"The Entire System Has Been Utterly Destroyed By The MF Global Collapse" - Presenting The First MF Global Casualty

Tyler Durden's picture

Presented without comment, merely to confirm that the market as we know it, no longer exists.

BCM Has Ceased Operations (source)
Posted by Ann Barnhardt - November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”

With Best Regards-
Ann Barnhardt

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Richard Chesler's picture

Its a big club and you aint in it.


Pladizow's picture

I'd like to think this is the begining of a trend but pessimistically I think some new or existing scum bag will step in to fill the position!

nope-1004's picture

Cudos to you Ann.  Well said.

For 4 years most here have been writing about the insane corruptness present in the financial world.  There is no market.  There is a perception market.  We need more people like you to come forward.

Careless Whisper's picture

but, but, no one ever lost a penny, according to the head of cme group, at the new "global command center"



redpill's picture

They can't even make the assurances sound sincere anymore.  Confidence is leaking away.  Unrest in the streets, long time hedgies going away, closing up shop, knowing it's better to be out early than get caught late.

It's coming soon.  Can you hear the distant drums?  The echo becomes louder on days like today.

DoChenRollingBearing's picture

+ 1

Yes, it's almost time to head for the hills.

caconhma's picture

Occasionally, a small spark ignites a firestorm. This is how revolutions start!

Chris Jusset's picture

HOLY SHIT ... That is the best critique of our dysfunctional capital and derivatives market I've seen to date!  AWESOME!

TruthInSunshine's picture

Loose translation (for those with little time due to current events or other reasons):



T1000's picture

You have to read her blog posts -


She's stopped paying her federal taxes. She is the fire starter. Oh. My. Jeepers. 

He_Who Carried The Sun's picture

This is ridiculous. Tyler Durden, this is NOT the 1st of April and the collapse of some hoax backyard business is all you can come up with regarding MFG fallout? *TsTsTS* I am going to call your Mama tonight!

Actually, there was a collapse last week: a bag of rice tumbled over in Bangkok harbor and by JUST ONE HAIR almost KILLED a mouse.

CompassionateFascist's picture

No, you are quite mistaken. This is symptomatic. One by one, people are waking up, and discovering the nightmare...is real. Too bad Limbaugh mentioned this pretty lady tho. She's now up near the top of the ZOG liquidation list.

Bananamerican's picture

"So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy."

well, there it is......

Ann on "Ann"

" I am an old-school commercial hedge broker specializing in CATTLE and GRAIN. Farmers, ranchers, etc. Actual hedging of actual cattle and grain using futures and options. Very old-school original"

joshua10's picture

“It is said that men go mad in herds, and only come to their senses slowly, and one by one.” -Charles Mackay

One by one the professional money managers are coming to terms with reality, and have come to realize that even they are just as vulnerable as the rest of us to a godless savage apex predator like Corzine. They are finally realizing what Ayn Rand meant when she said, "You can ignore reality. But you cannot ignore the consequences of ignoring reality."

koperniuk666's picture

rand copied that directly from buddha

I did it by Occident's picture

I guess going full Galt.  She won't be the last. 

T1000's picture

What's the contagion factor on this?

When people find out that MF Global customers were taken to the cleaners, even if their accounts were 'safe', then they see that no one is going to jail, then they see that their lost funds may not come back (or with a severe haircut), when do the people start to connect the dots?

Hello, McFly, Hello...

If 'your' money is in someone else's hands, then it aint yo' money!


Widowmaker's picture

No doubt she voted for, and supoorted W fucking Bush.  I can always smell a bushie!

She's a shill just like all the rest, trying to get on the record so that in hindsight can say I told you so. 

Just like bailout-Krastings, all one can eat of the the failure rewarded pie while complaining all the way to the exodus.

Getting out of the business victimized into cushy retirement says it all!!

4realmoney's picture

I agree, although it is all painted black. Come on there are always oportunities.

Michael's picture

If you're going to panic, panic first. Good job BC.

mr1963's picture

I personally think the clawback sent her over the edge. That same lawyer did the same to the people who withdrew monies from Sentinal prior to that blowup. You can't even be smart enough anymore to run from a fire, you have to go back and get in line.

bigkahuna's picture

the shit-storm cometh...

Jay_Son's picture

BEFORE giving any weight to her assessment, take a look at who she is and what she says.  This woman is a right-wing religious wack-job -- she is dangerously crazy.  


It gets really good around 6:00, lol.  Apparently, Satan inspired Mohammed to create Islam.  Like I said, dangerously crazy.

buyingsterling's picture

So having what would be considered a rational opinion of Islam 100 years ago (before PC BS took hold) now disqualifies someone from commenting about the business they've been in, day to day for years? You're an intolerant jerk. It doesn't take an insane person so see through Mohammed's power-madness.

Armchair Bear's picture

watching now - awesome!!!  burning koran bookmarked with bacon...

zhandax's picture

Never confuse the fact that the Muslims want us dead with the fact that the bankers want us broke......Two totally different agendas and genealogies.

john39's picture

its easy to be wrong about who is behind all of this... Muslims have been the fall guy for awhile (now who WHO could be behind that?).  She might not have the big picture down, but seem like she got the part about MF Global and corruption pretty well...

rodocostarica's picture

Total nut job. Nice letter though.

t0mmyBerg's picture

Yes, a religious whackjob.  On the other hand, if you aren't at least a little nervous about the idea of sharia and the ability of the other religious whackjobs known as mulsims to try to start importing it here (it is after all the stated goal of several muslim groups), then you are not paying attention.  Like many trades I seem to do, she is simply early.

Jay_Son's picture

I certainly can't compare your intellect to hers, but your ignorance of Islam is just as bad.  Sharia is not coming to the United States.  I know this is going to be hard to wrap your head around since Fox News has told you otherwise, but "Sharia Law" in the U.S. boils down to parties, i.e., marriage, business, etc., voluntarily entering in to ARBITRATION/MEDIATION agreements.  These arb/med agreements, like all others in the US, outline the how disputes are to be resolved.  Where "sharia" is involved, both parties agree beforehand to resolve their - mostly family - disputes according to Islamic presciptions.  STOP USING FOX NEWS AS YOUR (ONLY) SOURCE OF INFORMATION.

As far as her fear of clawbacks, that may be well founded.  I'm not sure it warrants closing up shop, but hey, one less nutcase.  

DanDaley's picture


"The object of jihad is to bring the whole world under Islamic law."

Bernard Lewis - The Middle East: A Brief History of the Last 2,000 Years (page 234)

Bernard Lewis doesn't work for Fox.  


Jay_Son's picture

Well that settles it then, doesn't it?

Harlequin001's picture

and the objective of christianity is not,I take it...

fiftybagger's picture

If you are speaking of Catholicism, you would be correct; which had a large hand in the creation and promotion of Islam.  If you are speaking of Christ, you would be quite wrong:


33 Then Pilate entered into the judgment hall again, and called Jesus, and said unto him, Art thou the King of the Jews? 34 Jesus answered him, Sayest thou this thing of thyself, or did others tell it thee of me? 35 Pilate answered, Am I a Jew? Thine own nation and the chief priests have delivered thee unto me: what hast thou done? 36 Jesus answered, My kingdom is not of this world: if my kingdom were of this world, then would my servants fight, that I should not be delivered to the Jews: but now is my kingdom not from hence.


John 18
King James Version

Optimusprime's picture

No--Bernard Lewis works for the neo-cons.  Get a clue.

DanDaley's picture

If you are lost in the simplistic notion that the only reason Bernard Lewis, probably the foremost historian on Islam, is merely a sycophantic shill for the neocons, then you are surely delusional.  First of all, Lewis is not entirely unsympathetic to Islam, and second, the record of Islamic expansion, and attempts at expansion, into Europe over many centuries is abundantly clear to anyone who knows anything about history at all. It took the Spaniards nearly 800 years to rid themselves of their Islamic oppressors (despite Obama's extolling the virtues of Cordoba's golden age -paid for by the taxes on Christians -the jizya).  In short, just ask why it is that Christian churches cannot be built in Islamic lands, yet mosques sprout like mushrooms in nations formed by Christians. 

t0mmyBerg's picture

I do not watch Fox or MSNBC.  Bloomberg during the day maybe.  I read a couple Ag newsletters, Zero Hedge, Wall Street Journal maybe, a few otherr things.  Simple fact of life is that Islam is not consistent by its own tenets with the separation of church and state, which is, you know, the basis of American civilization.  Do you work for CAIR?


CrockettAlmanac.com's picture

Separation of church and state is the basis of American civilization? You mean that same America which is one nation under God, the God in whom "we trust?"

JR's picture

The man who is intolerant of the views and values that other men hold sacred, who wants to “root up all the religion and civilization that made him and wash out all the common sense of ownership and honesty, would let his culture and his country be flattened out by savages from the ends of the earth.” – G.K. Chesterton

Karl Marx, author of the Communist Manifesto and a hate-filled atheist, wrote in his poem Prayer:

The hellish vapors rise and fill the brain,
Till I go mad and my heart is utterly changed.
See this sword? The prince of darkness sold it to me. -
For me beats the time and gives the signs.
Ever more boldly I play the dance of death.

In his poem The Pale Maiden, he writes:

Thus heaven I’ve forfeited, I know it full well.
My soul, once true to God, is chosen for hell.

Jay_Son's picture

lol, I was waiting for an ad hominem attack.  I even anticipated it would take the form of a pejorative.  I amaze myself sometimes.

CAIR?  Really?  Even if I did, how does that change the fact that you really believe Sharia law is "invading" the US.  Do you believe aliens and UFO's are invading too?

And separation of church and state?  Christians are by far a greater threat to freedom in the United States than Islam is.

Andre's picture

"It is not that Christianity has been found wanting and discarded, but it has been found difficult and left untried." Mark Twain

In reality there hasn't been a religious war for 300 years, and levers of power will always have people who want to pull them for their own power and glory. If you get down to it, eco-freaks are more dangerous at this point than Christians. 10:10 says it all



The Navigator's picture

"Christians are by far a greater threat to freedom in the United States than Islam is."

I could respond in too many ways - but why waste time - you're too fucking stupid.

zhandax's picture

I certainly can't compare your intellect to hers, but your ignorance of Islam is just as bad.

Full retard.  And I don't watch fox newz

RealFinney's picture

Based on 7:25 Mohammed sounds like a total Boss.

Max Fischer's picture



Thanks for the YouTube link.  This lady is just another right-wing, hypocritical, schizophrenic freak from outer space.  And she probably manages a very small amount of money for other hypocritical, schizophrenic freaks from outer space. 

Toward the end of her video, she says that all Muslims should be arrested and deported.  LOL. And she says any politician who supports the freedom to practice Islam should be tried for treason.  I thought the First Amendment protected freedom of religion.  WTF??  She's probably one of those hypocritical TEA BAGGERS who thinks our Constitution and our government exists only for their particular objectives and ideologies.

It's really amazing how the Republican party has been co-opted by super freaks over the past several years.

Max Fischer, Civis Mundi 


Central Bankster's picture

You and this crazy lady in the video seem to have a lot in common.

The_Nihilist's picture

Goldwater did warn us many years ago.