Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else

Tyler Durden's picture

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Ghordius's picture

Damn, Tyler, you are too early according to my expectations! You are breaking the UK story too early! Why can't you just wait until the EUR has reached 1.3000?


The UK story - (starting with the British Press going wild since November about the EZ) with the highlights:

- about how the City of London has a special charter that make it a separate part of the realm (including a "minder" of the status in Parliament)

- how bank-heavy, mortgage-heavy, financial liabilities-heavy, leveraged it is (just touched here)

- how lax regulations are (just touched here) - Mr. King is already asking for dictatorial powers of regulation from Parliament ("If I don't like the way you bank, you are out" - his words he wants to be able to say)

- how fragile the British Pound is (which could bury the "small currency is beautiful" meme currently cursing around) - again Mr. King is preparing for a big storm

- and, of course, the little thing that by British Law all swans belong to the Queen, be them black or white

Tyler, you are too early! You really want to be the first of the pack, eh? ;-!

Sandmann's picture

City of London has a special charter


with its own strange little Police Force and its own funny practices

pods's picture

Yep, and the BOE and a big old building for the Rothschilds too.


Girl Trader's picture

There's a great discussion of the City of London and its status in Treasure Islands by Nicholas Shaxson.

Cathartes Aura's picture

I've said it before, and it still rings true for me - those who arrange the game pieces over centuries have no boundaries, no nationstate imaginary lines to restrict their movements, be it body or fiat or resources. . .

the City of London has a special charter that makes it a separate part of the realm

of course it does, it's like the "district of columbia" is to amrka, a place where the "laws" don't apply to those who are privy to the hidden corporate agendas.

it's already a global "world" and nationstates are fictions we are schooled to believe in, and to fear stepping out of line - "the City of London" is the global banking headquarters, and amrka does the resource theft and "law" enforcement via global military (how many nationstates does amrka occupy? *ponder*). . .

once your mind embraces this, many other things make perfect sense.

pods's picture

In the 10 ring as always CA!


dizzyfingers's picture

"amrka does the resource theft and "law" enforcement via global military (how many nationstates does amrka occupy? *ponder*)"

Been thinking A LOT about this very thing... must never allow US kids to leave the homeland again, it's bad for the country when the brightest and best are sent to die somewhere else rather than live and take part in the society here. Think about it folks, if anything is counterproductive, it's the military.

"WAR IS GOOD FOR BUSINESS: INVEST YOUR SON" ...OR YOUR DAUGHTER...OR BOTH!! (please cut, past, and pass this on)

Mauibrad's picture

The Congressional hearing today is a big jerk off.  Has even one Congressman or Corzine even mentioned Re-Hypothecation?  They are talking all around it without talking about the known problem.  This is why these things happen and don't get solved, Congress are a Bunch of Dumba$$e$!

CompassionateFascist's picture

No, they are all invested in the same Ponzi. And theyll ride it to the bitter end.

LeonardoFibonacci's picture

Erect the gallows, lads.  Once a century or so, it becomes obvious its time to use them again.

URZIZMINE's picture

This is why Jon C  can't find the cash. He hasn't read his own companies "investment agreements"


High Plains Drifter's picture

 canuuks took a bite on this shit sandwich? tell me its not so...........

ISEEIT's picture

Fair disclosure.

Do not panic and ASS-ume that this is D-day. ZH is a public service. Tyler explains your future. He has not/ does not proffer timing. We are in general fucked. The average and typical human is likely to have a life that sucks with possible random good fortune.

Plan accordingly and know the game you are playing.

Cursive's picture


House of cards waiting to fold at the slightest breeze. Wait for it....

Mr Lennon Hendrix's picture

They folded.  What you are seeing is a hologram.

Zadok's picture

Hey Cursive, nice avatar!

Deo vindice's picture

Well, as they say...

"Two heads are better than one"

DormRoom's picture

I'm still pissed the Fed loaned out 7.7 Trillion @ 0.5% to the big banks and bought back @ 3%.  ECB is probably going to do the same.

Starving Artist's picture

Actually they only loaned about $1.2 trillion IIRC. I think 7.7 was the secret program cap.


DormRoom's picture

still, underwater home owners can't get a deal like that from their bank.  It's just really irritating to know that the system rewarded the thieves, and miscreants while honest ppl continue to suffer.


Still no arrests, as school boards shut down schools, and shorten the school year because of the economic fall out.  They've stolen the future of so many.

Mr Lennon Hendrix's picture

Yeah, yeah, Bernanke apologizes.  What is he to do?

And the trillions, multiply by 10 for fractional reserve lending.  Fiat Ponzi.  Booyah, Jim!

dizzyfingers's picture

..."shut down schools"

Everyone in every community where that's happening paid for those schools and should reopen them and teach in the classrooms. Guess what they should teach -- current events, only, all day everyday, pointing out every change as our society decays because of central banksters, so that every child cannot but help see it for what it is. That's the way to fix what's broken -- teach the children all about it RIGHT NOW before they escape into society with empty heads and no perception of what is happening and why.

If someone had done that for my generation.... oh how different things would...well, might...be.

Get out there, people -- occupy those government schools.

navy62802's picture

Correct. This was pointed out in Bloomberg's rebuttal to the Bernanke's criticism yesterday.

Tyler Durden's picture

When you get a $1 billion revolver from the bank, it is still a 1 billion revolver (as in committed capital) even if you just use $0.01 of it.

In other words, the bank (or the Fed in this case), has put $1 billion at risk ($7.7 trillion in this case).

Melin's picture

What I never understand is why the incredible corruption is blamed on sleepy regulators with too few regulatory tools at their disposal.  If only there were more regulators and regulations, we'd finally get that "free market" we're pining for, right?

Get government out of the economy.  It's not possible to have free markets and government regulators just like it's not possible to have your cake and eat it too.

Tyler Durden's picture

It is not about regulation. What it is about is perverting the incentives of risk and reward. If failure is an option, there is no need for regulation. If failure is impossible, such as now, regulators merely aid and abet the death of pure capitalism.

But you are right: the less intervention, the purer the capital markets. Unfortunately, for a rent-seeking behemoth of a government (such as the one we have now which issued $100 billion in debt every two weeks), the only stable source of under the table revenue (read "lobby" or bribes) is the financial regime.

Which also is the government's handy scapegoat when things turn rough.

It is not Wall Street's fault government has become a monster, and more importantly, a monster which the people have let usurp all power in exchange for promises of (insolvent) welfare payments and mind numbing primetime TV.

What OccupyWallStreet and the rest have to realize is that while Wall Street is a symptom of all that is broken and flawed in modern society the cause, the real cause, is us.

But it is always easiest to point fingers...

High Plains Drifter's picture

yes it is our fault. the buck stops here as they say.  we fell asleep on the walls of the city and the enemy walked in. we are responsible. citizenship is a terrible burden , one that most amerikans do not wish to carry......when good men remain silent, evil flourishes.   we see now in the high places incarnate evil. evil men flourish and do what they want.  now they won't listen to us anymore. there is no redress of grievances. none. they do what they want when they want.  so it is. so it has been and so it will be.....

Mr Lennon Hendrix's picture

It is more than that.  We are cheering the evil man on as he destroys our city.  We are mad.  Mad on Fluoride, meth, and soda pop.  We got high off of the Pusherman's delivery, and we are addicted to the madness.  There is nowhere else to run, so now we laugh and laugh our balls off.

Element's picture


Wall Street is just a lowly parasite eeking out a misery-creating 'living' within Rothschild's central banking butt-crack.

We have it on record that the Rothschild's always intended to create central banks which lend to Govt, especially and particularly to Govt, specifically to capture a political system and national finances, to milk the country dry. Who watches the watchers if the Govt is regulator and also the biggest client?

That's how this whole game got rolling.

All that's different this time, is the TBTFs created massive private debts first, via central bank policy, with a dupe's (GW Bush) nod-and-wink, then they bought down Lehman's via shorting it, to get a 'systemic crisis', then the Govt of GWB took Hank Paulson's Henny-Penny demand and turned these deliberately created unrepayable private debts on BANK balance sheets, into public debt obligations on the taxpayer's balance sheet.

This is the kind of debt with direct political and systemic strings and which the really big boys who own the central banks LOVE to milk to death.

Private debt just means the bank is porked if you default.

Public debt can be bled dry for decades

(so no, they will not actually want any sort of political Frau Merkelesque EU intervention or treaty where deficits don't grow larger than REAL GDP, so they'll ensure this does not come about politically, or succeed if it does--it's still print or snuff for eurolande)

So the real trick is to force govt to keep borrowing and selling assets for penny's on their printed $$$.

Govt is the sucker, the paid dupe and the traitor, yes, oh yes, but the Govt is not the criminal mastermind behind it all.

Look deeper into the butt-crack and you'll find who is ... (though best to not point a finger still).

SWRichmond's picture

So the real trick is to force govt to keep borrowing and selling assets for penny's on their printed $$$.

Asset-stripping the taxpayer.  Exactly.

SWRichmond's picture

Tyler: Reposting by popular demand, and because everyone has to understand the embedded risks in this market, courtesy of the shadow banking system.

This article is a great one, and is one everyone should read.  I'm sending to everyone who hasn't pissed me off lately.

Zadok's picture

+100 green arrows for you Tyler!

Can we also dispense with the articles that seem to have the premise that the Federal Reserve is trying to do good but...?

The enemy is us, unfortunately the 'us' is a bit loosely termed because I don't recall hearing much of what needed to be said, nor have I supported in any way what has happened.  

However, I am enduring the consequences of this reality.  


Zadok's picture

Can we dispense with one more thing, technical analysis in the context of utterly manipulated markets.  We might as well have a water witch cross the wires over the Bernank's head to discern the future of the market.  Manipulation of the market is to make it do something it would not otherwise do, that negates the very purpose of technical analysis which is to discern what the markets will do.  

In the absence of agreement on this, I will just resort to ignoring nonsense.  

Sorry, may be a bit off topic.  

Good article, thought provoking and interesting new information.

Thanks ZH.

Tyler Durden's picture

People enjoy the illusion of control that patterns provide.

Hence charts.

CvlDobd's picture

I see a lot of charts here.

I use charts but I do not believe they have any predictive value. Just risk to reward setups. Markets are gonna do whatever TPTB want. I just try to lower the risk with the chart when entering a position.

Mr Lennon Hendrix's picture

Knowing the manipulation makes reading charts easy.  If you know when they like to sell (like yesterday) then you know when they will sell.  I will explain:

When you see the price of the Trinity drop (gold/silver/platinum) in unison, equitie will follow.  Easy trade; it has worked since before the Flash Crash.

When you see the Trinity rise in unison, equity will rise.  It has worked since the "Spring" of '09.  Easy trade.

Get some.

Deo vindice's picture

We're really in uncharted waters. Who has a chart for that?

Calmyourself's picture

I use and understand charts to know what happened their predictive value has become null..

giddy's picture

...that's if one only sees established patterns... true analytics is seeing things anew... can't put new wine into old bottles... or 2011 data into 2006 models...

flattrader's picture

I don't know which of the Tylers is "speaking" right now, but I'll assume it is the "well-conditioned" Tyler.

I know the the predator class has completed its work when they get us to blame ourselves.

Yes, if we blame the victim, the perp ultimately walks free.


Totentänzerlied's picture

He who cannot command shall obey. The people refuse to command thus they obey. Our masters know the wisdom of these words, and we live the result.

That a victim is not always innocent is no contradiction, particularly when the victims outnumber their attackers by many orders of magnitude.

wandstrasse's picture

the cause, the real cause, is us.

normally it is blatant sycophancy to support arguments of the boss, but this time I simply HAVE TO. The root cause for all this mess is a population (including myself) which exchanged artificial wealth (out of the debt printing press) for their future and their freedom. Both is lost now. How conscious was the population about what happened? How conscious could they/we have been, 20,30,40 years ago? I have no idea.

OldPhart's picture

I was more comatose than concious over the last thirty years.  However, I was always someone who had little fondness for credit and paying interest.  I'm 52 and got my actual first credit card about seven years ago.  Up until the debit card system I paid cash direct or bought a twenty-five cent money order.

In my twenties my caution was reinforced when others convinced me to use travelers checks on a trip.  Trying to get those suckers accepted without making a $20 purchase was virtually impossible.  It ruined the trip and cured me of the use.

I bought my first actual new car at the age of 35, at a fixed rate, at a payment I could afford.  I bought a house with $0 down, for $75k in 1998 at 7.5% fixed 30 year.  At the close I wound up getting $1,500 in cash somehow.  Since then I've never pulled equity, couldn't even conceive of it, never refinanced, never did much at all.  My payment with principal, interest and insurance runs less than $750 a month.  I have no second, and have been paying $800 to $1000 per month to bring down the cost of interest as fast as possible.

We've never bought big boy toys.  Didn't buy our first computer until the prices had dropped into the hundreds of dollars instead of thousands.  And didn't buy the kids video games until those prices had dropped quite a bit, too.  When we did buy we paid cash or used the debit card cash equivalent.

My 2005 car was paid off early by paying more than required.  The 1948 truck was a gift from my dad (since it's what I learned to drive in), my youngest son was given a truck by his grandparents as they retired to cruise the world.  My oldest son has had the luck of Midas due to skill, hard work, dedication, and taking advantage of legitimate opportunities his character opened up.

I purposefully took a job near home, foregoing about $50k annually, so I could do things I wanted with those I want to be with.  I live like I make less than $40k per year though I make about half as much more because that's how we've been living since I was 18.

We are, and will always be, considered the white trash in the neighborhood because we have little concern for image.  My front yard is desert sand, literally, because I don't want to pay to water grass. 

Last time I peeked out the backdoor the backyard was a mess of tumbleweeds, dried up sticks and random shit blown in. 

We use a wood fireplace for heat because I can get through the winter with three and half cords of wood that costs $500 if I buy all at once.  Otherwise I'd be shelling out $12k to replace the internal AC/heater.  In the summer we use fans and open windows to cool off.  Granted, it gets miserable around 120 degrees...but it's a dry heat.

As my mother in law was dying I checked into a HELOC for emergency use.  They wouldn't even consider it for the relatively tiny amount I was asking for.  During the years that banks were throwing credit at people in the form of home refi's I'd occassionally waste somebody's time getting into the details of the loans they proposed.  Around 2005 my $75k home had a 'value' exceeding $360k.  I just wanted to transfer my outstanding principal and pay a lower interest rate.  They wanted me to draw a minimum of $20k out and I'd get 6% interest.  No deal.

Now my house has a 'value' of about $100k, realistically sell for $75k, and I owe around $43k (citimortage played around quite a bit with my extra payments until I started paying attention).

The point is we weren't extravagant, we didn't borrow excessively, we bought a home to live in not as an investment, and we plodded along unglamourously until we are one of the few families here surrounded by a sea of foreclosures.


We had no strategy.  We couldn't figure out how people half our age were able to afford a house, cars, toys, big screen TV's, etc.  Made us feel bad about ourselves for the longest time and even had marital strife over it.  In short, we were comatose for twenty five years or so.  And what we did see confused the shit out of us.  It just didn't seem right somehow.

The bail out early in 2008 (forget who it was) shook me to groggy conciousness.  The bail out at the end of 2008 was a bucket of ice water on my back.  I woke up and was pretty pissed about being woken up that way.  Since then I've been trying to learn all the stuff I tried to avoid.

I've been to countless websites every night, initially jumping inand arguing only to get my ass handed to me, neatly, for being a dumb-ass.  Then I started listening and learning and paying attention.

Of all the sites I've been to, countless times, since November 2008 the quality of commenters, contributors, and the moderator, Tyler, blew me away with the depth of obvious depth of knowledge and the level of arguments made.  I lurk here throughout the day and most of the night.

At the moment I have three loans to be paid off.  The mortgage and two student loans.  One of which will be paid off next Friday, the other has about $1,200 left and I'll start applying the paid off loans payment to it in addition.  So that should be done around June.  Then those payments will be added to the mortgage.

According to the original amortization schedule, my mortgage balance puts it into somewhere in 2017.  My next goal is to start pushing actual monthly payments ahead rather than just pay down principle.  If I make two or three additional full payments per year, that gives me an increasing buffer in case something happens.  Citimortage doesn't care what the principal balance is (well, they do because they want to steal my equity), they only care that monthly payments are accounted for.

I am a financial dumbass. 

All the products, structures, abbreviations, returns, ratios...are all the equivalent of my five years of spanish back in the Stone Age.  Familiar, misty, often garbled and long forgotten.