A Run On The Global Banking System - How Close Are We?

[neilgin1]

(friends, this is a must read, it buttresses my shrieking and caterwauling about getting out of all paper NOW!)

excerpts:

"Nine weeks after its bankruptcy, the general public still hasn’t quite realized the implications of the MF Global scandal.
My own sense is, this is the first tremor of the earthquake that’s coming to the global financial system."

"Brokerage firms hold clients’ money in what are known as segregated accounts. This is the money that brokerage firms hold for when a customer makes a trade. If a brokerage firm goes bankrupt, these monies are never touched—because they never belonged to the firm, and thus are not part of its assets.
Think of segregated accounts as if they were the content in a safety deposit box: The bank owns the vault—but it doesn’t own the content of the safety deposit boxes inside the vault. If the bank goes broke, the customers who stored their jewelry and pornographic diaries in the safe deposit boxes don’t lose a thing. The bank is just a steward of those assets—just as a brokerage firm is the steward of those customers’ segregated accounts.
But when MF Global went bankrupt, these segregated accounts—that is, the content of those safe deposit boxes—were taken away from their rightful owners—that is, MF Global’s customers—and then used to pay off other creditors: That is, JPMorgan."

"The Chicago Mercantile Exchange, which handled the bankruptcy, should have done this—but instead, the Merc was more concerned with making JPMorgan whole than with protecting the money that rightfully belonged to MF Global’s 40,000 customers.
Thus these 40,000 MF Global customers had their money stolen—there’s no polite way to characterize what happened. And this theft was not carried out by MF Global—it was carried out by the authorities who were charged with handling the firm’s bankruptcy.
These 40,000 customers were not Big Money types—they were farmers who had accounts to hedge their crops, individuals owning gold (like Gerald Celente—here’s his account of what happened to him)—"

"Now, what does this mean? It means that nobody’s money is safe."

http://www.zerohedge.com/news/guest-pos ... ose-are-we

[barrytrot]

So because one of several companies is clearly doing illegal things then all companies are? Actually, you may be right, many probably are. One could choose a firm that does not do any of it's own trades, but my guess is none exist. Although that may be a good business plan, "we do no trades, we just protect you." I think people would flock to that!

Anyway, interestingly, Canada prevents firms, even MF Global, from using customer funds in any way, and thus all the Canadian clients of MF Global received their money quickly and in whole.

Also, it wasn't all the money taken, "only" about 22% (something like that). So if they were trading profitably they may still be ahead of "physical".


Paper of various types has a LOT of earning power and if all companies don't collapse then it's the better investment with smaller premiums and several more tools to earn income.


Also, Neilgen1 do you realize how horrid life will be once they all do collapse? Do you really think the government won't just seize all gold and silver to keep themselves afloat for a few more weeks? Of course they will.

So why take your money out now, what's the difference? If you are correct and everything collapses then you aren't safe anyway. So why not hope for only "partial collapse" and earn money investing?

[JJM]

Never underestimate the ability of TPTB to paper over problems. 2012 could pretty easily be a repeat of 2011 here in the U.S. Bank runs are coming, but I've no clue how soon, where, or for how long...

I realize the implications of the MF Global fiasco, but your average citizen remains asleep, and doesn't want to hear about it when they do wake up.

Praise the Lord for open eyes!

[Lemon Thrower]

i have liquidated most of my stocks, and i'm moving anything else to DRS.

closing my no-frills brokerage account and moving stuff to a higher service one.

[neilgin1]

Never underestimate the ability of TPTB to paper over problems. 2012 could pretty easily be a repeat of 2011 here in the U.S. Bank runs are coming, but I've no clue how soon, where, or for how long...

I realize the implications of the MF Global fiasco, but your average citizen remains asleep, and doesn't want to hear about it when they do wake up.

Praise the Lord for open eyes!

amen, all Glory and Praise to the Lamb Who was slain, for by the Blood of the Lamb, we are cleansed of all sin and unrighteouness. yes! and amen. JJ, you could be right, they want the elections to go smooth, but the only check in the Spirit , i get is a false flag event, so that people rally around Barry O., the little community organizer who could....and BarryTrot, you remind me of a family member, a dear friend, who was having a diabetic meltdown in the middle of our crew's bull session, who squealed, "would you guys stop this 'end of the world' talk!!" to which i replied, "sure, except it wont be THE end of the world, it'll just FEEL like it".....then i left his urban brownstone, to travel the many many miles back to my ranch in the wildwood, township population density. 6.9 per square mile, which is strange considering i know all seven, and they didnt count me. Five of them, i spent Christmas Day with, and the other two are snowbirding in climes south, before which they gave me their ranch keys and said "if 'anything happens', feel free to use our stuff". so i do pray, there are enough signs of collapse prior, that my loved ones, finally listen, and make it to Zion, and if you think i'm weird, or sowing "chaos" as you once wrote..oh well, so be it. i might disagree with you, but i would happily give my life defending your right and freedom to speak as your heart leads, WOULD to God this country go BACK to the Constitution....doesnt look like that will happen though.

[beauanderos]

I just killed my 401K contribution totally for next year. Who cares if they match 50% of the first six percent if the entire system is in chaos and currency is at risk of worthlessness. I'm just hoping for a precious metals rally at some point soon (2012) so that I can at least break even on my investments (bets!) and pull what remains to go physical. I trust the word of Gonzalo Lira, he's lived thru what most of us can only surmise with dread.

[neilgin1]

I just killed my 401K contribution totally for next year. Who cares if they match 50% of the first six percent if the entire system is in chaos and currency is at risk of worthlessness. I'm just hoping for a precious metals rally at some point soon (2012) so that I can at least break even on my investments (bets!) and pull what remains to go physical. I trust the word of Gonzalo Lira, he's lived thru what most of us can only surmise with dread.

Raymundo, mazel and good fortune in that work around, i too, find myself fond of some the finer thinkers coming out of Argentina, lotta wisdom there, hard fought.

[Cu Penny Hoarder]

Moving to a different or "more trustworthy" brokerage will not protect you. When the system crashes all brokerage accounts, 401k's, IRA's, banks accounts, CDs, annuities and every other paper instrument/product will be inaccessable or gone altogether.

That leaves cash and PMs as the only choices. All fiat currencies go to zero eventually, so that really means you only have one choice.

I feel for people that have large amounts of cash locked in their 401k/IRA account. The only way you can access the money is if you quit your job, or borrow against it. I liquidated all those things 2-3 years ago.

[barrytrot]

When the system crashes all brokerage accounts, 401k's, IRA's, banks accounts, CDs, annuities and every other paper instrument/product will be inaccessable or gone altogether.

Not everyone thinks it's "when". So don't assume you are 100% correct. Neilgen1 and others have been saying, "abandon all hope and paper" for several months and the situation is by-and-large identical and still no where near "zero-hour".

"if" is much more appropriate.

Also, the method of crash could be any number of things, many of which would not invalidate all "paper".


EDIT: I'm sure the time since "abandon all hope and paper" has been said is more like 10+ years for many. And, thus far - Quite a bit of hope remains!

[Sheikh_yer_Bu'Tay]

I think the most devastating aspect of the MF Global debacle is who is cannibalizing the personal accounts. It is not MF Global, it is the very controling authority investors thought would be the guarantor of their accounts. This is similar to what happened in the 30's. This time around it is the very institutions set up to protect investors that are harming them.

What will suffer most as collateral damage in the MF meltdown is faith in the marketplace itself. Slowly, consumer confidence will dwindle away and investors will stop investing. The day will come when you can buy the Dow for an ounce of gold again. When that day comes, it will be the best time to buy stocks. It will be up to you to wisely invest in the right ones. The safety nets are proving too weak to stop the fall.

There are still good investments to buy, and I may start buying when prices drop a little lower..... but buyer beware. You are on your own again. Buy with money you can afford to lose.

Edit: Oh, and another thing... if Gerald Celente is such a great trend forecaster, why didn't he see this one coming?! He personally predicted a global meltdown for 2011 in 2010, or was is 2009? If he believed his own words, how did he lose so much?

[beauanderos]

Oh, and another thing... if Gerald Celente is such a great trend forecaster, why didn't he see this one coming?! He personally predicted a global meltdown for 2011 in 2010, or was is 2009? If he believed his own words, how did he lose so much?

Celente didn't "lose" anything. The monies in his accounts was STOLEN from him. I guess you're trying to imply that all 40,000 account holders at MFG were idiots for believing that the clearing house was honest? It was Corzine who pulled the wool over their eyes, not the business entity.

[Cu Penny Hoarder]

When the system crashes all brokerage accounts, 401k's, IRA's, banks accounts, CDs, annuities and every other paper instrument/product will be inaccessable or gone altogether.

Not everyone thinks it's "when". So don't assume you are 100% correct. Neilgen1 and others have been saying, "abandon all hope and paper" for several months and the situation is by-and-large identical and still no where near "zero-hour".

"if" is much more appropriate.

Also, the method of crash could be any number of things, many of which would not invalidate all "paper".


EDIT: I'm sure the time since "abandon all hope and paper" has been said is more like 10+ years for many. And, thus far - Quite a bit of hope remains!

The only paper I will continue to hold and believe in is toilet paper.

Good luck to you.

[Sheikh_yer_Bu'Tay]

Oh, and another thing... if Gerald Celente is such a great trend forecaster, why didn't he see this one coming?! He personally predicted a global meltdown for 2011 in 2010, or was is 2009? If he believed his own words, how did he lose so much?

Celente didn't "lose" anything. The monies in his accounts was STOLEN from him. I guess you're trying to imply that all 40,000 account holders at MFG were idiots for believing that the clearing house was honest? It was Corzine who pulled the wool over their eyes, not the business entity.

Yeah, I guess you are right. It was stolen from him.

[mongo]

Went home over the holiday and was talking to a friend of mine who is a futures and comodities broker. He personally lost all of his commisions for the month of October and is waiting to see if hes going to get any of it back. Guess what ? He was going thru a trader group who was going thru MF Global and he told me that it was some executives covering for JP Morgan because they were into JP and friends for about 1.2 Billion. If I misunderstood my friend im open to facts and truth. But would someone tell me why there arent a whole bunch of people who should be in jail right now for theft of other peoples money ? I welcome all informed opinions and views but it seems like all the big boys are watching out for each other and the hell with the little guy helped them make their billilons. PFG ( Pretty freaking greedy ) and zero integrity.

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Mongo

[camtender]

but it seems like all the big boys are watching out for each other and the hell with the little guy helped them make their billilons. PFG ( Pretty freaking greedy ) and zero integrity.

Sort On
Mongo

Exactly, the tone at the top. This has little to do with MF Global, and much more to do with the response to MF Global by govt regulators and the BK courts. In a fiat money system, if confidence is lost, what else is there? Nothing.

[inflationhawk]

If there is some sort of "run on the bank" you can bet cash will be king and the US dollar will soar in value initially. Calamity in the last several decades has always meant run to the stronger currency, not the strongest commodity. It will take a long time for the US dollar to turn to toilet paper as many people predict will happen. The best scenario for PMs is not a banking crisis, but the slow perpetual devaluation caused by multiple stimulus packages. Sudden shocks like 2008 will result in PMs plummeting in value in the short term. I much prefer the steady predictable process of devaluation through stimulus. If you plan for it and see it coming, you can do very well with your personal finances. Sudden crisis and calamity does no one any good except if you are holding cash which most of the time is a losing proposition. I believe we have at least one more round of stimulus coming pre election and this dip in PMs will be temporary. If Obama gets re-elected, we could be in for a big spike in PMs and a bubble. If Romney gets it, I see the end coming for the PM rally and I would expect a more Harry Dent type scenario of deflation and debt write downs and an end to hopeless stimulus to cover up the massive debt issue.

[neilgin1]

I believe we have at least one more round of stimulus coming pre election and this dip in PMs will be temporary. If Obama gets re-elected, we could be in for a big spike in PMs and a bubble. .

good word, Hawk......if Barry gets re-elected, lets not forget 2nd amendment issues either, in the first election, first term, he had to protect his right flank, 'blue dawg' Dem's, if he gets a second term, thats when he might make a move on the 2nd amendment. just my read.

[mongo]

I for one am hoping and praying that B.O. doesnt get reelected. " The best thing we can hope for is that in 2012 there is a change"

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Mongo