my 4 grown sons read it so that they might better understand and navigate through the world they have inherited. Very best regards.
Thanks for the encouragement!
The rampant fraud and abuse evident in the financial industry really speaks to a cultural problem. Everybody is out for himself, and has no experience of catastrophic failure. This is because, since the 1980′s our government has repeatedly bailed out large firms that make bad business decisions. Chrysler. Continental Illinois. The banks that bet on Mexican debt. Long Term Capital Management. We have rewarded failure, rather than allowing it to be punished by bankruptcy and disgrace. There is no shame anymore.
Have you ever read The Fourth Turning, by Strauss and Howe? They have a theory that generations replay crises every 80 – 100 years. This is partly because all of the people who learned the difficult lessons of the last crisis (the Great Depression and WWII) are gone. The baby boomers and generation X leaders had never personally faced such a catastrophe and had been raised to “do what feels good.”
So after 40 years of “follow your dreams” we now see what happens when you allow driven and ambitious men free reign. In 2008, our leadership elected to sweep the problem under the rug. There were no full scale investigations of fraud. Instead the bad players were bailed out, and then, shamelessly continued to give themselves massive bonuses while the economy tanked. That our politicians would do this should not surprise us, since they are cut from the same cloth.
I fear we are headed for another crisis like the one 80 years ago. We need to purge our leadership (both in business and government) of those who are incompetent and succeed only because of their connections, and those who are corrupt. They should lose everything and the criminals among them should spend a long time in prison.
I agree with you and I wish we would purge our political leadership and not just the leadership. The whole kit and caboodle needs to go. The problem we have in this country though is that we, the voting public, won’t do that. We reward them for stealing from us by re-electing them over and over.
No organic law of human nature condemns us to repeat crises of the past.
Really bad teachers who fail to teach the past condemn us.
Time to fire every last one of them, even the so-called good teachers, because they acquiesced.
Then only hire returning vets, and pay them with the former teacher’s confiscated pensions.
Parents are children’s first and most important teachers. Parents are responsible for the education of their children. The opportunity and obligation last a life time. The problem with the educational system is less incompetent teachers, but that they work for the state.
Corzine’s girlfriend when he was negotiating contracts w/ NJ public sector unions…..a union rep.
Who say’s Democrats aren’t in bed w/ the public sector unions.
In bed and exchanging bodily fluids, and being Democrats, they don’t make much distinction between hetero and homo such exchanges.
They’re sick.
Here’s another saying that may be more relevant to the MF Global situation than that business about BO and perfume:
***There’s never just one cockroach***
Time for every stock trader to check out what’s happening with his cash…
Dear Mr. Goldman: I think you make a slight error when you write:
“…the only proper thing to do would be to throw the book at Corzine and his colleagues and put some people in jail for a very, very long time.”
It’s the BOOKLET that will be thrown, and underhandedly, at that.
What’s even more telling is that MF Global happened after the 2008 blowup. We were assured that the imbeciles at the SEC who ignored Harry Markopolos shouting that Bernie Madoff was a crook (and who now whimper from the pain in their wrists) were on the job. Well, once again there’s a wreck and the damage control is on covering up the ineptitude the regulators did.
Sincerely yours,
Gregory Koster
Perhaps.
It’s the Commodity Futures Trading Commission (CFTC) that’s responsible for policing companies like MF and as of yet there’s no sign they failed in their duty. We’d have to look closely at the time line, but as I understand it the MF strategy to juice their profits by making bets on European sovereign debt is recent, i.e. something that Corzine was involved in, and the alleged theft could have been fairly recent when their trades started going against them.
The system is not and really cannot be designed to catch such thefts immediately, nor have we heard of any allegations that the CFTC was warned. Depending on a firm’s willingness and ability to lie to auditors a scam can go on for a while until either a recession hits or the losses become too big to hide.
That’s right. You can no more prevent all such thefts in advance than you can prevent a bank employee from embezzling. But you can deter malefactors.
Now if there was only some way to recover the billions he cost us here in NJ…
I well recall the big shots (and small fry) caught up in the insider trading scandals of the late 1980s. I thought that that was largely about insecure and largely amoral people who could count their worth only with reference to the amounts of money they could amass. For me, this is much like that; insecure, mediocre “leaders” who care nothing for anyone but themselves and their personal success and balance sheet, no matter upon whom that success is built. In the 80s, it was on the hoi polloi, ignorant investor who did not have access to inside information. Now, its on the ignorant taxpayer. Fortunately, there are those like you, Mr. Goldman, and others of the new media, who will let the rest of us know what is being done to us. Thank you for that.
Indeed, we do have laws against theft. I think there was one passed down by some being, mythical or not, to some old fart on stone tablets and it said something to the effect that man shouldn’t steal. It seems that being, mythical or not, was on to something.
Oh dear, the fox caught a wolf in the henhouse. I prophesize a mighty tough-lashing.
When our Government is in bed with Goldman-Sachs, and in-turn Goldman-Sachs is in-bed with the FED, this ménage à trois ensures cronyism and corruption will forever rule the day.
This is a crisis of legitimacy. The ‘financial services’ industry and the federal governments, both individually and as a system, are massively corrupt. The so-called President and his minions have committed impeachable offences and Wall Street’s masters of the universe are crooks. Both groups are certifiable sociopaths. Both groups are intellectual mediocrities. Despite the lap-dog media’s best attempts to apply lipstick, the pigs stink so much and are so filthy that more and more sentient Americans are waking up to the obvious. What comes next: either people of principle in Congress move to impeach federal officials regulatory and federal officials prosecute the financial crimes that have been permitted, thereby shoring up the system’s legitimacy, or history will take its course in far uglier ways than those we are currently experiencing. And if there’s another, yet more cataclysmic financial collapse, events will spin completely out of control a la Weimar, the French or Russian revolutions, etc, etc.
The problem here is that corruption is a normal and accepted part of our political system. People occasionally complain about it, the establishment mouthpieces occasionally decry it, but nothing changes. At bottom liberals believe the right sort of people have a right to make their own rules or just help themselves to whatever they can or want to take if they feel like it. If certain classes of people are regarded as special, inherently moral and good, and mostly beyond questioning, this will go on.
Well, we’re still the leper with the most fingers. Here’s a rough index for you: In Russia, more than half the economy is off the books (underground, black market, etc.). In Italy and Spain, the ratio is about 30%. In the US, it’s 8%. By and large, we still work on the books and pay our taxes — we’re the most honest place in the world (with Australia and Canada). I’m the first to point the finger at malefactors, but let’s keep things in context.
I do recall reading recently that Transparency International or some such site that monitors and indexes corruption, nation by nation, has downdgraded the USA. Please correct me if I’m wrong. I don’t enjoy waxing pessimistic and somewhatapocalyptic, but the fact that the corruption you and others so well describe is getting worse and is not being seriously addressed by the powers that be does not bode well, as far as I can tell. P.S. I admire your work and look forward to reading your two recent books.
The big question is how much longer the middle class will continue to work on the books and pay taxes once the conventional wisdom becomes that doing so is a sucker’s game.
No books? No taxes.
Read my lips.
I’ve said it many times before: mark my words. The undergrouhd economy is not anything like 8% (I’d be curious to see how one measures, with precison, that which is invisible). Much of it is merely because we count stupid stuff like unemployment payments, as output, in the first place.
For instance, those Union construction workers. Every single one I ever knew worked off the books while on unemployment, as their normal model of employment. Because they have priced themselves out of all but Davis-Bacon work, that accounts for any on the books work they do. So, they work just enough hours each year to qualify for their full benefits (say 1200 hours), then go on unemployment. They all then do side work off the books. So, you’re paying them $120 per hour they work, unemployment for all the rest of the year, and they’re still earning $400 to $500 per day, off the books.
Even leaving aside welfare recipients, who do much the same thing, and foodstamps, which have become an alternative underground currency, I think 8% is a foolish figure. Or don’t we consider the multi-billion dollar illegal drug business to be “underground”?
Sorry to pick nits, David, as I find your work extremely well done, as a rule. I just have more street-level experience of this than you probably do.
I was avidly reading the latest over at the Zero Hedge blog yesterday and came across this post that I think dovetails with what DPG has written here and at Asia Times. The person writing the post is Ann Barnhardt, a commodities broker (I believe) who has decided to close up shop rather than continue in the current frankly criminal atmosphere. Eloquent:
http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-mf-global-collapse-presenting-first-mf-global-casualty
David, A Contrary Thought. Maybe regulations are the cause of the problem.
Not so long ago (100 years and more) banking and investment were marginally regulated. Bad judgment and risky investments were causes for bankruptcy, which provided the only recourse. Most non-professional investors chose to invest where they could see and touch their money, usually in their own or other local enterprise. Banks were holding agencies for funds and selected largely on the quality of their safes.
Everyday folk were even more cautious, viewing every high sounding scheme with several tons of salt.
Less than sophisticated investors (which is really all of us but a few of the best professionals) fall into one or more traps. First is the idea that a degree in xyz studies makes one educated and sophisticated and surely able to handle grubby money as well as the spread sheet tyros of Wall Street. Next, and perhaps the biggest trap, is the great faith put into the regulations themselves. “I am OK because even though the investment is too good to be true and I don’t really understand it, the regulators are looking out for me.” or “FDIC protects me.” etc. etc. etc.
So the Fools Rush In. Even now the hue and cry is focused on how the government will bail out the investor.
Where is it written that any investor, large or small, gets a return for no risk? Profit (a word that has suffered much abuse) is better described as Return on Risk.
The “Consumer Investor” would have been better served by staying simple. Pay for the house, first. (Mortgage interest deduction is a scam…but that is for another day). Set aside liquid (CD’s) assets for 12 months living. Then invest in what you can see and touch. Local Bonds (businesses you know and muni’s where you live), a few stocks, a small business (your own or something local). Then, if you still have uninvested wealth, be fully aware that you are on your own (and frankly, you are pretty well off and ought to know better). If you need the money for your security, you do not belong at MF Global or anywhere else, nor do any mutual funds or retirement assets you hold.
All of this is very elementary, and extremely conservative. But it assumes that no regulator is in place to ‘protect’ me.
I live in Metro DC. I know, on a social level, various regulators. They are no brighter than anyone else and their primary skill set, like all government bureaucrats, is working the Civil Service system for maximum return. Duh.
I doubt individual investors have enough information to evaluate risks. And even whe maagement has its own money at risk you get the kind of problem we had at Bear in 2007. I see no way to do without regulation.
The zero hedge discussio seems grossly overwrought to me.
“Regulators reportedly are conducting an audit . . .”
Yeah. Sure. Right.
I respect your knowledge and your analyses, Mr. Goldman.
But your patient rationalization seems to petition absolution.
And this at a time that calls for the garrotte and the guillotine.
“I doubt individual investors have enough information to evaluate risks.”
Can anyone ever have enough information? Would this not also apply to regulators, who have consistently demonstrated that they can’t properly regulate? We saw this throughout the beginning of the century: Which regulator was really running around telling investors that maybe the markets was overheating and due for a correction? I don’t recall, but maybe you do, Mr. Goldman, seeing as how you was inside the workings of Wall Street for quite some time.
No, not everyone can have enough information, but the key is to get out as much information as possible. Thank God for the Internet.
When 68 million dollars was stolen from account holders at Intrust in Chicago circa 2000, the two owners of the company each received Federal sentences of 14 years. By that standard, 600 millions would be worth approximately two life times of incarceration. On the other hand, the Intrust convicts were small-time real estate developers without the political connections of a Corzine. Regarding the effectiveness of regulation, I believe the State of Illinois (the Intrust fraud took place in Chicago, surprise) is being sued for negligent regulation of the trust company.
It’s been obvious for a long time to anybody with something between the ears that the difference between Democrats and Republicans beyond some declarations and ideology (not to be confused with policy, let alone the IMPLEMENTATION of policy) is infinitesimal and illusory. This is particularly true with respect with corporate and particularly Wall Street welfare. Both parties are bought and sold by Wall Street, who holds the state by the balls.
Corzine was determined by Wall Street, not by his party and that explains his company’s behavior. His only problem was that instead of working for one of the biggies on WS, who own the govt and are therefore protected by it, he went at it alone. Had he still been at GS and done the very same thing I can almost guarantee none of this would have happened to him (I am not sure something will happen to him anyway). Hell, they’re all doing it on WS all the time.
Folks, do not be victims to the propaganda that we’re living in a free, efficient, competitive, productive, private market, capitalist system. It’s a kleptocratic corporate welfare state, crony capitalistic, that privatizes profit and socializes cost.
As long as that does not change — and I don’t see what will change it — the decline will continue, with the barbarians at the gate.
“and I don’t see what will change it”
Lex talionis might. Someone will invoke LT eventually.
@15. Information costs money. If you cannot afford the cost of gathering the information needed you are one or more levels too high in your investment thinking. Move down a notch to level where the information is within your grasp. My local school bonds are easy to understand. I live here. I know my school board and county tax environment. Locallism also limits overreaching by my local government.
Theft and fraud remain theft and fraud. Thousands of pages of regulations mean failure.
In my Navy days we used to say that you could do anything short of outright criminality if you looked through the regs hard enough. Similarly, Federal Acquisition Regulations (FARs) are over 1,900 pages long. I, as a contractor, and my government buyer agency, can make almost anything happen. My guess is that SEC, FDIC etc regulations fill libraries.
So, as always, we get back to basics.
“Move down a notch to level where the information is within your grasp.” Peter Lynch of Magellan Fund used to walk through facilities of companies he was considering buying, asking questions of low-level employees, observing, looking for obvious absurdities, etc.
Occam’s Razor and Albert Einstein said it best.
the right answer is accountability that prevents the creation of moral hazzards- whether you are a back box hedge fund manager or VP at a bank- the answer is the same- if you are doing anything that involves leverage or risk to the institution or its customers you have to pledge everything you own, down to your wife’s wedding ring as collateral against your doing anything over the top.
that will rationalize risk.
Does Goldman Sachs ever hire anyone who isn’t a criminal?
I know plenty of people at Goldman Sachs who are straight arrows.
Or at least you think you do……….
People had all kinds of confidence in Corzine too, and entrusted him with their money, their futures, their savings, but that proved unwise.
What we’re dealing with here is a two-tiered system of knowledge. There is that knowledge that the ordinary citizen possesses, and there is that knowledge that those on the inside possess. And even those on the inside can find themselves outside the loop.
The SEC has become a joke.
this sounds very aristocratic France. Is it? The Democratic Party grandees strike me as French aristo. They have official mistresses with influence- Pamela Harriman, local tarts- any of the scandals, and now gambling with government money, rather than being fiscally sound. Does it sound that way to you, too?
You are so familiar with all the players and with history. I’d love to hear your take on the matter.
Unfortunately the dems and the Wall street crooks are one of the same. Until the electorate demand accountability from elected officials there is no solution. No law will determined a criminal from committing a crime, the only deterrent is heavy punishment. Corzine should reside in the next cell to Maddof. In a democracy you deserve the government you elect.
The one thing that the political system seems to be very good at is enrichment of its members and their cronies. If nothing else, this is a good reason to limit the size of government. The fewer political officials we have, the fewer “above the law” crooks we’ll have stealing from the rest of us.
“Who’s the MF now?”
To me, MF means either Maynard Ferguson or MotherF**ker, and I don’t think “Spengler” is referring to Maynard Ferguson (as in MF Horn 1 or MF Horn 2).
….could be Massey Ferguson, if he’s into tractors…
i think he pocket the money, any bets
Here’s the link to a letter from a future’s broker to her clients that PJM lead blogger Instapundit Glenn Reynolds linked to earlier in the day:
http://www.bizzyblog.com/2011/11/17/thank-you-ann-barnhardt-we-need-a-lot-more-people-with-her-courage-like-this/
Here’s what I wrote to another econ-blogger, whom I’ve often clashed with over Russia:
the kleptocracy the good Professor has been decrying in the Kremlin is now here, breathing down our necks. Sometimes the Devil isn’t strolling down Bolshaya Sadovaya ulitsa (anyone who picks up the reference gets a cookie) with a fat black cat in tow headed for Tverskaya straight to the Kremlin. Sometimes he’s right there behind you, or even cackling maniacally as he loots your friends and acquaintences. My sincere thoughts are with the person [the blogger says he]dined with who lost their money in the MF Global collapse, and I pray that this was not a deliberate take-down of gold speculators like Gerald Celente as the new kulaks targeted by a gangster government for liquidation.
Praise the Lord and, if you’re in Iowa, do the only thing you can do to tell these MFers and their Fed bankster enablers that they’re through: vote for Ron Paul this January.
http://www.bizzyblog.com/2011/11/17/thank-you-ann-barnhardt-we-need-a-lot-more-people-
with-her-courage-like-this/
MF Global and Governor Corzine
Sandusky and Penn State
Climate Gate and the EPA and Mann
The Real Estate Bubble and FNMA and Barney Frank
Obama’s Foreign Policy and the the utter collapse of the Arab States
The Eurozone Collapse.
The Chinese Depression
Early 2012 will make us yearn for the fall of 2008.
Years ago, when a joint operating agency of the State of Washington, the Washington Public Power Supply System was busily trying to build five nuclear power plants with five different designs, a representative of an investment firm(which one I don’t recall)got off the tour bus and started talking to the laborers working on steel and concrete, who told him that they were doing their second re-pour because the first two were deficient. He found the closest pay phone, called the office in NYC and told them to dump every WPPSS bond they held. A little digging can go a long ways.
Brooks
So true. Until recently I thought Murray Rothbard was too extreme – not anymore.
Mises and the Austrians are right – the state is in it for themselves and much of the current financial services industry are government chartered enablers.
I agree. Austrian economic theory is much more appealing to me these days.
If you wish to understand why we are in this mess, the best place to start is the story of Govt Official Brooksley Born. She was one of the few that actively tried to prevent the current global crisis. She was raising the warning flag in the mid 90′s and was actively shut down by the same people that gave away trillions to fix the credit disaster she warned about.
http://www.stanfordalumni.org/news/magazine/2009/marapr/features/born.html
The above link is just one reference, there are dozens more.
Her story encapsulates the nightmare our government has become. The only problem is when it becomes a Republican / Democrat issue, it is not and never has been. Officials in our government were not ignorant, they knew full well what they were doing and fostered the environment for fraud and embezzlement, diversion and outright criminal conduct to develop and prosper on Wall Street.
The sad part is when it becomes a partisan issue and we default to Democrat / Republican angles…it is a systemic problem, not a political one and will not be solved until we toss off the visors and see the landscape for what is truly is.
The story of Brooksley Born is a good start to place this into context.
I have no respect at all for the cockroaches in the financial rip-off game. Just name ONE Wall Street firm that hasn’t cheated? They do stupid things, loose bazillions & we are stuck w/ the bill. Drastic action needs to be taken. 1) Cut off all Wall Street access to the gov’t. None of them allowed to work for the gov’t for 10 yrs. AFTER they quit their banking jobs. Also the same for re-entering the financial rip-off business. Make ‘em clean toilets in east LA or something. 2)Break up the 10 largest banks. These people are simply blood suckers that control everything. So, how much did the people that lost their homes get? No bail out there! The big shots that caused the problem were all rewarded. Cut up B of A, Chase, etc. into at least 4 different banks. 3) Make them responsible for their own actions. They invest in real estate 300 miles West of CA, let ‘em go broke. It would encourage the others.4) Outlaw lobbying & political contributions by all financial institutions. They own DC, cut the purse strings & legalized bribes. 5) Make insider trading libel to the death penalty. 6) Disband the fed & come up w/ something else. These idiots have made nothing but wrong decisions for the past 20 yrs. or so. Nuff said! Make ‘em pay the piper, NOT us!
Corzine AND ALL his enablers need to do hard time for their fraud and theft and this needs to happen soon, within weeks at the most. Funds are already starting to trickle out of other competing exchanges as investors realise that there is NEVER only 1 cockroach and that co-mingled accounts might well be far more common than anyone realises.
If Corzine walks, expect the trickle to become a flood VERY quickly.
Remember : In a burning building, he who panics FIRST and races for the exits gets out alive…
A few remarks to an excellent post.
1. As far as where the money went – it went to cover the marks to market on the repo to maturity that were financing the ESFS bonds owned (or not owned) by MF – this is a 98%+ certainty.
2. Regulation, far from stopping the initial position actually helped it. The rules for conduit or off balance sheet entities were manipulated to create another owned not owned type of position – the theft wasn’t approved, but the cause of the losses was. I will spare everyone a really boring discussion f the rules for “non control”. but trust me, they are outrageous.
3. Following Tip O’Neal’s comment that money is the lifeblood of politics, the GSE’s were a large source of the lifeblood for the body politic. It was not, however, the only source. Regulation, and the ability to sell indulgences from regulation is also a source (see 2 above).
4. Regulation is an activity – the best way to show people that you are doing something is to make a lot of noise and pass something. That the regulation is actually unneeded is not irrelevant, but part of the three card monte act of modern politics. Take the so called robo-signing scandal – there is no need for regulation against this – it is or was a series of frauds against the court, something that has bee illegal in the English speaking world at least since the reign of Alfred the Great King of Wessex in the 9th century. Instead what is needed is enforcement and punishment. This is harder to do, requires no grandstanding on the part of legislators, steps on important peoples’ toes, and removes a whole source for shakedowns – I mean contributions.
5. Regulation, or the process of regulation makes a lot of people money: politicians, lawyers, accountants bureaucrats, etc. That is why it is preferred to enforcement. What is perhaps even more important is that it cements the position of intermediaries (fixers) whose sole value added is the ability to negotiate through, or around, this increasing man made thicket.
6. The final issue re Corzine and finance itself was summarized in testimony by JP Morgan Sr. in front of Congress: he was accused of only lending money to people who had it or collateral, not helping entrepreneurs, and all around vampirish villainy, etc. His response was that all the collateral in the world was useless unless first there was a judgement about character. No one took him seriously, but what the nasty old man was trying to say in his late Victorian manner was that if someone has no character, don’t deal with him. Will someone do what they say they will? Can they be trusted? This doesn’t necessarily mean that the man in question is a nice guy, or that they will not make mistakes. Instead will they bust a gut to keep there word and trust?
On this front Corzine was and is a disaster, and while is extremely difficult to judge financial health of a firm, the man was an open book.
That’s not true. And it is a very distorted take on the history of journalism.
Newspaper editorialists, though, don’t take money from big advertisers for endorsing their products.
Now we don’t really know that for sure, do we?
This is far worse than it even appears. Like the Penn State sex scandal, it seems that hundreds of people were in on the scam. That Federal regulators refused to investigate Corzine because he was a Democrat.
The Feds are dribbling info so as to not create headlines, but the fact is client street accounts have disappeared. Pure theft. That the executives pulled their money out 90 days prior to the bankruptcy filing to avoid the claw back.That clients who did not lose money had it confiscated by the Trustee to pay himself and his crony attorneys.
More than once I have come across an anecdote from ancient Rome. I’d like to believe it is true. It goes something like this: when a new bridge or aquaduct was completed, the architects and engineers that designed and built it were required to be assembled underneath as the scaffolding was removed. This was akin to Dr. Johnson’s quip about the prospect of being hanged focussing the mind.
A country serious about public safety enforces very serious sanctions against those who endanger it.
Ours is not such a country.
How might we transform ourselves into that kind of country? What are the prospects of that? What incentive have our rulers to implement truly draconian sanctions, much less enforce them against the Keystone Kops that warm seats at the SEC and the CFTC?
Decline in empires is indeed a choice, but it’s one made largely involuntarily, through ennui. A code of morality, universally held in a society, is required to choose not to decline. We, alas, have chosen to abandon the Judeo-Christian moral ethic, and Corzine is the result. Until I see the financial industry’s “regulators” swinging from a rope, because the American public demanded it, I will be betting on further decline.
“Newspaper editorialists, though, don’t take money from big advertisers for endorsing their products.”
Like Obama?
I’m amazed, actually I’m not—That about right…
It’s strange that most, if not all, of the posts regarding the Mr. Goldman’s article concern Corzine’s MF bankruptcy. What, no comments regarding the theft of billions from the taxpayer by two organizations, Fannie and Freddie, strongly supported by the Democrat Party? And not a single mention of Barney Frank in the article by Mr. Goldman. Corzine’s operation was a private enterprise. Fannie and Freddie are quasi-government institutions that, with complete government support for decades, were instrumental in causing the housing bubble, which led to the financial crises. Which is worse? MF or F & F?
David – this other piece in PJ made a passing mention of something else that contributed to this malfeasance.
http://pjmedia.com/blog/ceo-salaries-and-pharmaceutical-costs/
Clayton mentions in passing something that may be more significant that he realizes:
I think you can see that the ramifications of this are well beyond the pharmaceutical industry, and go a longs ways in explaining the myopia that you’re talking about. It’s a small leap from myopia to temptation to crime.
Democrat Extremism in the Defense of Extremism
Barry Goldwater’s line from his 1964 Republican presidential nomination acceptance speech is often misquoted and more often intentionally misinterpreted.
What Goldwater actually said was, “I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue!” What the founder of modern conservatism and inspiration for Ronald Reagan meant was that Americans should value their freedoms enough to struggle for them, as long as those liberties were virtuous.
Lyndon Johnson refused to debate Goldwater during the ’64 campaign for the presidency. Instead, with no substantive basis, Democrats painted the senator from Arizona as an extremist of the worst kind who would start World War III and deploy nuclear weapons in Viet Nam.
Toward that end of smearing Goldwater, Democrats deployed the most infamous, extremist advertisement in national political history, a picture of a young girl picking daisies with an atomic explosion in the background.
The ad also featured Johnson saying, “These are the stakes. To make a world in which all of God’s children will live, or to do into the dark. We must either love each other or we must die” and concluded by showing “Vote for President Johnson on November 3rd.”
The ad ran only once but once was sufficient. Mission accomplished. Johnson defeated Goldwater in a landslide and went on to send 63,000 American soldiers to their deaths in ‘Nam.
If we define extreme as the outer limits, most removed from the center, beyond the average sense of moderation, that one minute ad was the epitome, not only a bald-faced lie but a distortion which helped cause those needless fatalities.
Having learned the effectiveness of lies and distortions though not their immorality, many statements and actions by liberals and indeed by today’s Democrat Party must be labelled extremist yet, practicing the same underhanded techniques as those employed against Goldwater, they succeed in establishing them as truth thanks to a complicit media.
There have been so many examples of extremist Democrat rhetoric and actions during the brief reign of President Barack Hussein Obama rivaling the venom of the Goldwater campaign that it’s impossible to detail them all in the limited space available here.
Virtually all of them, from MSNBC commentators wishing death for conservatives, to union thugs visiting mayhem on opponents, to administration functionaries preaching racial hatred and defying authority, to the Wall Street Occupiers creating social chaos, are designed with one goal in mind: re-electing the president.
The thinking seems to be that anything, any words or activities that serve to subvert the American value system, also serve to undermine the Republican Party and to insure four more years of the extremist, socialist domestic policies and foreign policies which cater to the most extreme elements in America.
Why else would Obama and other Democrats wink at their vile MSNBC lackeys, their invective-spewing unionists, their un-elected officials making a farce of law, and endorse the OWS anarchists?
Thanks to liberal brainwashing as to the rightness and entitlement to legal abortion and residency in the White House of the most pro-abortion president in history, there is no more contentious issue on the American scene today.
For Democrats, the abortion issue fills their needs to appear sensitive, at the same time they conceal their gross insensitivity to life. It enables them to lock-in a powerful segment of the electorate, at the same time it constitutes an infringement on the rights of the pre-born. It affords them the opportunity to claim a sense of superiority, at the same time it satisfies the contemporary fixation on selfishness.
As such, the liberal sacrament of abortion has become the domestic foundation of the Democrat Party. . .
(Read more at http://www.genelalor.com/blog1/?p=6007.)
Another Holder Circus. A RICO Prosection that would only occur by a “change” in the DOJ in 2012 Thank GOD for a 10 year Statute Of Limitations.
Civil RICO can begin as soon as the facts are Clear to state a “Cause Of Action”.
LET the Depositions begin, Amended Complaints will fly in the following Days, weeks, months & years. Did any Federal Judges get some of the money??
How about their financials, and reports thereto? Or will they have to “Recuse” if they too became financial victims?!
J. Christian Adams for Attorney General Of The United States!
The firms went out of business. Where fraud was committed prosecutions should follow. As for the political issues. This is how Democrats live. This is how they will always live and this is how the always did live. They need government to bail them out and to cover their you know what when violations of law occur.
What becomes perplexing is why Conservatives are blowing their horns about this one. Not that they ought to point it out – they ought to. But its a bit like complaining about a pail in the Augean Stables that has a hole in it and leaks when you try to use it. True enough, but what are we going to do with the Stables.
I have only one paltry idea. If every firm that was mismanaged to the point where it failed did so and there was more pain to the innocent – the customers – things would happen real real quick.
Us, we pristine and moral conservatives and good bedrock Republicans cannot do dip you know what about this. It is the broad base of the Democratic milieu that has to rise up – the customers. When those the Democrats biggies are relying on renounce them, the industry will become more honest.
Not until – no matter how much we want it to.
hello
Corzine is more a revolutionary than a thief. I believe this action undertaken by Corzine was deliberate. I am from NJ and have listened carefully (or read) to all of Corzine’s speeches over the last decade. He is truly a revolutionary and wants credit allocation to be a government (read: political) function and not left to the market.
If he had succeeded in his bet on Euro sovereign debt he would have been declared a hero and taking on Geithner’s job…..his failure on the debt bet is a self sacrifice (he believes) in a revolutionary onslaught against private sector credit allocation….mark my words..this will eventually be seen as the truth. Corzine is the Engels of our generation. I know this stuff. My family is communist from the 1880s in the mills of Bialystok and Kiev. My father was an active member of the 3rd Communist Internationale..Comintern.
Corzine is deadly combination of evil and stupidity.
Paarl of Rhodesia
PS I live near Summit NJ and play adult ice hockey in the area…..Corzine’s first wife was a very competent female player ….I got to know several players from the Beacon Hill Skate Club where the Corzines were members…One
sharp tongued member said: To know Jon Corzine is to dislike Jon Corzine !! ;>)
The sort of informed opinion that you provided here, on more than one level, represents the highest function of PJMedia. Certain of the comments are generally more eye-opening than the blog posts, with the exception of David Goldman’s posts. Hooray for the commenters who provide special insights.
“Who’s the MF Now?”
Since nobody has said it yet, I will: I don’t know who the latest MF is, but I do know that we’re all getting F’d.
The real story WRT MF Global is the CME’s failure to maintain the trading book.
Massive shortages are showing up in actively traded accounts with live positions.
Hence, it is damning for the entire exchange.
Lehman went under — but it was not the fault of the NYSE.
MF Global snowed the CFTC and the CME — pulling cash out of client accounts to cover ramping losses.
THAT’S the nexus of this crisis.
Remember when all the Wall Street firms were partnerships? When the firm went down, they went with it into disgrace and,perhaps, poverty. Why did that change?
You wouldn’t want your Volt to burn rubber…