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December, Tuesday 06, 2011


DOW + 52 = 12150
SPX + 1 = 1258
NAS – 6 = 2649
10 YR YLD +.04 = 2.09%
OIL +.21 = 101.20
GOLD + 6.20 = 1729.40
SILV +.68 = 32.86
PLAT + 6.00 = 1532.00
The single most important thing you need to know today: The Green Bay Packers have offered 250,000 shares in the franchise for sale at $250 per share. They’ll use the money to make improvements to Lambeau Field. That brings the total number of shares outstanding to 5 million. The max you can buy is 200 shares. The shares are not traded on an open market. The shares don’t pay a dividend; the value doesn’t change; it is difficult to transfer shares, unless somebody dies or something – maybe it is a good investment. Our technical director, James Tidwell, a true cheesehead – tells me this is important.
What else is going on in the world? Oh, Financial Armageddon, collapse, redemption, recovery, betrayal. Another quiet day.
Let’s start with Financial Armageddon. It did not happen today. Despite the fact that Standard & Poor’s threatened to downgrade 15 European countries to negative outlook or actually cut their ratings or even call them bad dressers. The markets shrugged off the ratings agency threats like water off a ducks back. S&P pushed their point – they might downgrade the powerful countries of France and Germany. Yawn. Shrug. They might even downgrade the European Financial Stability Facility. Which was met with derision. Now, the markets seem to think credit downgrades are really nothing to worry about. History suggests the markets rally after a downgrade. Remember the downgrade of the United States? It didn’t predict nor cause a crisis in debt or equities. So, “neeener, neener”.
A German newspaper reports the 17 euro zone national central banks could pay at least $134 billion into a special fund that the International Monetary Fund could use for programs for nations struggling to control their debts. Also other central banks, for example the U.S. Federal Reserve, are apparently prepared to finance a part of the costs. One senior euro zone official has said that no amount had been discussed at the political level. They’ll figure out how much money to print on an as-needed-basis. I’m sure it will all work out beautifully.
On Nov. 27 Bloomberg News reported that big banks reaped an estimated $13 billion of income after the Federal Reserve committed $7.7 trillion in funds as of March 2009 to rescuing the financial system. Today, Fed head Ben Bernanke said the news reports made “egregious errors” about the size and impact on Americans of the Fed’s emergency lending during the 2008 financial crisis. In a letter to the Senate banking committee, Bernanke said the numbers were “wildly inaccurate,” and total credit outstanding under the Fed’s liquidity programs was never more than the $1.5 trillion peak reached in December 2008.
Helicopter Ben said: “To be sure, that is a very large amount, but it was necessary to ensure that the crucial mistake made during the Great Depression–failing to prevent the collapse of the financial system–was not repeated,” then he added, “Seriously, they haven’t made a helicopter big enough to carry that much cash.”
You’ve got to admit Ben makes a good point. If you used helicopters to drop $7.7 trillion in cash, the choppers would have a traffic jam in the sky over Wall Street. If you wanted to dump that much cash, you’d have to have multiple helicopters flying all over America, dumping cash on Main Streets all across the land – clearly that did not happen!
Hey, wait a minute – Bernanke denied the Fed bailed out his bankster buddies to the tune of $7.7 trillion. It was just $1.5 trillion – tops. Well, all righty then; it’s not like you lied about $7.7 trillion – you just lied about $1.5 trillion. Yes, your honor the defendant stole 77 widgets – no, I’m sorry, he only stole 15 widgets; my mistake, please dismiss all charges with my apologies.
It’s not like the biggest theft in the history of the world it’s just – well, yeah, it’s still the biggest theft in the history of the world.
And just how many people have gone to jail?
Well, that brings us to today’s Mailbag. As you may recall, I was not able to join you on Friday because of a bad sore throat and I missed answering your letters. So, I’m trying to make up yesterday and today and maybe tomorrow.
You can email me at Sinclair@moneyradio.com
Let’s go to the mailbag:
Sinclair:
Love your show and your sarcasm.  Keep up the good work.  Please be as nasty as possible.
I think something is seriously up with the MF Global situation.  It is being handled in a very bizarre way.  Besides the fact that it has destroyed our commodiities exchange, the integrity of which is toilet-like, I do not understand why traders were not made whole by the CFTC and why this was not relegated to history.  It is almost as if they want the market to implode.  I, for one am afraid to have my money in one place, if it can be psychopathically taken away.  Americans do not seem to see the significance of this.
Thanks a bunch.
First of all, I will not be nasty for the sake of being nasty.  Secondly, the appropriately named MF is the biggest stinkin sack of —– this side of the Federal Reserve.
You might think there would be some response by the regulators; the CFTC, the SEC, the Chicago Mercantile Exchange.  The Merc not only failed to step forward to backstop MF Global client accounts, they did not even allow the MF Global customers to liquidate their accounts and then transfer to other firms. What the Merc did was the worst possible thing—they froze those people out of their accounts and didn’t allow them to liquidate while the markets continued to trade; leaving them exposed to further risk an d further losses. This has never happened before. This was a complete breach of fiduciary duty by the Chicago Mercantile Exchange itself to the point that it literally has destroyed the entire paradigm. In the past, when firms went under customer funds were intact and the exchanges would step in to backstop everything to keep customers 100% liquid. And normally, a quick transfer from the bankrupt firm, the bankrupt firm would be immediately replaced. Up until October 31st, the customer segregation of funds rule was utterly sacrosanct. If a firm traded and speculated they speculated with the proprietary trading side of the company – no customer funds were touched  – ever.
MF Global was under the auspices and under the auditing supervision of the CME. And I believe that MF was audited not just annually, but quarterly. Also, there is the question of how in the world can the Merc miss the margin being posted. The Merc is supposed to be moving equity and doing margin wire transfers twice a day every day. How could those customer funds be “missing”. They aren’t missing. They were stolen. Jon Corzine and band of thieves at MF Global stole them. Nothing even close to this has ever even happened before and it is the function of the Mercantile Exchange itself—the reason why the exchanges exist is that they stand in the middle of every transaction and they act as the de facto counterparty to every single transaction so that, for example, if you place a trade you never had to worry about the credit worthiness of the other individual, whoever it might be, who is on the other side of any trade. If the exchanges can’t perform this function – they are complete and total failures; they are unworthy of any trust.
Now, for every buyer there is a seller and it is a one-for-one, zero-sum game; but to ensure the credit worthiness and the integrity of the market, the function of the Mercantile Exchange itself is to stand in the middle of every transaction and be the guarantor. One year ago, the merc held a press conference and touted the fact that never in the history of the Mercantile Exchange has a customer ever, ever lost funds resulting from the collapse of a firm. Well, they can’t say that anymore.
So, more than a month after this theft – how’s it going? Well, we think there’s an investigation. Jon Corzine has been subpoened by the House Agricultural Committee to appear on Thursday at hearings about MF Global.
He’s very likely to refuse to testify. It may be the first time a former US Senator has ever relied on the protection of the Fifth Amendment to shield himself before a Congressional inquiry.
Yes, this is the same Jon Corzine that back before the 2008 meltdown complained about firms that were crazy to leverage at 30 to 1 or 40 to 1. He is the former head of Goldman Sachs. So, what did he do? He leveraged MF Global at possibly as much as 100 to 1.  Apparently the lesson he learned at Goldman was he could gamble with other people’s money. Maybe he thought his pimp daddy government buddies would bail out his sorry butt.
And why not? Did anybody at Goldman get hit with criminal prosecution? Did anybody at Citigroup get hit with criminal prosecution? Did anyone at Citigroup violate Sarbanes Oxley? Did anyone at Countrywide violate Sarbanes Oxley? Hell yes, but the Justice Department won’t even work up a sweat. The SEC worked out a sweetheart settlement that was so egregious that a Federal judge had to tell them to stop passing out candy to the predators. And it’s not just the Obama Administration or the Bush Administration. It is a combination of Democrats and Republicans that have sold out our justice system to the banksters.
You cannot have a legitimate government without justice for all. Right now we have harsh justice for street criminals, and we open the vault doors for the politically connected. If you are big enough to buy influence in the Justice Department or the SEC, or apparently at the Chicago Merc, you will get the kindest possible considerations. Now if you go into a Circle K and steal a six pack, they’ll put a bootjack on your throat, pepper spray your eyes, cuff your hands, and if your lucky you might not get tasered. If you go into the Chicago Merc and steal $600 billion, they may consider a possible investigation, they may ask you to come to Congress to answer a few questions – if it suits your fancy – would next month be convenient? – why thank you so much.
You have to start acknowledging these people for what they are; they are evil; they are basically sociopaths and psychopaths. They don’t feel any sympathy or empathy for other human beings. The only thing they care about is themselves. They will do anything. They will steal. They will lie. They will cheat. They will lie to your face. They will look in the camera and lie in order to advance their wealth and power. The Federal Reserve is lying to you. Jon Corzine has lied to you. And Chuck Prince and Vikram Pandit and Angelo Mozillo and Lloyd Blankfein and Ben Bernanke and Hank Paulson and Timmy Geithner. And they have stolen from you – trillions and trillions of dollars. And maybe even worse they have stolen justice. And the sad truth is that most Americans have been sleeping through the whole thing.
You’ve got to wake up.
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