The System Here And There Is Totally Broken

Posted at 12:52 PM (CST) by & filed under General Editorial.

My Dear Extended Family,

How anyone can put any money in a securities/commodities clearinghouse is beyond me. You risk your financial life to win trading then end up with practically nothing whatsoever.

The system is totally broken. Governments are busted. The securities insurance programs are wildly over extended by the fact that their capitalization cannot guarantee what they are supposed to be guaranteeing

QE invents money out of thin air, and because of that is the only central bank tool and will have to run at full speed to infinity. How the Fed and Treasury utilize QE is totally up to them. They could buy MS or PFG bonds if they wanted to.

Right now in a busted clearinghouse you have no financial relief from anyone because of bankruptcy laws. If you think any industry organization of government regulator is going to give you a cent you are really stupid. You have to assume that if it was not for funds that have to trade commodities, the commodities market volume would be finished. The commodity market of the future has to be guaranteed by the US Treasury and Fed like they guaranteed OTC derivatives, or it will not exist.

You want to see an explosion watch when the clearinghouses in grains implode. Clearinghouse risk exists in shares as well as commodities, so how the hell can you sit back so comfortably, trusting the typical sociopath Wall Streeter to put your money ahead of his/hers?

Those of you with your fancy special tax treatment retirement accounts are sitting ducks dependent on your clearing house broker and/or the will of the government.

Gold is the only asset on the planet without a liability attached to it. Gold is going to and through $3500 without any question in my mind.

9 tries to break $1525 have now failed. The manipulators are put of aces. The proof was a recent email from gold’s father of $1100 calling me a fool three days in a row.

If you own gold in futures or ETFs (they own their gold in paper) take delivery or end up with absolutely nothing whatsoever.


Q&A: What PFGBest Customers Can Expect
Updated July 11, 2012, 6:23 p.m. ET

Futures-brokerage firm Peregrine Financial Group Inc., or PFGBest, filed to liquidate under Chapter 7 of the U.S. bankruptcy code on Tuesday, leaving customers wondering about the fate of their funds.

Although customers may get a quick return of some assets, the liquidation process can be confusing and lengthy. Here are answers to some questions about customers’ money.

Q: How much money is missing?

Regulators currently believe there is a shortfall in customer funds of roughly $215 million.

Q: Will customers get their money back?

Any money the trustee determines is still in segregated accounts—accounts specifically designed to hold customers’ funds—can be distributed quickly, potentially in just a few days, said bankruptcy experts.

But a shortfall in segregated funds could mean losses for customers if the money isn’t found.

Q: How do customers get money back?

In a futures-brokerage bankruptcy, a trustee is appointed to return segregated customer funds. The trustee also collects and liquidates company assets and distributes the proceeds, subject to court approval.

Q: Are there any other resources for customers?

CME Group said Wednesday that family farmers and ranchers with assets caught up in the brokerage’s collapse will be eligible to draw upon the exchange operator’s new insurance fund. The fund provides up to $25,000 per account to customers that suffer losses from the insolvency of a futures brokerage.

Q: What about open positions in futures and options that haven’t been settled?

When commodity brokers fail, open trading positions are often transferred to other brokerages. But in this case, those positions have already been liquidated by Jefferies Group Inc., JEF +1.44% which served as PFGBest’s clearinghouse. Jefferies on Wednesday said PFGBest-related cash of roughly $125 million will remain in fully segregated accounts until disbursement is directed by regulators.

Q: What do the company’s assets and liabilities mean for customers?

PFGBest said in its bankruptcy filing that its assets are between $500 million and $1 billion, and its liabilities are between $100 million to $500 million. If assets are in fact greater than liabilities, brokerage customers may have access to those assets before other creditors, bankruptcy experts say.

A bankruptcy judge would approve distribution of assets outside of segregated funds. Depending on the complexity of the case, that distribution could take months or even years, experts say. A criminal investigation, under way in this situation, could also delay any distributions.

Q: How does this matter differ from MF Global?

A: MF Global Holdings Ltd.’s MFGLQ 0.00% collapse in October resulted in a shortfall of roughly $1.6 billion in customer funds. Nine months later, customers have received about 80% of their U.S.-based funds as trustee James Giddens searches for more assets. Since PFGBest is a much smaller firm and believed to be less complex, it is possible that the bankruptcy case could proceed more quickly, experts say, but the timeline isn’t known.

Q: Where is the money right now?

Regulators are currently trying to locate customer funds, which stood at over $400 million as of April, according to data compiled by the Commodity Futures Trading Commission.

Q: Where can one get further information?

A meeting of creditors is scheduled for Sept. 5, 2012, at the office of the U.S. Trustee in Chicago. Trustees in bankruptcy cases will typically distribute contact details and a website to direct customers and creditors but that hasn’t happened yet.