Tuesday, 22 November 2011

The MFs at MF Global

MF Global Investments is the name of a rather fly-by-night hedge fund operation established on Wall Street fairly recently. It collapsed a few days ago and has been tentatively found to have lost between $600 million and $1.2 billion of its clients’ money in the course of throwing good money after bad. It did so, the investigators now swarming around its chaotic bookkeeping now believe, by illegally shifting the cash from client accounts into its casino trading operation. In short, it is alleged to have committed the same kind of crimes as the so-called ‘rogue traders’ that cost Barings, UBS and SocGen vast sums.

One notable difference is that the guy in charge of this no-longer-shocking rip-off was until recently the Democratic governor of New Jersey, Jon Corzine [above]. Will he do time? After all, a billion bucks is rather more serious, you would think, than the three-dollar bottle of water looted by a guy in Britain during their recent riots—for which said thief received a six-month prison term. We need to resuscitate Victor Hugo and have him rework Les Misérables.

MF Global is another chapter in the ongoing destruction of the rule of law, but the bright side on this occasion is that certain powerful constituencies were ripped off. You know something is up when a leathery old dinosaur like Chuck Grassley is stirring his horny tail shingles over the latest debacle.

The Commodity Futures Trading Commission should ‘do everything possible’ to get to the bottom of this, said Grassley, a Republican senator from Iowa. Oh, you mean the Commission that you and your GOP buddies have done everything in your considerable power to intimidate, dismantle, starve, browbeat and harass into irrelevance since government cannot solve any problems, but rather is the problem? Good luck getting that entity moving on restoring the cash to your Iowa farmers who used MF Global to hedge future crop and livestock prices.

‘Unlike the big banks, the average farmer who lost money in this fiasco can’t afford to hire an attorney and attend proceedings in a Manhattan courtroom’, said Grassley in an insouciant display of cynicism.

Grassley’s Iowa is where a group of sell-out state attorneys-general periodically gather to find a way to give the TBTF banks a free pass over their looting and wrecking of the economy through mortgage chicanery. His state’s AG, Tom Miller, is at the heart of this scheme whereby the banks would pay a paltry fine in exchange for immunity from things like the robo-signing scandal, fraudulent foreclosures, document counterfeiting, and the mass crushing of homeowners now slipping into poverty. Obama and team are fully behind this plan to further entrench the 1% and reward criminality—the current White House version of ‘bipartisanship’.

Luckily, a few AGs are resisting, like our own Eric Schneiderman, whose election I am happy to have supported monetarily. Schneiderman and prosecutors from Delaware and Nevada are investigating and should be presenting some interesting civil and perhaps criminal cases in coming months. (Hilariously, Miller kicked Schneiderman off the negotiating team for objecting to the sell-out.)

Obama wants to bury all this fraud and ‘turn the page’ as he did with the torture scandal of the Bush era. Republicans are naturally silent because they’re fully complicit. But loyal capitalists, wherever they may be hiding, ought to be demanding a real clean-up with real consequences because, as the MF Global fiasco illustrates, the entire financial edifice requires trust. When clients cannot even be certain their cash deposits are protected from the Wall Streets gamblers, then the game is very close to up. I am already reading advice in the financial blogs that people should hoover up any assets they have and put them promptly into explicitly government-backed and -guaranteed securities because nothing is sacred, and nothing is safe.

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