"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

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Yellow Tang's picture

Holy shit, what a fucking horrible human being.  Sorry you got so many junks, man.

Diogenes's picture

Any religion that tells you to murder your own children and call it honor killing comes from the devil, it does not come from God.

Jay_Son's picture

That's right.  Christianity and Judaism are not from god - if there was one.

Genesis 21 and 22.  Hey Abe!   Heeeeeeeeyyyy Abe!  Guess what?  I want to you to kill your own son!  Your only son!  Ah HAHAHAHAHAHA!  <meant to be read in the voice of Lewis Black>

The_Nihilist's picture

So sad how people shoot themselves in the foot making fun of a religion that is based on their own.

Brutarius's picture

Yeah, crazy like Mohammed being visited by two angels who yanked his heart out and removed single black spot and then put it back in.

The_Nihilist's picture

Thank you for posting this. I don't know why people are down voting you but the people usually need a boogey man, these days it is muslims. It is scary what this country has become and how many people don't even question what they believe. Thank you for questioning things in this sad circle jerk.

tumblemore's picture

She's right. There is no rule of law in Wall St. The people who will react first to that growing realisation are likely to be people with some form of strict moral code (whatever it might be). The people who react last will lose the most.

koperniuk666's picture

You are right she is definitely insane.  but that does not necessarily make her post or opinion or comments wrong. My mother is insane but she does have her brief moments of lucidity.

The scary bit of the clip is that  bernhart is an analogue of the huge  number of you americans who believe this fairy tale god crap. you are more scary that the vile cunts who believe islam. 

and she has clearly not read the koran. (i have) -it has little or no content outside of continous repetion of imprecations (GOD IS GREAT) . i summarized the koran on an A5 sheet. the hadith is where the abuse and lies come from. (it has much in common with christian 'interpretation' of the scripture) -  it is the old testament that is the endless ramblings (to use her words) of a sick abusive psychos.

it doesnt make any  sense ( except to an IQ60 illiterate  goat herder in the desert) and yet millions allow it to control their lives?

Fuckwits. Chrsitians are at least half the problem. With your education system there should be no reason to believe such horse shit.

suck my cock jehovah

smlbizman's picture

most importantly....is she do-able ? 

DoChenRollingBearing's picture

Take a look downthread to Manthong's link.  She does look kind of hot with her pink AR all cuddled there...

Fuckin Floyd's picture

I'll get back to ya on that one.

SWRichmond's picture

Can you hear the distant drums?

Those aren't drums, that's shelling.


SokPOTUS's picture

Always better to be out and wish you were in, than to be in and wish you were out.

whstlblwr's picture

I don't know, she sounds a little off her rocker with the Marxist comment in client letter. Not professional. Maybe it's a good contrary indicator, have to see.

JoBob's picture

I can overlook that. She just might be a bit pissed right now!

buyingsterling's picture

A little honesty is refreshing. OK, Barry isn't necessarily a Marxist, who knows? We do know that he's been ordered to play one on TV.

mrgneiss's picture

Yes, a scintilla of emotion invalidates the rest of her points, tool.

We won't change the course of this ship until a lot more people wake up and get emotional, the banksters would like to keep people nice and obedient and "professional".  I'm glad people like Churchill, Washington, Lincoln got emotional and lost their professionalism over issues they cared about..........

whstlblwr's picture

I agree emotion okay, but sentence is extreme, and makes wonder about other points in letter. Even though I agree with much of what she says, of course.

"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.

Maybe her hairdo enough to invalidate her comments. Is it polygamy wife?

Central Bankster's picture

This may be the first time you've ever made sense.  I have to agree the letter is unprofessional.

Silver Bully's picture

'Can you hear the distant drums? '

Time to borrow from good literature describing barbarians at the gate:

"We have barred the gates, but can not hold them for long. We can not get out. They have taken the Bridge and the Second Hall. Frar and Loni and Nali fell there. The pool is up to the wall at the Westgate. The Watcher in the water took Oin. We can not get out. The end comes. Drums, drums in the deep. They are coming."

Milestones's picture

Some for the Glories of this World; and some

Sigh for the Prophet's Paridise to come_,

Ah take the Cash and let the Credit go,

Nor heed the rumble of the distant drum!  


Quartan from the Rubaiyat of Omar Khayyam  (11th Century Persian poet.           Milestones

GenX Investor's picture

And that folks is your daily dose of reality and brutal honesty.  Long live the markets! God save the markets!

c&#039;mon man's picture

I am guessing this article will have 25,000 reads in 2.5 hours...

Reformed Sheep's picture

I just don't buy her holy morals. She's been in the business, managing money for quite some time... Now the wheels are falling off the cart and there's no safe way to play the game any longer. Is she seriously only just now realizing the whole thing is a corrupt sham?

Remove the political rant and it's a very powerful statement, nonetheless. I personally detect some bitterness at the realization the gravy-train has derailed, though.


Totin's picture

Yeah, she should stick it out and lose all of her investors money. Gotta take the bad with the good right? Brilliant.

Dugald's picture

Ticks, when bloated, drop off the Host......

azusgm's picture

She may be the first independent broker who has brought her work to a near halt with no plans to restart until this administration is gone and Congress has been cleaned out and cleaned up. However, an independent oil and gas man I know did the same thing several weeks ago and for the same reasons. He's not even prospecting. He didn't have to get hit by MFGlobal. He could see this coming.

Although I agree with him totally, I'm feeling the squeeze since I was doing some of his title work for him.

How about some impeachments?

trav7777's picture

she lost it when she went beyond "Crony of Obama"

You want to make a point, make it ONCE, don't beat it to death, then let the rest of your character assassination buttress the point.

redpill's picture

Because you never repeat yourself, right Trav?

Joeman34's picture

HaHaHaHa...  Best one-liner of the day award!

Hephasteus's picture

You can say that again. :)

Pladizow's picture

If you would only follow your own advice!

Central Bankster's picture

He's an asshole, but even an asshole is right twice a day.  That's how the saying goes right?

Robot Traders Mom's picture

@Trav-I really agree with you on this one. Obama is just one person and is not responsible for this mess. He is a complete tool, but this is the work of many more people, much higher up on the food chain then him. Calling out Obama only plays into the hand of the two-party system.

Do not mention these fucking scumbags in politics, by name or party, when addressing our problems. Call out Monsanto, JPM, Proctor and Gamble, etc. People don't need to waste their time blaming Bush or Obama. They are puppets. Nothing more, nothing less.

tarsubil's picture

"Do not blame Caesar, blame the people of Rome who have so enthusiastically acclaimed and adored him and rejoiced in their loss of freedom and danced in his path and gave him triumphal processions and laughed delightedly at his licentiousness and thought it very superior of him to acquire vast amounts of gold illicitly. Blame the people who hail him when he speaks in the Forum of the 'new, wonderful good society' which shall now be Rome's, interpreted to mean 'more money, more ease, more security, more living fatly at the expense of the industrious.' Julius was always an ambitious villain, but he is only one man." - Cicero

Zap Brannigan's picture

I've seen alot of applicable quotes from historical figures (particularly Thomas Jefferson), but holy crap, this was said before year 0. 

CrockettAlmanac.com's picture

There is no year zero. 1 BC was followed by 1 AD.

chindit13's picture

Often referred to as The Original Leap Year.  And some people thought Y2K was a hassle.

Debt-Is-Not-Money's picture

"There is no year zero."

Right! That's because there were no programmers back then!

No one knew that zero was a number?

eureka's picture

WRONG - the ones with the most power hold the most responsibility.

"...one to whom much has been given, much shall be required from him..." 

Stop the relativist, Hollywood-CIA-Wall-Street-Pentagon HEGEMON moral relativist garbage already...

DO blame Caesar and Obama and George W and Blankfein and Dimon and Clinton and Larry Summers and Bernanke and LBJ and ALL OF THE US MAFIA SCUM BAGS THROUGH OUT ALL TIME - and let's get RID OF THEM - NOW, THIS WINTER - EVERY ONE WHO SERVES THE ELITE AND THEIR UNHOLY SATANIC EMPIRE.

ED's picture

What more reason do you need than to blame someone else to justify sitting on your hands? Its far more effective when you feel some personal responsibility, presuming you have a spine. I blame you, and I, too.

Calmyourself's picture


If Bamster and his regulatory EXECUTIVE branches did not do this who did??  Because this is really going to help business, how about delaying the Keystone pipleline, joos in london behind that too I suppose?

Robot Traders Mom's picture

From your article: The Obama administration’s new proposal to double the fuel efficiency of cars by 2025 may...add $2,000 to the price of passenger automobiles, according to two federal agencies.

If you want to factor inflation 15 years down the road with the Fed balance sheet beyond comprehension, $2,000 then will be like $7 now. I'm not really worried.

I didn't say anything about the Jews, that was you. You don't seem to comprehend that the Federal Reserve controls monetary policy, not Obama. You are the reason our country is as fucked up as it is. You only look at the R or D behind someone's name and assume they are either with you or against you.

Here is some truth I'm going to hit you with: You are a pawn for crony capitalism, continuing to push the political paradigm just like the Fox and MSNBC pundits. I don't know what the point of your comment was, but you should probably start off on a rookie blog before you come on here and try to push an agenda 98.4% of us don't agree with.

buyingsterling's picture

$2,000 then will be like $7 now. I'm not really worried.

Oh, it's OK because they're also trashing the money. Everyone bend over; you go first.

Robot Traders Mom's picture

I won't be the one bending over, I own physical assets. In that sense, I am the 1%...

Silver Bully's picture

Correction. 0.00001%. How many citizens actually talk about owning gold, let alone HAVE physical in hand? if 1% of the world's population bought 1 ounce of gold, the Comex and LBMA would shriek in fear of delivery.

Calmyourself's picture

Factor inflation $2000 to $7, 15 years down the road and this has what to do with business killing regulatory over reach?  By the way who really cares if your worried? 

I fully understand the Fed and Obama, my point which you so easily missed was that the administration within its executive run bureacracy is over reaching its regulatory powers and thus harming industry and the economy overall.

Really is that what I think?  Hmm, it may go a bit deeper than that but I do think that the "all politicians are bad" mantra is for simpletons with bad hair like you.  If that were the case I guess Ron Paul is just another schill reaching ro the golden ring, right, because all R's are bad and simpletons like me just cannot comprehend your oh so nuanced ways, ha..  The jew comment was not directed at you and frankly should not have been there my bad, I was trying to combine comments..

You Sir or madam are a pawn for shallow thinking and who gives a fuck what 99.9% of you agree with.  Is it fight club or lets all agree with the ugly bitch with the 5:00 shadow blog.. 

By the way you should really try on my avatar, just sayin..

chet's picture

"Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies"

Give me a fucking break.  Who is responsible for the utter lack of morals on Wall Street?  Why Obama of course! 

Regulation and law enforcement is a total joke, and that is on Obama since he took office in early 2009.  But Wall Street is immoral and has been for decades.  And regulation has been a joke for decades. 

Tea Baggers are so blinded by hatred for one man they're missing the opportunity to be out on the streets with OWS, who are showing more courage in a couple of months than the political right has in three years.

T1000's picture

Go read her blog. She goes into much more detail about her positions, vis-a-vis good vs. evil and what not. It's not just obammy, but the entire fed govt she's "revolting" against. I think her message is going to resound with many.



Robot Traders Mom's picture

Tea Baggers are so blinded by hatred for one man they're missing the opportunity to be out on the streets with OWS, who are showing more courage in a couple of months than the political right has in three years.

The "tea baggers" were originally out protesting on Wall Street in 2008. However, this all goes back to corporate interests and the fact the Tea Party has turned into a group that is more concerned with gay marriage than they are with understanding fractional reserve banking.

True revolutions start from pain. We will all know when we are in pain and we are not quite there yet. Everything beforehand is just window dressing. Ignore OWS and the Tea Party. Peaceful protests only work when they are part of the NWO's plan.