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MF Global and the great Wall St re-hypothecation scandal 12/7/2011
By Christopher Elias (UK)
(Excerpts from article)
Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).
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Watch Corzine's MF Global Testimony Live

And now the one we've all been waiting for...

Iran Releases Video Of Captured US Drone Plane

Due to our less than admirable Farsi skills, we present the following Iranian video showing the captured downed US drone without commentary. As they reverse engineer our planes, we reverse engineer their state media released video.

Europe Says Europe Has "Lost Credibility"

Deeply philosophical headlines, via Bloomberg, from our European allies:

*GERMAN BDB BANKING ASSOCIATION SAYS EBA `HAS LOST CREDIBILITY'
*GERMAN BDB BANK ASSOC. CRITICIZES EUROPEAN STRESS TESTS
*BDB SAYS STRESS TESTS HAVE NOT HELPED STABILIZE THE MARKET
*BDB SAYS GERMAN BANKS ARE NOT UNDERCAPITALIZED

CFTC Issues A Clear Statement: MF Global Customers Have Priority In This Bankruptcy

 

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The US Is Largest Debtor Nation In The History Of The World

Admin at Jim Rogers Blog - 1 hour ago

We are the largest debtor nation in the history of the world and the debts are going higher and higher by trillions, every two or three years. We're all paying the price for it. And wait till 2013 - we're really going to pay the price. - *in Yahoo Finance* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

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Corzine To Take the 'CEO Defense' - The Re-Hypothecation Scheme - Customers Have Priority

 

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The Market Is In Neutral Territory

Admin at Marc Faber Blog - 2 hours ago

Right now, the market is in neutral territory. It was very oversold on October 4th when the S&P dropped to 1,074. Now around 1260, the upside in my opinion will be between 1,280 and 1,350 because there’s a lot of supply around that area. But if there is some good news coming out of Europe, and good news would simply mean postponing the problems for another few years with some kind of money printing operation, either by that ECB or IMF or EFSF, that lift stock prices higher. - *in Bloomberg* *Marc Faber is an international investor known for his uncanny predictions of the stock marke... more » 

 

Bloomberg Video: US Equities Are Not Terribly Expensive

Admin at Marc Faber Blog - 3 hours ago

Dec. 7 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom & Doom report, talks about the outlook for equities and his investment strategy. Faber speaks with Lisa Murphy and Adam Johnson on Bloomberg Television's "Street Smart." Related ETFs, SPDR S&P 500 ETF (SPY) *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Latest Irrelevant European Stress Test Results Leaked

In all the noise, Europe decided to rerun its stress test and come up with the following completely meaningless "latest and greatest" capital shortfalls:

• Greece: €30 billion
• Italy: €15.4 billion
• Germany:  €13.1 billion
• Spain: €26.2 billion
• Portugal: €7 billion
• France: €7.3 billion
• Austria: €3.9 billion
• Belgium: €6.3 billion

Etc. Why meaningless? Simple - one chart says it all...

The "Treaty" Negotiations

Well, it seems like the ECB is telling the countries they need to change the treaty if they want the ECB to act more like the Fed (giving up the pretense of sterilization).  Maybe the move is designed to push the issue and make the summit come up with an even bigger plan (regardless of how unlikely it would be to get implemented). For sure, sovereign spreads are indicating disappointment as we suspect the chance of a smiling hand-holding photo op has greatly diminished.

Tensions Escalate As Syria Pipeline Destroyed - Video

Just when you hoped the worst was over with Draghi's market-disappointing news this morning, things just got a lot more real in the Middle-East. State media is reporting that armed terrorists blew up an oil pipeline west of the flashpoint Syrian city of Homs. In an interesting twist, an anti-regime group said the government was behind the blast. Nonetheless Fox Houston is noting that the explosion is the third reported attack on energy infrastructure since the outbreak of the pro-reform protest movement in mid-March. Interestingly oil prices (along with all other commodities) continue to plunge on USD strength and liquidations (from European upsets) but we suspect that all it would take now is for a splinter Turkish group to take responsibility for the blast and this drop will promptly reverse.

Presenting All That Is Wrong With America: Here Is The Top Contributor To The House Agriculture Committee Chairman

As part of the MF Global hearing, we just heard a very dignified and shall we say it disgruntled introduction by House Agriculture Commttee Chairman Frank D. Lucas (Rep-OK) where he said it is "critical" to shed light on the MF Global matter, and which in no uncertain terms made it clear just how disgusted he would be with MF Global if it was found that Jon Corzine is guilty of stealing client funds. Well, we decided to take a step back and look at the Republican's top campaign donors. To our complete lack of surprise, we found that the top lifetime donor to the Honorable Mr. Lucas is... the American Bankers Association.
And scene.

Euro CDS Spike As Draghi Shatters Rumorville

What Mario Draghi did today is the worst of all possible worlds: on one hand he is allowing more financial risk-taking on the ECB's dime courtesy of increased liquidity and relaxed collateral requirements as well as longer LTROs, on the other he essentially killed any provisional bailout rumors, saying that the ECB will not monetize, nor lend to the IMF. The result: sovereign risk is soaring, as seen by this CDS update.

Market Snapshot: Flip Flop.... Update - And Plunge On Bond Purchases, IMF, Lehman Comments

Update 2: Draghi just killed IMF lending proposal - "lending money to IMF to buy Euro bonds is not compatible with the treaty" - EURUSD now in free fall.
Update: two additional comments, i) that the ECB is not the IMF, and that lending to the IMF would be very complex legally, and ii) that the liquidity situation is comparable to post Lehman have sent everything plunging to overnight lows. Lastly, Draghi just kicked the ball in Europe's court. This is about to get very ugly fast.
It was all going so well until Draghi dropped the coded 'less' bond purchases 'no bazooka' bomb-shell at which EURUSD, BTPs, European bank stocks, and ES all stalled instantly and started to revert to pre-Dragozel levels. BTPs are holding up the best for now, though almost entirely retraced, but a 1% up and down roundtrip in ES was enough for many to see the schizophrenic market at its best.

ECB's Mario Draghi Press Conference Live Webcast

LTRO changes, collateral expansion, other? What will the ECB undertake to extend and pretend today? Find out at the ECB's conference today.
Key headlines:
Will conduct two LTROs, with 36 month maturity with option of early repayment. First will be allotted on December 21, 2011, and will replace October 6, 2011 LTRO. This is more than the expected 2 years.
ECB will ease collateral criteria for loans to banks. Will reduce rating threshold on ABS collateral
National Central banks can accept credit claims such as bank loans
Will reduce the reserve ratio from 2% to 1%, which will free up collateral in money markets

• DRAGHI SAYS HE DIDN'T SIGNAL MORE BOND PURCHASES LAST WEEK

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