Or does everyone still think there’s a solution to this mess? I just think it hasn’t gotten painful enough yet. Not that I’m any fan of pain, understand. I think everyone is still way too comfortable with things “the way they are.” Why do I say that? Well, nothing’s changed, has it?
In case you’ve been living under a rock, it’s been revealed that securities regulations galore were broken by MF Global, and those violations contributed mightily to the bankruptcy. Some $1.2 Billion of supposedly “segregated” client money is “missing.” Well, isn’t it obvious that it was stolen, most likely by the people who had access to it, took it out of the accounts, and then continued to send out statements that indicated it was still there? Is that “legal”? Does anyone in high finance know what “legal” means anymore? Does anyone care?
We are four years into the greatest financial calamity in human history, and not one single person in any high position of responsibility in the banking industry, including people who have stipulated in Grand Jury hearings that they knew they were committing fraud on a massive scale, has been prosecuted, let alone convicted or jailed.
The MF Global bankruptcy has demonstrated yet again that insiders and big banksters can steal anything they want without fear of retribution. Oh yes, Jon Corzine is going to be called in front of a CONgressional inquiry, and rest assured CONgress will tell Mr. Corzine they are very angry at him, and they really really mean to get to the bottom of this, and there will be lots of CONgressional faces making lots of definitive statements for the cameras. But nothing will happen, the money is gone, the perps walked (away.) The bankruptcy Trustee has locked up the clients’ remaining funds while the margin calls (calls to those very same clients for additional funds) continue. To call the conduct of this affair “reprehensible” just really doesn’t do it justice.
This affair has destroyed confidence in the commodities markets, where MFG was a player. Perhaps that was the intent: wave after wave of selling has hit many commodity prices. The money, plus money from the Eurozone, is being frightened into…U.S. Treasuries.
In a very related matter, the “Super Committee” failed, as I assured you it would, to come to any agreement on cutting the deficit. It was supposed to fail. It was never meant as anything other than a technique to kick the “deficit crisis” can down the road and head off another impending U.S. debt downgrade. Mission accomplished. The only people who look stupid are the ones who believed it in the first place. The Republicans are already talking about how they will change the law to prevent any meaningful cuts from the defense budget that might otherwise take place under the “automatic cuts” regime. Some automatic cuts, huh? Expect the Dems to rally their forces for a similar effort related to protecting federal entitlement spending. CONgress promised to cut, and no cuts materialized. Ho hum, just another day in America. And that’s that. Where’s the outrage?
The game has always been: last man standing wins. The U.S. is still abusing, and still able to abuse, its position as issuer of the debt-currency of last resort, the USD.
The Eurozone is in full blown banking crisis. In other posts we’ve covered the EZ’s actual needs for new capital and the increasingly outlandish lies they’ve told in recent weeks about where the money was going to come from; in a video interview on CNBC now available on Zerohedge, one analyst states flatly “1 Trillion [Euro, leveraged four times] is not even close” to what they need. When you hear the words “a liquidity run that’s market-driven,” is it time to drive to the bank?
Note in the video how Italy and Spain’s ten year bond yields have recently smashed through the 6% barrier, widely viewed as the breaking point, joining Greece, Ireland, and Portugal [edit: thursday, Belgian ten-year yields have just spiked to 5.72%, having been as low as 4.3% two weeks ago). Remember, the yield on the U.S. ten year is currently two percent, and we are paying about $400 Billion per year in interest expense. Imagine what would happen if our interest rate tripled! It’s simple arithmetic that even Eric Cantor can do. The next time we need funding and there’s no foreign crisis to scare money our way, what will we do? Print, baby, print! That is what many “economists” in Europe are demanding the European Central Bank do.
Change is coming. I promise. Does anybody care?
Here is Bill Black doing a “teach-in” at Occupy LA: