Guest Post: MF Global - A Fractal In A Frying Pan

Tyler Durden's picture

Submitted by MsCreant

MF Global: A Fractal in a Frying Pan

Gerald Celente, in an interview with Russia Today, claims he cannot access his PM trading account or get answers to his inquiries. It turns out Lind-Waldock, who he originally had the account with, was subsequently bought out by the now bankrupting MF Global. Understandably distraught, Celente asserts, “They took my money out of my account, six figures, and they have it. They closed out two of my positions, and I cannot get any answers, and I can’t get my money.”

Celente got many of us thinking—“If a guy like him can be refused access to his money, then who is safe?” Some argue he should not have been buying “paper gold.” Celente states that he was buying PM futures and taking delivery. “Max Keiser” the “Silver Bears” “Turd Fergusen” and more, have encouraged us to buy silver and “Bust the Comex.” Many of us here on Zero Hedge have fantasized in the comments section about someone wealthy enough to lay a few billion on the Comex for PMs and then stand for delivery. Celente, it is arguable, was doing this not only for himself but perhaps for Joe and Josephine Average who do not have the ammunition to fight this fight.

But as I got to thinking, I realized all of the above misses a valuable take away lesson. It is not simply the case that MF Global is a “first domino to fall” or a “canary in the coal mine” or a “harbinger of collapse.” MF Global is a fractal in a frying pan. Because of the defaults that must take place (municipal debt, sovereign debt, empty box MBS, CRE, I could go on and on), MF Global is showing us an early template, or fractal structure, for how these bankruptcies are going to manifest in our daily lives. MF Global is now falling out of the frying pan and into the fire and MANY OF US WILL FOLLOW. As the flow of bankruptcies increases, our everyday lived experience will be reshaped by the realities of the new structure as it is branded on our lives—financially and emotionally.

While Gerald Celente is crying about his lost six-figure account, Bill Fleckenstein also has personal money tied up with MF Global. He is hopeful that he will get it back but is critical of the authority figures involved. Celente does not expect to get all of his money back. Ann Barnhardt of Barnhardt Capital Management has shuttered its operations after six-years in the business. She did not feel like her clients’ funds were safe in the futures and options market any more. Lawrence Lepard, who posted on Zero Hedge, wonders if the MF Global failure was a hit job done by the Fed. My point is not about who is right or wrong (time will tell), but that we are getting an early, slow paced look at things to come—the story telling, guessing, shock, denial, hopeful strategizing, negotiations. The success, failure, triumph, rage, loss, and sorrow. As we move through time and defaults, the pace of people finding out that they “can’t get to their money” is going to pick up.

Today there is headline space to chide or support Celente and Fleckenstein. Today we have time to focus on what the one MF Global bankruptcy might mean about the state of the financial industry, the health of our economy, the impotence (or outright corruption) of our government regulatory agencies, and what it means for some of us as individuals. As more and more defaults and bankruptcies occur, more and more people will be claiming to have been robbed, crying about their lost retirement/college fund/income stream. They will not be news anymore. It will be the new normal. Before this is all over, most of us are going to claim we have had “our money taken” when, in reality, we are creditors who will be caught up in massive, multiple, overlapping, bankruptcy proceedings. We will want to focus on our individual situations—who did what with our money, why it was wrong, and who should go to jail. Many of us will also be the reason someone else has to go bankrupt. We will be their crook, their robber who did this that and the other with their money. And someone might want us to go to jail for it too. We are going to be at each other’s throats, in courtrooms and on the streets.

Gerald and Bill—you are not special. Today you can garner attention and sympathy (or contempt) for your plight. Tomorrow you will be but a grain of sand in an avalanche of financial discord, fuel long burned off in a raging firestorm that will consume everything, a fractal spark that flew out of the frying pan, giving us a glimpse of the future.

My husband read this and asked, “What do you advise?” At first blush, I find advice to be condescending. Who am I to advise? Buy precious metals? Have some cash on hand out of the banking system? Take all your cash out of the collapsing financial system? Stock up on some basics for emergencies? That might be decent advice but it is not the point. We need to be flexible. Focus on one individual’s situation, one company, or one country for that matter will soon be unsustainable. Few of us will escape the consequences of participation in the financial system. It is both broken and corrupt. Our “inability to get to our money” is going to cascade into each other’s lives, blowing up all kinds of relationships. We must keep our eyes and ears peeled for stories from multiple perspectives. This is why we read ZH.

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wrs's picture

Nice post, how was I first?

Manthong's picture

I seem to recall Fleck commenting in a KWN piece not too long ago that he had money in BAC and was not worried about it.


strannick's picture

Few of us will escape the consequences of participation in the financial system. It is both broken and corrupt. Our “inability to get to our money” is going to cascade into each other’s lives, blowing up all kinds of relationships. We must keep our eyes and ears peeled for stories from multiple perspectives. This is why we read ZH.

-This is why we read ZH

trav7777's picture

MFG isn't the first...Reserve Primary, anyone?  JFC, that was locked up for months and it was supposed to be a cash equivalent.

Hulk's picture

Primary reserve fund broke the buck on Lehman paper. It was locked up for over a year...

knukles's picture





got inside information from TPTB?

MsCreant's picture

I am cutting in here because I know you will forgive me.

Thanks to everyone who commented, positive and negative. It would not be fight club without both.

Bay of Pigs's picture

BOP knows and respects Missy. Very nice indeed... 

Willzyx's picture

Primary Reserve was a case illiquidity.  When you say breaking the buck, you are talking about a 3 cent / dollar haircut on cash reserves.  Sure, the funds were tied up and redemptions were frozen, but all you really had to do was hold the rest of its securities to maturity to get back 97% of investor funds.

MF Global on the other hand was insolvent.  The money is gone.  Period.

Buck Johnson's picture

MF Global definitely isn't the only one and there are more to come trust me.  Things are falling apart, and what the system is doing is feeding on itself to prolong itself for a few days more.  When a system is down to that it's almost gone.  Individuals who thought there money was safe where wrong.  People who thought things couldn't happen, where wrong.  Even if there was money to bail this whole mess out, it still wouldn't work.  Because they are now being told or realizing that no society on this planet has been able to print/devalue their currency and still maintainn it's status.  The insidious trap to debt or currency monetization is to not do it in the first place.  Once you do it, it ensares you by saying print just a little more, a little more.  It's always just out of reach and then you look down and see the ground coming up at you fast.

Xanadu_doo's picture

"...saying print just a little more, a little more.  It's always just out of reach and then you look down and see the ground coming up at you fast...."


Pass the frickin' crack pipe -- I need to keep chasing the dragon, BITCHEZ.

Westcoastliberal's picture

Yes and ZH always delivers.  Thanks Tyler!

Pegasus Muse's picture

Celente has an interview from several days ago up on KingWorldNews.  He turns in an Oscar winning performance in the categories of Best Rant and Righteous Indignation.  Classic Celente:  

SRSrocco's picture


Gerald has made the interview circut on his MF Global fiasco.  He was on Financial Sense this weekend along with Erik Townsend.  Erik also got screwed on his oil futures when the market dropped from $115 down to $75 back in May.  Townsend describes how he had protected himself with puts and knew the price of oil would be coming down, but he noticed his account was showing liquidations.

He called his broker and they told them that they were liquidating his puts to cover his longs.  He told his broker that he was making a lot of money on his puts and they didn't need to liquidate the contracts.  The broker tells him that according to some hidden rule in the contract his account was showing a negative on his longs.... so they had to sell his puts to make good.

Erik decides to sell his longs a at loss to get out of the situation, but he was unable to do so because of this same insane stipulation in his contract.  He lost over $200,000 on this trade and explains the whole thing and how he is now deciding not to go back in the futures markets at all.

I highly recommend listening to this interview:

T1000's picture

If you think you can take all you money out now and be safe, you may be wrong, dead wrong.

They can clawback your money that you withdrew, even if "organic", back TWO years!

"The Madoff trustee sued the New York Mets owners demanding withdrawals made as long as six years before the bankruptcy, before a judge restricted him to a two-year window. The Mets owners are fighting the remaining demands"

How far back will these criminals "clawback" time to get your funds? They wanted to go back six years in the Madoff case. 

I ain't afraid of no ghosts, bitches. 

Harlequin001's picture

I place my investments through offshore companies held in trust. Any clawback and the company is history.

I keep my money...

Abitdodgie's picture

Yea like G Celente had GLD cos it could not happen to him , once your money is out of the account its gone.

Hook Line and Sphincter's picture

clawbacks don't work if they don't know where to dig

been there done that's picture

Great, then we should also be able to "Claw Back" Banker bonuses and alleged profits going back 10 years.

cocoablini's picture

Celente whines about the whiteshoed boys but at the same time wants to make easy money playing their game. Except they changed the rules of the game for their benefit. dUH!
We need to remove all our money from brokerages since its only SIPC insured and basically insolvent. Not federal but private insured. duh. Broker investment houses need to burn.

jcaz's picture

Yeah, cause "Federal" insured is gonna be sooo much safer....


w a l k - a w a y's picture



"D'oh!" is a catchphrase used by the fictional character Homer Simpson . . .

oldman's picture

Anyone who witnessed the failed Hunt play on silver saw the rules changed, but there was little said of this. This oldman was so outraged by this that he dropped out of the market he loved, commodities, and went to trading munis. It was a good decision because a lot of people who said he was mad ion 1981, thought he was a genius by 1984; but no one knew that he had lost interest and faith in the sysytem and had been only a lucky fool.

When everyone knows the future and talks about that and nothing more, it is time to move on---he is getting that sense now. Only a fool would begin nibbling at banks in the middle of a collapse.

wish me luck, dudes        om

AgShaman's picture

Yeah...I caught that interview as well. It was quite good.

The Clif Notes:

Rules can get made up and 'jiggered' however the CME and it's Clearing Members see fit...and at any given time. They are no longer a non-for-profit and accountable entity. My mind quickly moves to what Henry Kiss and Rothschild said about controlling the money flow/'s their tool to garner CONTROL.

This is a nice missive from MsCreant...too bad she is preaching to the choir.

Most of the people that visit this place understand MMT and the scam being run behind the scenes. Unfortunately...we reside in the minority. I've turned lots of people onto places like this where they can get a view of the underbelly of the beast that enslaves them. I'm guessing that about 1 % of those people have the mental capacity, attention span, and level of education to absorb and process the material.

When you watch the Occupy Movements....every 3rd or fourth word from the unhappy protesters seems to be the "D" word. These college/university educated people don't appear too educated to me. They appear indoctrinated...and brainwashed....and their levels of brainwashing are thick and deeply rooted. Their cries for "proper" Democracy is a signal that the Oligarchs are winning....and the future looks bleak.

The "Death Dealers" on Wall St. are comfortable in their positionings. Bankruptcy is a right of passage to a sick little game that they joke about later at their private soirees. I'm guessing 98 of the 99% of the Occupy Movement don't even know what a Primary Dealer is....much less what their ties are with the FED windows and their inner workings on the CME's casino.

Americans can't hold these criminals in D.C. and their masters on Wall St. accountable......they believe they are suppose to be living in a Democracy.

oldman's picture

All too true what you say, but these dudes are all we have right now. I am grateful that at least someone is in the streets of the US because this is a connection with the rest of the world that we have been cut off from by the msm propaganda. These dudes are a far better Secretary of State than Hilary Dilary Dock.

They need and merit our support unless we are only whining about change                om

BidnessMan's picture

And send the family an invoice for the one yuan cost of the bullet used for the execution.

topcallingtroll's picture

Bullets are free nowdays. Just a normal business expense.

They make up for it by selling the organs to Israel.

Cliff Claven Cheers's picture

Spiral, isn't amazing the ChiComs adhere more to the rule of law and capitalistic principles than the supposed western democracies?

trav7777's picture

lol and you take a few isolated cases in a sea of fraud to claim this?

For every one person executed there are 1000s still engaging in counterfeiting in China and with the express permission of the Chicom gov't.

T1000's picture

At least they get a couple good hangings. You know how many our corruption musters? A big fat zero.

China 1 - USA 0

Score one for the rule of law in china. While we get jack shit. 

LeBalance's picture

Just because the ChiComs decide to hang a few low lying apparatchiks every blue moon and the USComs never do is not a point for the Chinese. Both systems are prison colonies.

Moe Howard's picture

They were killed because they didn't pass some of the loot up the chain. Rouge thieves go down every day in the USA, but the bankster group never does. Madoff went down because he was stealing from the protected group, the joos. If he had kept his scam to the gentiles, he would be walking free today.

Confuchius's picture


What do you know about China, besides nothing.

merizobeach's picture

Having been there, I know that the "rule of law" in China means exactly jack-shit.

snowball777's picture

Capitalistic censorship, violent repression, and divisive exploitation of the ignorant?


eftian's picture

Sounds a lot like the usa lately..

Confuchius's picture


You know even less about China, if that is possible

old naughty's picture


...and in here, we perhaps have them to thank for sounding early warnings!

defencev's picture

That is right. At least mafioso Corzine should go to jail, Marxist Obama removed from the office and shit Behanke kicked out. But do not whine...

All this cascading bullshit is in the minds of people who are reading Zerohedge. DO NOT READ THIS BULLSHIT EITHER. Just choose your banks and brokerages carefully. Take as much as possible of your assets to HK and Singapore. The Banks like DBS, Standard CHartered and HSBC will be fine.

Confuchius's picture


HSBC together with JPM is the other big naked shorter of paper silver on the crimex.

The only good bankster is a dead one.

defencev's picture

My own approach is quite simple. HSBC provides excellent services, has good loan to capital ratio and is quite active in Asian Markets. What you can do with HSBC is to open accounts with different branches in different countries of this bank. These branches are licensed in each country and covered by local government insurance scheme. I typically keep funds in local currency and thus covered by government insurance in each location. Not only there is a good chance the bank will be bailed out by UK (where is head quartered) in case of emergency but also that I will be able to recover funds in various jurisdictions if it does not happen. So far, HSBC did not ask for bail out anywhere...

 In my view, it is the best global bet.

Perhaps, I need to add here that as a Premier customer with HSBC, I have an opportunity of instantaneous and free  transfer funds between accounts in different jurisdictions with excellent exchange rates. If something really serious start happening, I am sure that HSBC will not be the first bank to collapse and I will have plenty of opportunities to move funds or even cash all of them (HSBC has also its own international ATM network).

You, guys are just ignorant jerks sitting in your caves subject to brainwash by various dubious idiots pretending to be in the know. As all absolute idiots, you are absolutely sure that you are right and the rest of the world is wrong. The thing is with such an attitude you will end up where you began: in your filthy cave with nothing.

merizobeach's picture

"As all absolute idiots, you are absolutely sure that you are right and the rest of the world is wrong."  Project your own mentality much?

Leraconteur's picture

HSBC is one of the global leaders in derivatives trading.

Derivatives are backed up by the deposits at HSBC.

Your money, IOW.

When the flag goes up, CDS, CDO, CLO lien holders are not subordinated - they go to the head of the line, even in front of local government insurance schemes. Your money will disappear like it did at MFG.

HSBC is off the list.