Although the details and the individual perpetrators are yet to be disclosed, what is now painfully clear is that the CFTC and CME regulated futures system is defaulting on its obligations. This did not even happen in the big failures like Lehman and Bear Sterns in which the customer accounts were kept whole and transferred before the liquidation process.
Obviously holding unallocated gold and silver in a fractional reserve scheme is subject to much more counterparty risk than many might have previously admitted. If a major bullion bank were to declare bankruptcy or a major exchange a default, how would it affect you? Do you think your property claims would be protected based on what you have seen this year?
You always have counter-party risk if you hold gold and silver through another party, even if they are a Primary Dealer of the Federal Reserve. As Ben said, the Fed offers no seal of approval.
If a Bankruptcy Trustee can pool your bullion into the rest of the paper assets and then liquidate it at prices that are being front run by the Street, you will have to accept whatever paper settlement that they give you.
The customer money and bullion assets are not lost, or rehypothecated or anything else. This is a pseudo-legal fig leaf, a convenient rationalization.
The customer assets were stolen, and given to at least one major financial institution by MF Global to satisfy an 11th hour margin call in the week of their bankruptcy, even as MF Global was paying bonuses to its London employees.
And in an absolutely classic Wall Street move, they are still charging the customers storage fees on the bullion which they have misappropriated from them. lol.
And so in the great Wall Street tradition they are trying to force the customers and the public to take the loss. The regulators and the exchange are aghast, and are trying to imagine how to resolve and spin this to preserve investor confidence and prevent a run on the system.
'Let them eat warehouse receipts.'
For many this would have been unthinkable only a few months ago. They had been cautioned and warned repeatedly, but chose to trust the financial system. And now they are suffering loss and anxiety, frozen assets, and the misappropriation of their wealth.
How more plainly can it be said? The US financial system as it now stands cannot be trusted to observe even the most basic property rights as it continues to unravel from a long standing culture of fraud.
Get your money as far away from Wall Street as is possible. And if you want to own gold and silver, take delivery and store it in a secure private facility outside the fractional reserve system....
The Silver Rush at MF Global....
By ERIN E. ARVEDLUND
December 17, 2011
It's one thing for $1.2 billion to vanish into thin air through a series of complex trades, the well-publicized phenomenon at bankrupt MF Global. It's something else for a bar of silver stashed in a vault to instantly shrink in size by more than 25%.
That, in essence, is what's happening to investors whose bars of silver and gold were held through accounts with MF Global.
The trustee overseeing the liquidation of the failed brokerage has proposed dumping all remaining customer assets—gold, silver, cash, options, futures and commodities—into a single pool that would pay customers only 72% of the value of their holdings. In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the value.
That has investors fuming. "Warehouse receipts, like gold bars, are our property, 100%," contends John Roe, a partner in BTR Trading, a Chicago futures-trading firm. He personally lost several hundred thousand dollars in investments via MF Global; his clients lost even more. "We are a unique class, and instead, the trustee is doing a radical redistribution of property," he says.
Roe and others point out that, unlike other MF Global customers, who held paper assets, those with warehouse receipts have claims on assets that still exist and can be readily identified.
The tussle has been obscured by former CEO Jon Corzine's appearances on Capitol Hill. But it's a burning issue for the Commodity Customer Coalition, a group that says it represents some 8,000 investors—many of them hedge funds—with exposure to MF Global. "I've issued a declaration of war," says James Koutoulas, lead attorney for the group, and CEO of Typhon Capital Management.
At stake is an unspecified, but apparently large, volume of gold and silver bars slated for delivery to traders through accounts at MF Global, which filed for bankruptcy on Oct. 31. Adding insult to the injury: Of the 28% haircut, attorney and liquidation trustee James Giddens has frozen all asset classes, meaning that traders have sat helplessly as silver prices have dropped 31% since late August, and gold has fallen 16%. To boot, the traders are still being assessed fees for storage of the commodities...
At this time of the year, a lot of families get together, and in most homes the conversation usually gets around to politics at some point. Hopefully many of you will use the list below as a tool to help you share the reality of the U.S. economic crisis with your family and friends. If we all work together, hopefully we can get millions of people to wake up and realize that "business as usual" will result in a national economic apocalypse.
The following are 50 economic numbers from 2011 that are almost too crazy to believe....
#1 A staggering 48 percent of all Americans are either considered to be "low income" or are living in poverty.
#2 Approximately 57 percent of all children in the United States are living in homes that are either considered to be "low income" or impoverished.
#3 If the number of Americans that "wanted jobs" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.
#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.
#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.
#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.
#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.
#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006. Today, that number has shrunk to 14.5 million.
#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.
#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.
#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.
#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job. In July, only 81.2 percent of men in that age group had a job.
#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.
#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.
#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.
#16 As the economy has slowed down, so has the number of marriages. According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married. Back in 1960, 72 percent of all U.S. adults were married.
#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.
#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.
#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.
#20 If you can believe it, the median price of a home in Detroit is now just $6000.
#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant. That figure is 63 percent larger than it was just ten years ago.
#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.
#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.
#24 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.
#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.
#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.
#27 If you can believe it, one out of every seven Americans has at least 10 credit cards.
#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.
#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.
#30 The retirement crisis in the United States just continues to get worse. According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.
#31 Today, one out of every six elderly Americans lives below the federal poverty line.
#32 According to a study that was just released, CEO pay at America's biggest companies rose by 36.5% in just one recent 12 month period.
#33 Today, the "too big to fail" banks are larger than ever. The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.
#34 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.
#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.
#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.
#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.
#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.
#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.
#40 Sadly, child poverty is absolutely exploding all over America. According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.
#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.
#42 In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for more than 18 percent of all income.
#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.
#44 Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.
#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars. That was the third year in a row that our budget deficit has topped one trillion dollars.
#46 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.
#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars. When Barack Obama first took office the national debt was just 10.6 trillion dollars.
#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.
#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
Of course the heart of our economic problems is the Federal Reserve. The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence. If the Federal Reserve system had never been created, the U.S. economy would be in far better shape. The federal government needs to shut down the Federal Reserve and start issuing currency that is not debt-based. That would be a very significant step toward restoring prosperity to America.
During 2011 we made a lot of progress in educating the American people about our economic problems, but we still have a long way to go.
Hopefully next year more Americans than ever will wake up, because 2012 is going to represent a huge turning point for this country.....
By David DeGraw, AmpedStatus.com and OWSNews.org
[ for DeGraw's role in organizing the Wall Street protests.]
Occupy the Constitution: Get Money Out of Politics!
One of the most popular 99% Movement and Occupy Wall Street issues is getting money out of politics. In a country where the candidate who spends the most money on their campaign wins the election 94% of the time, it is blatantly obvious that our electoral process is dominated by the richest global financial interests. By saturating the campaign finance and lobbying system with an endless supply of cash, Wall Street has rigged the political and economic system against hard working Americans. In unprecedented fashion, they have consolidated wealth into the hands of one-tenth of one percent of the population, at the expense and suffering of the American people.
If you’re wondering why we have the most severe inequality of wealth in American history; if you’re wondering why we currently have an all-time record number of Americans living in poverty, while we have all-time record profits and bonuses on Wall Street, it is primarily the result of the richest members of society being able to manipulate and control the legislative process through a system of legalized political bribery.
For us to take the first crucial step in solving the many problems we currently face, we have to create an amendment to the Constitution to get money out of politics. Thankfully, there is huge momentum building on this front. Here’s a brief summation of the newly proposed amendments, courtesy of the Get Money Out campaign. Hopefully, with your leadership, one of these amendments, or elements of a few of them, will soon become the 28th amendment to the US Constitution:
1) Rep. Ted Deutch – OCCUPIED Amendment (or Outlawing Corporate Cash Undermining the Public Interest in our Elections and Democracy)
Introduced by Congressman Ted Deutch (D-Fla.), the amendment reverses Citizen’s United by stating that corporations are not people under the Constitution, and that corporations are barred from making election-related expenditures. It authorizes Congress and the states to regulate all election contributions and expenditures, and reaffirms Congress’ right to regulate corporations.2) Sen. Bernie Sanders – Saving American Democracy Amendment
Senator Bernie Sanders introduced an amendment in the Senate that mirrors the OCCUPIED amendment in the House. Introducing this “companion bill” in the Senate allows both houses of Congress to begin debate on the same bill without having to wait for the other to pass it. Learn more. Read the amendment.3) Cenk Uygur, Wolf PAC – Wolf PAC Amendment
Wolf PAC, a group started by progressive TV and radio host Cenk Uygur, reverses corporate personhood and prohibits corporations from giving to any politician. The amendment also sets a cap of $100 on all political donations and it establishes a public system to fund political campaigns. Read the amendment.4) Senator Tom Udall – Udall Amendment
Senator Tom Udall (D-N.M.) along with eight other Democratic Senators proposed an amendment that gives Congress the power to regulate all money spent on campaigns and outside political groups such as Super PACs. It allows states to regulate state elections in the same manner. It would clear the way for Congress to pass reform legislation that would limit spending and would withstand a challenge in the Supreme Court. Read the amendment.5) Rep. Jim McGovern and Free Speech for People – The People’s Right’s Amendment
Congressman Jim McGovern (D-Mass.) introduced the amendment with the support of Free Speech for People, a non-profit group that aims to end corporate personhood. The amendment states that people or persons as used in the Constitution does not include corporations and that corporations are subject to regulation by the people through their elected representatives. Read the amendment.6) Public Citizen – Democracy is for People Amendment
Pursued by the non-profit group Public Citizen, the amendment would reverse the Citizen’s Uniteddecision and permit Congress to regulate political spending by corporations. The amendment has not been drafted into specific language, but is based on a set of core principles. Read those principles and get more information.7) Russell Simmons – Simmons Amendment
Hip-hop mogul Russell Simmons announced support for an amendment in a speech to Occupy Boston protesters. The amendment establishes public funding of political campaigns and prohibits any political contributions from any source. It gives Congress the authority to design and enforce the public funding system. Read the full text of the amendment. Watch Simmons’ speech.
8)Rep. Donna Edwards – Edwards Amendment
Introduced by Representative Donna Edwards (D-Md.), the amendment would overturn theCitizen’s United Supreme Court ruling by allowing Congress to regulate political spending by corporations.9) Rep. Kurt Schrader – Schrader Amendment
Introduced by Representative Kurt Schrader (D-Ore.), the amendment authorizes Congress and the states to regulate the contribution of all funds to candidates and the expenditure of funds to influence elections. Read the amendment.10) Rep. Marcy Kaptur – Kaptur Amendment
Introduced by Representative Marcy Kaptur (D-Ohio), the amendment authorizes Congress and the states to set limits on the contributions that may be accepted by and the expenditures that may be made in support or in opposition to candidates running for public office.11) Move to Amend – Move to Amend
A group opposed to corporate personhood, Move to Amend, has proposed an amendment that would overturn Citizen’s United by affirming that corporations are not people and can be regulated, and that money is not speech and can be regulated.12) Get Money Out – Get Money Out Amendment
The amendment was proposed by the Get Money Out organization, which was started by MSNBC host Dylan Ratigan, and became a part of United Republic in late 2011. The amendment prohibits corporations from making political donations and affirms that political donations are not speech, which allows Congress to regulate them. It also makes election day a federal holiday.13) Lawrence Lessig – Lessig Amendment
Lawrence Lessig, Harvard professor and founder of Rootstrikers, which joined forces with United Republic in late 2011, introduced an amendment that prohibits corporations from contributing money to any candidate, limits campaign contributions to $100, and gives Congress the power to regulate outside campaign spending. It also establishes Election Day as a national holiday.So that’s the team so far. Join us at GetMoneyOut.com. Tell your friends. Let the world know....
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