Thursday, November 15, 2012

Systemic Collapse: The Corzine Factor

In the end, more than freedom, they wanted security. They wanted a comfortable life, and they lost it all – security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again.  - Edward Gibbon, English historian and acclaimed author of "The Decline and Fall of the Roman Empire."
I hope everyone has a chance to meditate on the quote above, as it applies to the state of our society here and now.  History may not exactly repeat, but it sure does seem to rhyme (to paraphrase Mark Twain).

Before I get started on my source of irritation today,  I wanted to point out that Bernanke is giving a speech right now in which he is stating that the Fed will do what it can to support the housing market and that the pace of mortgage financings  is as low as it was in 1995.  Now, why on earth would he make that latter remark if the housing market was in a state of recovery?  Furthermore, it was reported by the Wall St. Journal that the FHA is on the verge of insolvency.  How can this be if the housing market is recovering?  Finally, it was reported today that the U.S. Postal Service is also on the verge of insolvency and it has been borrowing heavily from the Taxpayer to sustain itself.  If you take all three of these factors into consideration, in aggregate, it can only mean that either the Fed is going to let the housing market collapse and the U.S. mail service will have to be drastically reduced, OR there is a LOT more QE coming.  The precious metals and mining stocks are extraordinarily cheap here...

The John Corzine issue has been a perpetual source of disgust and irritation for me (not continuous as I've accepted that our system is entirely corrupt, but it sneaks up on me).  Quite frankly, if there was any ONE reason to vote against Obama in the election, it was because of his profoundly abysmal failure to crack down on Wall Street corruption, and specifically his refusal to prosecute Jon Corzine despite the overwhelming evidence of Corzine's overt and blatant role in the collapse of MF Global and the loss of over a billion in dollars in customer assets that were supposed to 100% legally protected.  The actual numbers support the fact that Obama has failed to prosecute the financial industry, as litigation by the Justice Department has declined substantially during Obama's tenure even though the evidence of events of lawbreaking and corruption has soared.  This, despite Obama's explicit promise in his 2008 campaign to "clean up Wall Street."  It's hilarious/pathetic to me that this topic was never any part of any of the debates this year...

The latest irritation stab from the MF Global/Corzine issue surfaced when the House issued a report yesterday which blames Corzine for the collapse of MF Global.   What is beyond absurd is that the House Democrats refuse to endorse the findings, saying "ummm, we need ummmm more time to study the findings."  Here's a news release of the report:  LINK

The bottom line here is that anyone who has any Wall Street experience AND knows the regulations governing the brokerage business KNOWS that Corzine is not only guilty of violating several SEC and FINRA regulations but should be sitting in a jail cell waiting his trial.  Over a $1 billion dollars was stolen.  Martha Stewart was put in jail for a just a small percentage of that amount.  This has become an an egregiously inexcusable case of  bi-partisan politicizing by the Democratic Party - led by Obama - as the Government has refused to crack down and go after Corzine.  Corzine, a former Democratic Governor of, and Senator from,  New Jersey has been one of Obama's biggest campaign fundraisers.

I have outlined on this blog where and how Corzine broke the laws.  The Trustee of the MF Global bankruptcy has finally joined in with private groups in suing Corzine.  I still can't understand why Obama hasn't forced Eric Holder to do the same.  Well, let me revise that, it's obvious why Obama has refused to go after Corzine just as it's obvious why the House Democrats refuse to endorse the House report.

We live in a system that is collapsing and the overt corruption permeating from every institutional sector of our system is entirely indicative and supportive of my "collapse" premise.  Just remember, how does a system collapse?  First slowly and then all at once (to paraphrase Hemingway).  The only issue in my mind is where our system sits relative to the proximity of "all at once" on the collapse timeline...


  1. Corzine is guilty, but does anyone doubt that if he was a Republican senator/governor/bundler that the Democrats would find him guilty and Republicans making excuses?

    1. Exactly. Call yourself a Republican and you'll get 30 years in an ass-pounding prison for spitting on the sidewalk. Call yourself a Democrat and you'll be regarded as a humanitarian while sodomizing old women and pouring sugar in their gas tanks.

    2. Of course not. The left media would demand his head, or he would fall on his sword like a good weak republican.

    3. Justice discards party, friendship, kindred, and is always, therefore, represented as blind.--ADDISON.

  2. "The last duty of a central banker is to tell the public the truth." (former US Federal Reserve Chairman Alan Blinder)

  3. Oh yea. If he was GOP he'd be skewered.

    Hey Dave, do you like PAAS or SSRI? I want to buy an actual silver producer and these two keep popping up. What sayeth ye?


  4. DTCC Provides Update On Status Of Flooded Securities Vault

    Cataclysm averted.

    Or maybe not. Because at the end of the day, it is not whether or not the physical stock certificate for a given holding was damaged in the flood. What is far more troubling, and has been since the advent of Cede & Co as master custodian, is that regardless of the content of its securities vault, it is the DTCC that is the rightful and ultimately legal owner of every security. Or would be in case Cede & Co decided to make it a legal matter of assigning ownership: good luck in a legal battle with a company that is owned by every major financial institution in the US (including Goldman, JPM, the NYSE and of course, the Fed).

    In other words, it was not DTCC's flooding that was the issue: that is largely irrelevant. It is the fact that DTCC, and its "partnership nominee" exist, and that they are in effect, the default custodians of every transaction. Because if the day comes when all securities-based property has to be "sequestered", all that would be needed is one quick phone call to DTCC and it's done and done.

    Johnny's just a warm up................and precedent

  5. Max Keiser talks to Francine McKenna of and American Banker magazine, about Jamie Dimon

    In the second half, Max Keiser talks to Francine McKenna of and American Banker magazine, about Jamie Dimon, the most over-rated banker in America, and how much longer JP Morgan can survive the various scandals, frauds and putbacks.

  6. At this stage Democrat and Republican is a non issue. Our country is in grave danger and desperate men do desperate things. Corzine is the one who got caught with his pants down. There are and will be others, that you can count on.

    Stay focused on the thieves being amid both parties and realize that corruption like a vine pierces many a man's heart regardless of party lines.

  7. reading all this bullshit about irritations etc - all it does it creates fear and stress. Move on - protect yourself in a way you see fit and focus on the things you want to be doing from here on.

    Once again the Gold Bugs are really the most arrogant traders - (not even investors) and doesn't matter how many there are the invisible hand is the one that moves the market in whatever direction they want. So even in this secular bull for over ten years it's because of them that it has moved and not because of Hathaways - Schiffs - Turks or whatever. The gold superhighway - my foot - look where the XAU gold ratio is again.

    I have come to learn that I want to be in the secular trend but I definitely not go to a war with the existing gold shareholders. Even the professionals get taken by emotion and pronounce the super highway and moon shot blah blah at the GDX 55 level - just like Jim Sinclair pronounce the GDX 66 breakout as the fill your boots with miners now.

    You guys aren't the ones moving markets and the quite people are the ones to watch not the blah blah ones.

  8. And Bill Murphy is the biggest idiot of them all. He was played by like fiddle beautifully by his "Rich Contacts in Europe" going to take on Silver. It's more like premature ejaculation what happened. The are not the big boys. And his lemettrepole is a wast of money totally.

    1. You know, the only reason I published your comments is to show how stupid, and driven by irrational emotionalism, some people are. I don't have time to address your mindless ranting other than to say that your vacuous babble is clearly motivated by a complete lack of intellectual understanding of the precious metals market and seems to be driven by a complete inability to manage the emotional aspects of investing in a volatile and highly manipulated market sector.

      Having said that, Bill Murphy is a visionary and a pioneer in the evolution of exposing just how manipulated and corrupt our markets are. Murphy is an example of a true patriot and defender of freedom.

      I would suggest that you take the time to learn and understand the true dynamics and historicity of the precious metals markets before you further embarrass yourself with displays of inanity.

    2. Way to slap down this blathering moron Dave. Please don't let him waste any more space on your fine blog.

      Some people are way beyond help, clearly this person is one of them. He puked all over himself.

      Btw, thanks for another fine and thought provoking piece. Your ability to crank them out each and every week is why I'm a regular.

      Enjoy your weekend!


    3. Thanks Ed! Anche un buon fine settimana!

  9. Where has all the Risk gone?

    But first that other component of the banks’ plans, ‘RWA reductions’. They are always a worry. RWA is Risk Weighted Assets – and reducing them means fiddling about with the assumptions and variables in the bank’s own computer model until it spits out the desired answer, which in this case is to show how an asset (loan) is less risky than a regulator thought. Being less risky means less capital has to be held against it. Holding less capital means the bank can claim to have reduced its risk without either selling anything or having to rise any more money. You just have to have your computer find that you weren’t as risky as everyone thought you were. Like magic but with added ‘science’.

  10. Why Hasn’t NFA Barred Jon Corzine?

    More than a year after MF Global’s demise, why hasn’t the National Futures Association taken action against Jon Corzine? For his malpractice Mr. Corzine should be permanently barred from NFA membership, associate membership and from acting as a principal of an NFA member. He should receive the maximum NFA fine as well.

    There should be a price to pay for one’s active involvement, complacency or willful blindness in the perpetration of schemes to subvert NFA rules. As the SIPA Trustee noted in his investigation report of MF Global, ”had customer funds been properly protected, the customer property in Customer Accounts should have been largely if not completely unaffected by the liquidity crisis at MF Global” (pg 96 SIPA Trustee’s Investigation Report). Regardless of his intent, Mr. Corzine failed to protect customer funds. The NFA should hold him accountable.

    To make things crystal clear, here is the case against Mr. Corzine’s license to do business in commodities.

    The Case for Barring Jon Corzine – Summary of Potential Charges

    The SIPA Trustee takes great pains in laying out the following case:

    “Contrary to some public reports, the shortfall of customer property at MFGI was not caused by direct investment of customer funds in sovereign debt or even by losses on proprietary investments such as the sovereign debt. Rather, as detailed below, the actions of management and other employees, along with lack of sufficient monitoring and systems, resulted in FCM customer property being used during the liquidity crisis to fund the extraordinary liquidity drains elsewhere in the business, including margin calls on the European sovereign debt positions.
    pg 15 SIPA Trustee’s Investigation Report.”

    As a result, Mr. Corzine violated the following Financial Requirements of the NFA Manual:

  11. Ex-Needham CFO Arrested in Theft From Firm

    As chief financial officer at Needham & Co., Glen W. Albanese worked on the brokerage firm's charitable efforts after Hurricane Katrina and its scholarship fund for children of victims of the 2001 terrorist attacks.

    Now, federal authorities have accused him of directing money to a different cause: himself.

    Bill Denver for The Wall Street Journal Former chief financial officer of Needham & Co. Glen W. Albanese
    U.S. prosecutors in New Jersey accused Mr. Albanese in a criminal complaint Thursday of colluding with vendors to overbill Needham by $1 million, using the money for landscaping at his home, a designer dog known as a Labradoodle and tickets to Disney World and Six Flags theme parks.

    The 41-year-old Mr. Albanese, of Manalapan, N.J. resigned as Needham CFO in February 2011, after the company became aware of the alleged scheme, regulatory records show.

    He persuaded vendors, including a printing company and an information-technology provider, to issue false invoices for more than $1 million, either at inflated prices or for services that were never rendered, federal prosecutors in New Jersey said.

    According to an online biography, Mr. Albanese graduated from Pace University and is a certified public accountant who had worked at PaineWebber Group Inc. and Mitchell Hutchins Asset Management. He joined Needham in 1997, according to a brokerage-industry regulator.

    Mr. Albanese had one vendor deliver him envelopes with cash containing several thousand dollars each time at meeting spots in Manhattan, according to the criminal complaint and a person familiar with the case. That vendor and others paid Mr. Albanese's personal expenses, and he also charged the vendor's company's corporate credit card, according to the complaint.

    The complaint alleges that one vendor met Mr. Albanese at predetermined locations in New York with cash-filled envelopes and used funds from his company's accounts to pay for landscaping and installation of home-theater equipment at Mr. Albanese's home.

    ...and everyone thought he had a green thumb...wait, he did.

  12. Sig Heil !!