• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

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

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Thu, 12/08/2011 - 00:17 | 1957225 Starving Artist
Starving Artist's picture

Brilliant essay, thank you for shining some light on these dark pools

Thu, 12/08/2011 - 00:17 | 1957226 Akrunner907
Akrunner907's picture

So why isn't John Corzine sitting in a jail cell with Kweku Adoboli?   

Thu, 12/08/2011 - 00:32 | 1957268 Doomer
Doomer's picture

Cuz our Prez is a coward.

When he said "change", what he meant was there would be CFLs in the White House instead of those evil incandescents.

The White House already has one too many dim bulbs.

Thu, 12/08/2011 - 02:00 | 1957468 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Nope.

Cuz Erin Andrews is SMOKIN' HOT and no one cares if some people lost some money cuz everyone has been losin' money for years now.  Just went to Ross and got some fresh kicks, yo!

Thu, 12/08/2011 - 00:43 | 1957303 surf0766
surf0766's picture

How about all the enablers of the crash. Where are they? Will they too go to jail? Anyone? Anyone? B....

 

Thu, 12/08/2011 - 00:57 | 1957334 High Plains Drifter
High Plains Drifter's picture

they just throw the dotheads under the bus if someone has to go down for this mess. no problem. 

Thu, 12/08/2011 - 01:19 | 1957385 DOT
DOT's picture

Hey, lay off my peeps.

Thu, 12/08/2011 - 02:01 | 1957471 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Sheeeit.....back up off me!

Thu, 12/08/2011 - 02:48 | 1957552 Clowns on Acid
Clowns on Acid's picture

I have been asking that very "where is Jon Corzine " question for 6 weeks.

 

Thu, 12/08/2011 - 08:06 | 1957778 Sandmann
Sandmann's picture

running away from John Galt !

Thu, 12/08/2011 - 19:49 | 1961164 ejhickey
ejhickey's picture

2.47 km  !!!

Thu, 12/08/2011 - 00:22 | 1957227 Doomer
Doomer's picture

In Frankfurt, Merkel is saying to Turbo Timmy "Dieser Sauger könnte sinken!"

Thu, 12/08/2011 - 02:01 | 1957473 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There will be four German guys that understand that, and I ain't one of 'em.  Speak 'Mercan, damn it!

Thu, 12/08/2011 - 08:53 | 1957868 The Reich
The Reich's picture

You'll never get it, Sauger!

Thu, 12/08/2011 - 04:09 | 1957625 malek
malek's picture

google-translated scheint mir?

Thu, 12/08/2011 - 05:38 | 1957682 NoClueSneaker
NoClueSneaker's picture

Rüschtüsch .... Denglisch vom feinsten ...

Angie won't say a thing. Dr. Wolfgang Strangelove Scheuble will have to lick all the stuff he vomited on Timmay three months ago, and simply allow turbo-printing, either ECB or Bundesbank manner ....

TINA whores again.

Thu, 12/08/2011 - 00:23 | 1957231 SWRichmond
SWRichmond's picture

I'm currently about a third of the way through this and already I am thinking "DTCC, stocks in my IRA portfolio, held in some "custodial" account for me....ha fucking ha.

 

Edit: So JPM rehypothecated $500 Billion?  Time to buy more physical.

Thu, 12/08/2011 - 10:06 | 1958103 SWRichmond
SWRichmond's picture

Woke up and finished reading it.  There seem to be a few simple lessons that we've learned before, but this piece is incredibly important, it hammers them home, and pulls together some other events. 

  • If you're going to panic, panic first.  You'll get the assets, and they won't be there when the next panicker comes along and tries to get them.==> trust is dead.
  • Hide the assets somewhere they can't be "clawed back" a la JPM's proposed MFG distributions.==> the GPS / shovel combo is your friend.
  • Ann Barnhardt is right: If you can't stand in front of it with an assault rifle and defend it, it isn't yours. ==> the rule of law no longer exists.
  • Molon Labe, bitches.
  • I need to expand my garden.
Thu, 12/08/2011 - 19:48 | 1961162 ejhickey
ejhickey's picture

use space bags.  air tight seal.

Thu, 12/08/2011 - 00:21 | 1957235 Potemkin Villag...
Potemkin Village Idiot's picture

Are you getting it? Really getting it?

http://www.youtube.com/watch?v=tBj5neka5Zw

Thu, 12/08/2011 - 00:34 | 1957276 Doomer
Doomer's picture

I'm turning it up to 11!

Thu, 12/08/2011 - 00:23 | 1957242 High Plains Drifter
High Plains Drifter's picture

hypothecation is a really kule word isn't it?   

Thu, 12/08/2011 - 00:35 | 1957279 CvlDobd
CvlDobd's picture

Reminds me of Apothecary.

Thu, 12/08/2011 - 00:47 | 1957316 High Plains Drifter
High Plains Drifter's picture

i never learned anything about hypothecation or churning in business school. back in the early 1980's.....

Thu, 12/08/2011 - 08:05 | 1957774 Sandmann
Sandmann's picture

What School did you go to ? Most people were aware that using the same collateral with different lenders was not a great business practice, but it was bankers that frowned on manufacturers doing it......you know the lovely British stunt of Fixed & Floating Charge over a Company's Assets to stop them multiply hypothecating and subordinating senior debt holders

 

Maybe your Business School hadn't heard of Balance Sheets and was just fixated on Income Statements !

Thu, 12/08/2011 - 02:24 | 1957514 Caviar Emptor
Caviar Emptor's picture

Gentleman, Apothecary, Plowboy, Thief

Thu, 12/08/2011 - 00:42 | 1957297 Doomer
Doomer's picture

It's totally k

ühl!

Thu, 12/08/2011 - 00:25 | 1957248 navy62802
navy62802's picture

Fractional reserve banking in any manifestation is a fraud, and I'll always believe that. It still blows my mind that this system of banking survived the Great Depression. But then again, I guess it shouldn't surprise me. Because without it, the bankers wouldn't be able to cut the truly astounding profits they have over the past century. Thus they pulled no punches in making sure that the system survived the Depression.

Thu, 12/08/2011 - 02:03 | 1957475 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They pull the number out of a hat.  The amount of leverage in a given system is not scientific.  Why ten?  Because that is what the smart guys in the room say.  I call bullshit!

Thu, 12/08/2011 - 02:29 | 1957522 Caviar Emptor
Caviar Emptor's picture

But remember, after The Great Depression there was Glass-Steagle. Until it was repealed in 1998. 

And in the case of MF GLobal, they were confined to sweeping customer money into ultra-liquid assets, until CFTC Regulation 1.25 was amended in 2004 and again in 2005, allowing them to dabble in Euro sovereign debt and hypothecate in London.

And until Paulson approved 40:1 leverage for banks starting in 2000

On and on down the slippery slope we went

Thu, 12/08/2011 - 05:48 | 1957687 Sandmann
Sandmann's picture

Yes but Glass-Steagall was repealed because after London "Big Bang" in 1986 US banks had reconstituted themselves in London as Universal Banks and decided it was time that Sandy Weill get made legit, for his takeover of Citicorp to merge Travelers and Salomon - oh, and didn't he have a sidekick called Jamie Dimon whose Daddy had been a good friend of Sandy ?  Anyway, the Republicans were paid to vote out Glass-Steagall in return for the Democrats being alloweed the Community Reinvestment Act and hey presto, the way was open for retail banks to own CMOs with depositors' cash and fill their Mutual Funds up with Toxic Coolaid products

Thu, 12/08/2011 - 08:54 | 1957872 flattrader
flattrader's picture

>>> alloweed the Community Reinvestment Act<<< ???

Uh, you might want to do a simple Google search.  Even consult wikipedia.

The CRA was around well before the repeal of Glass-Steagall

Thu, 12/08/2011 - 00:26 | 1957251 lizzy36
lizzy36's picture

One wonders if anyone congressmoron will ask Corzine or any regulator/facilitator about hypothecation and rehypothecation tomorrow.

We all know the hedge funds read ZH, wonder how many are drunk dialing their Prime Brokers right now.

Thu, 12/08/2011 - 00:48 | 1957318 surf0766
surf0766's picture

They will sit and chat and 30 seconds before each ones' time runs out they will ask some half assed question .

How was your danish? Then we are supposed to believe they are doing someone's work, just not ours.

This crap ain't gettin' fixed. There is too much dam greed and corruption from all sides.

 

 

Thu, 12/08/2011 - 00:48 | 1957319 High Plains Drifter
High Plains Drifter's picture

i bet those morons won't touch it with a ten foot pole...

Thu, 12/08/2011 - 02:08 | 1957484 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Politicians don't know what it means, they barely know what any term means, they will have to wiki it, and that still won't answer it for them. 

Politicians are MORONS.  They don't understand shit!  They are snakes that made it to the top of the snake pit due to chance, because, after all, some snake had to be King of the Snake Pit.

Thu, 12/08/2011 - 06:05 | 1957701 UP Forester
UP Forester's picture

C'mon, politicians be smahrt!

http://www.youtube.com/watch?v=zNZczIgVXjg

Thu, 12/08/2011 - 00:27 | 1957253 Theta_Burn
Theta_Burn's picture

As long as those responsible are held to account, I'm good with it...

Thu, 12/08/2011 - 02:09 | 1957487 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

DUAL!

Thu, 12/08/2011 - 00:27 | 1957256 lolmao500
lolmao500's picture

CIBC and RBC blowing up would sure finish the other banks in Canada.

Thu, 12/08/2011 - 01:31 | 1957411 Terminus C
Terminus C's picture

Canada would be totally fucked.

No worries though... the tax payer would be dragged to the rescue at gun point.  BoC is controlled by Goldman, tis all part of the plan.

Debt slaves bitchez.

Thu, 12/08/2011 - 17:08 | 1960587 ucsbcanuck
ucsbcanuck's picture

Try telling Canadians that. Most Canadians sit around with false pride: "We're sooo much better than everyone else."

Thu, 12/08/2011 - 00:29 | 1957260 alagon
alagon's picture

Under fractional reserve lending, it would be wise of everyone to become a banker.

Thu, 12/08/2011 - 00:36 | 1957280 Potemkin Villag...
Potemkin Village Idiot's picture

Sure...

But face it... You're goin' SERFIN'

http://www.youtube.com/watch?v=l2sfev-gu3I

We'll all be SERFIN soon...

http://www.youtube.com/watch?v=2s4slliAtQU&feature=related

 

 

Thu, 12/08/2011 - 02:31 | 1957527 Caviar Emptor
Caviar Emptor's picture

The easiest way to rob a bank is to own one

Thu, 12/08/2011 - 00:31 | 1957266 CvlDobd
CvlDobd's picture

25% seems like a high estimate for what's backed by quality assets. It's all shit.

Thu, 12/08/2011 - 00:32 | 1957270 Carpathia
Carpathia's picture

Well worth the time to read.  MF Global is the modern day equivalent of the Credit-Anstalt collapse in 1931 the caused the last depression.  Plus ca change...

Thu, 12/08/2011 - 10:14 | 1958154 Catch-22
Catch-22's picture

... plus c'est la même chose (plus c'est pareil? CAN). And yet, folks in the great white are not ready for this. It's been spring for the last decade... I hear.

Thu, 12/08/2011 - 20:29 | 1961294 N57Mike
N57Mike's picture

.... like that name Carpathia.... the ship that picked up the survivors of the Titanic; who will be the one that picks up the life boats & survivors of the biggest financial disaster to ever hit this material world?

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