A Warning From Santa

So be good, for goodness sake!

In all seriousness, this is extremely important. Heed Santa! The guy has been around for a while and he knows what he's talking about. The ultimate impact of the collapse of MFing Global has not yet been fully felt. Only in hindsight will be able to completely assess the damage.

(my personal emphasis is added where underlined)

December 2, 2011, at 4:13 pm
by Jim Sinclair

My Dear Extended Family,

We all know bank’s balance sheets are cartoons due to FASB’s capitulation on the fair market value issue, that the euro financial leaders do not deserve the title leader, and that the Fed is the source of liquidity for Euroland in unlimited cheap dollar swaps, but there is more.

That more is the first failure of a major clearing house.

Clearing is the mechanism of all markets.
It is the guts of the system.
It is the engine under the hood of finance.
It is the pulleys that turn inside the watch.
It is basic to finance for, without clearing, trades cannot close.

Without faith in the clearing house system where is faith that what your account statement says means anything whatsoever?

Unless MF clients are made whole in every way, the system is broken. It is as if the heads blew off the engine of finance. Where can you keep your money and investments if a clearinghouse is allowed for whatever reason to go broke, therein leaving the clients to suffer?

Are you safe even in a custodial account if the clearing mechanism can erase assets across the board as a product of insolvency for any reason?

The system is in a critical seizure.

It may take some time, but even the financial sheeple are going to worry about their own funds. God help you if you hit gold right on a paper exchange with the wrong clearing facility.

You are wholly dependent on the ability of the clearing house to pay into your account the winnings by deducting those funds from the loser. You are wholly dependent on the ability of the clearing house to guarantee the safety and security (are T Bills securities?) beyond SIPC levels. SIPC is underfunded but would be made whole by funny paper.

God help all the exchange traded funds that are nothing more than houses of derivative paper requiring a sound clearing system to have even an excuse for existing.

If the clearing system fails then you have nothing whatsoever. God help you if you are a farmer hedging your crop or livestock if you the farmer have nothing whatsoever due to a broken clearing house. You are insolvent regardless of the fact that your hedge may have been perfect for the needs of your operation.

Unless MF clients are made whole in every way the system is broken.

People did not realize then and some even now that the failure of Lehman broke the technical procedures (mechanism) for the functioning of the OTC derivative and for that reason broke the Western world’s financial system for which we are paying dearly today.

MF is a Lehman Brothers, but worse. OTC derivatives have always been a fraud but could have, before Lehman failed, been globally netted to practically zero.

The lack of faith in the clearing house system breaks the mechanism of the marketplace, even for legitimate transactions. This leaves gold in your possession as the asset of last resort. This is quietly driving the gold price towards Alf’s objective of $4500.

For your sake immediately take delivery of your gold and silver.
For your sake immediately take paper delivery of your gold and silver shares from those very few companies still willing to facilitate that kind of transaction.
For your sake immediately make your general securities positions "direct registration" as a second best method of protection the asset against failure of your clearing facility.

You all have clearing facility dependence even if you do not know it. Unless MF clients are made whole in every way, the system is broken.

This is no time to take any unnecessary risk.
This is no time to be lazy.

Respectfully,
Santa

298 Comments

Big L's picture

OMG... 1st !

1st!  I didn't think this would ever happen.

It's my lucky day, I"m gonna go by a lottery ticket.

Having said that....

This kind of failure is stunning in it's implications. I've been worried for 2 years about this kind of event.

I don't know for the life of me why it's just sitting on the back  porch of our American awareness.

It's true, if this isn't cleaned up quickly the consequences are very dire. And this isn't being cleaned up quickly.

L

Marblesonac's picture

Thurd?

I Like Thurd the best!

edit: Dang, second :(

AinT's picture

Santa

The man sure can be florid but it's always worth working out what he's trying to say.

Be Prepared's picture

The Black Swan of Cairo

Kyle Bass, Hayman Capital, recommended reading this article during his AmeriCatalyst 2011 presentation and I must say...it's a good read and gets into the broader concept of normalcy bias...

DON’T BE A TURKEY 

The life of a turkey before Thanksgiving 

is illustrative: the turkey is fed for 1,000 

days and every day seems to confirm that 

the farmer cares for it—until the last day, 

when confidence is maximal. The “turkey 

problem” occurs when a naive analysis of 

stability is derived from the absence of 

past variations. Likewise, confidence in 

stability was maximal at the onset of the 

financial crisis in 2007. 

The turkey problem for humans is the 

result of mistaking one environment for 

another. Humans simultaneously inhabit 

two systems: the linear and the complex. 

The linear domain is characterized by its 

predictability and the low degree of 

interaction among its components, which

allows the use of mathematical methods 

can predict a solar eclipse and allows

the use of mathematical methods 

that make forecasts reliable. In complex 

systems, there is an absence of visible 

causal links between the elements, masking 

a high degree of interdependence and 

extremely low predictability. Nonlinear 

elements are also present, such as those 

commonly known, and generally misun- 

derstood, as “tipping points.” Imagine 

someone who keeps adding sand to a sand 

pile without any visible consequence, until 

suddenly the entire pile crumbles. It would 

be foolish to blame the collapse on the last 

grain of sand rather than the structure of the 

pile, but that is what people do consistently, 

and that is the policy error. 

You can download a copy of the article here:  <Article>

Marblesonac's picture

Lindsey, Ann and now Santa

Lindsey Williams called it in advance by a month or two.

If it's paper, even in a 401k or IRA, "they" will steal it.

Ann Barnhardt and now Jim Sinclair are saying it after the fact.  Get your paper assets converted to the real thing, and take possession of them!

Don't put it off, don't be lazy.

This financial system is at the end of the road.  No one knows how much time is left before the collapse, but it's better to be years early then one second late.

jacey's picture

clink clink

Turd, isn't this what you have been saying for months?  

The only protection is taking delivery of gold/silver.

Katie Rose's picture

another Ann Barnhardt Interview

It is 6 AM Saturday Morning.

What am I doing being up this early and on the computer????????? 

Crazy!!!

Another Ann Barnhart Interview.

This is a Christian News website that has great information and a lot of great interviews.

www.trunews.com

Interview here:

http://www.trunews.com/listen_now.htm

Scroll down to:

Monday November 28, 2011

Guest: Ann Barnhardt

Topic: Colorado agriculture hedge trader Ann Barnhardt shuts the doors of her financial firm to return all of her clients money. Find out what lead her to this shocking announcement in this powerful interview

www.barnhardt.biz

I'm going back to bed...

Enjoy!

mdcromer's picture

Yes, this is exactly what I

Yes, this is exactly what I believed to be true after the revelations of the details of the MF Global fiasco.  Great to see Santa reaffirming them here.

Be Prepared's picture

Santa and the Crooked CME

Jim Sinclair said "Unless MF clients are made whole in every way the system is broken."

The reality, and I don't have to wait 3 years and $891 per/hour for the "In Your Pocket" Trustee to know, is that MF Clients will never be made whole because....

(1) Most Clients had positions that they were unable to trade for at least a whole week.  The market wasn't frozen during that time and futures were still trading.  Clients could have and most likely did lose money on their positions.  Loss #1 that will never be repaid.

(2) The best that MF Clients will see is maybe 80 cents on the dollar.  Its clear that the CME hasn't stepped up to do a complete backstop here to restore confident after 4 weeks......which means they never will.  The "I don't give a $hit" Trustee is still petitioning and allowing this bankrupt company to continue to prop trade the very instruments that sunk them....right....they did such a great job the first time...we should let them continue.  I don't see this working well for anyone except the Trustee and the "Super" Priority lienholders.  Loss #2 that will never be repaid.

(3) The time value of money.....let's not forget that $1.5 billion has been out of commission for clients for over a month.  This money could have been productively put to work for the "real" owners of these funds.  Every day they don't have this money...it's costing them and the money they had to withdraw from other investments to fund their transferred positions had to come from somewhere....that's a loss as well.  Loss #3 that will absolutely never be repaid.

(4) Some clients use lines of revolving credit to fund their long term hedge position....these lines of credit cost money.  Loss #4....well you get the idea.

So, we have verifiable evidence this system is broken.  MF Clients can't and won't be made whole here because this was a robbery plan and simple.  There is absolutely no guarantee that your money is safe and the clearing house isn't watching the hen house.

Brotha Bob's picture

It's a scary world

It's a scary world. And, only going to get worse.

At first, like most everyone, I found it hard to believe so much was FUBAR. Now, nothing surprises me. We, the people, have let TPTB give this world over to the TBTF banks. If they are too big to fail, then they are too big and should be busted up.

The bankers and politicians have created one hell of a mess. And, We, the people, are going to pay for it. The end of this game, I fear, will be very ugly. Very ugly, indeed.

Santa is right, of course. If MF'ing Global situation is allowed to stand, no system is safe. Clearing houses, banks, governments. It is all a joke, where you you are is more important then the law. It is a world of serfs and royalty. Laws are for serfs, don't you know. The royalty have no laws.

I know at times, what I write here sounds like the end of the world. I do pray I am wrong, and fear I am not.

RaRaRasputin's picture

I must have been good

as he's bringing us Turd tee's for Xmas!  Nice store Turd although some of the 'TurdMart preparation' goods aren't available for us to buy from you on this side of the pond :(

Dr Durden's picture

Listening to the Barnhardt right now

The interview with Jim P. 

Sweet fancy Moses, she lays it OUT! I'm sitting here looking for things to punch and then almost collapsing into tears that this utter cockamamie bullshit is the NORM now. Fucking depressing. Glad I found Max Keiser over a year ago cause he's been screaming this for years.

Denial is a bitch.

Zenith's picture

Sorry for my ignorance, but...

I am not very knowledgeable in all the finance buzz words and concepts, and  consequently I do very simple investments: delivered physical gold and silver, and longs.  My longs are mutual funds and miners: Sprott Gold and Precious Minerals (SPR003), Sprott's PSLV and PHYS (almost 50% in there), Santa's TNX, SilverCorp SVM, and so on. I use Canada National Bank Direct Brokerage system. I am not trading futures, contracts, any puts or calls, any of this stuff.  Should I care about my longs?  Should I sell everything by the end of the month? Ann the first, then Celente and now Santa... I think this is serious.  Any comment will be very appriated.

Eric Original's picture

Zenith

Some of my stuff, like my miners, are in my account at TDAmeritrade.  I ain't moving anything.

realitybiter's picture

I have some firsthand

I have some firsthand experience with the MF Global situation.

Like Celente, I had traded with Lind Waldock for years.  It is a very small percentage of my portfolio and I use it primarily to trade after hours positions....a lot happens when the American markets are closed.  Even if I lose the current cash it will still have been a very good money maker for me.  As I made money, I took it off the table.  I never imagined the casino would simply steal the pot mid-game.

On the Friday before the announcement, I got worried.  I never imagined that they would steal cash, but I did think they would lock down positions.  I got flat, because I did not want to get stuck.  And then Monday it was all frozen.  What cash?

I was in disbelief when they "lost" the money.  But this is now known.  Obviously, they got caught undercapitalized, the prop desk stole money from the brokerage clients (probably hoping all would be well by just borrowing it for a few days, and then return it, with no one knowing what happened), it blew up, and they went BK.  JPM still has the stolen money, I am sure.  Hell, they probably suggested Corzine take it in the first place.

What happens next?  Corzine is a political nightmare.  He has to have so much dirt on everyone else that he is likely holding that info hostage, similar to the banks and the AIG CDS' in '08.  "You take me down, I take all of you down".  Maybe I am wrong, but he is obviously dirty.  I doubt he is a lone wolf.  Making him guilty will create mass guilt.  This is why they saved the banks in '08.  If you can paper over the crime, there is no crime.  No crime, no criminals...

So TPTB are stuck.  If they screw the customers, they will be giving them scads of ammo to go after civil criminal lawsuits.  The folks who lost money here aren't a bunch of poor saps.  They have deep pockets, and can get lawyered up, if needed....and pissed.

Also, if Corzine goes down, he will go down swinging and grabbing the collar of Jamie Dimon and the rest.  I think they are dragging this thing out and slowly making customers whole to give the appearance of sloppy accounting, not criminal actions.  Once, they make everyone whole, they will argue that there was no crime, just sloppy bookwork.  No dead body,  no murder.  All made whole, no theft.  It's America and the typical American has about a 72 hour window of "giving a rip" about the news of the day.  All is on the way to being forgotten.

We'll see.  Currently, the recovery number is somewhere between 66% and 80%, and rising as we go along.  It is not as if we live in a Country which can't create money.  We've been doing it for 98 years.  100%  is near.

Corzine will keep the stolen money.  Customers will get future taxpayer money.  No criminals will get prosecuted.  And the AG will look the other way.  "There was no crime."

The whole thing makes you want to puke, grab your stash, build enormous walls and wait for the rule of law to return.  If you are continuing to trust the solvency of markets, you are foolish, IMHO.  MFG is a Godsend.  It is a warning to all, without creating catastrophic damage.  It is the tsunami siren.  Get to higher ground.  You have time.

Sterling's picture

@Eric

Just thinking the same as I'm with TDAmeritrade via ThinkorSwim.

TD is their own clearing house right?  TOS used Penson but I think it was changed with the switch to TD.

Correct me if I'm wrong.

Dr Durden's picture

Bonfire

When the bonfire starts, what's the quickest to catch fire and be vaporized in the heat? 00101's, contracts, swaps, paper, etc. Not THEIR paper, your paper. Like Ann said, they're protected, you're the one that's going to get screwed.

But at the same time, they're going to keep the ponzi can-kicking going as long as possible cause there's still more to plunder. Just when you think it's going to explode, the game goes on.

My own personal opinion is to only have the paper at risk that you're ok with never seeing again. That's your Ameritrade account (which I have as well) in miners, whatever. Slowly and consistently transform paper into physical. It's very difficult to be patient when you see the tsunami brewing out at sea.

*edit* Excellent post, realitybiter. That's seems to be it in a nutshell. Another indication the cancer has spread and the parasites are killing the host. It's not over till the fat lady sings. I think we all need to have our heads up and be expedient when we need to, but it's not all going to go KABOOM tomorrow. We have to be realistic and not become captive to fear cause that's what they want.

foggyroad's picture

stock certificates

I contacted My broker yesterday and asked about taking possession of my stocks certificates, turns out it can be done on some, but not all company equities. Some companies will issue them ,some won't.

It takes 4 to 6 weeks @ 50.00$ fee per equity submitted,--Ie. 400 shares of xyz company costs 50.00.

You receive the certificate proving ownership and place it in your safe. If you wish to sell, you forward the certificate to your broker and it takes 10 days to have them processed for sale.

I am going to find out which of my equities are certificate friendly and consolidate my positions to those companies that are. Look into this soon as it takes a while to process. 

Boardwalk's picture

Direct Registration. . .

. . .of your shares takes the clearing house out of the way between you and the company you have invested in.  If you are in a position for the long haul, direct registration is a viable alternative to to leaving your shares with your brokerage -which actually means leaving them with DTTC, the MERS system of the stock world.

blknblu1 posted some great stuff regarding DTCC and direct registration a while back.

http://www.tfmetalsreport.com/comment/91843#comment-91843

A list of companies that allow direct registration can be found  here.  http://www.dtcc.com/leadership/issues/nomorepaper/industry/companies.php?lpos=asset_lob&lid=nomorepaper_drs_list#e

I own miners that I intend to sell at the next interim top.  Those shares are staying with my broker.  I also have a large position in edr.to that I intend to keep for a long time.  Those shares will get direct registered with Endeavor to help shield from clearing house risk.

Marblesonac's picture

Zenith and Eric

I heard, but did no research on my own, so this is unverified, but...

I heard that the Canadian bank that owns TD Ameritrade has about 40% of their portfolio in Euro Bonds.

Since my Ameritrade accounts only have PSLV, I am getting the hell out of everything except half my IRA, which I will get out in early January for tax purposes.

I will convert the PSLV to cash, then to phyz.  I will be giving up liquidity for safety.

Tyler's picture

A big thank you

To everyone who posted a comment on the previous thread regarding Costa Rica/New Zealand.  I read all of them and am looking through recommended blogs etc. 

My initial impression is that you can always find problems with any of these places.  The key is to determine which factors are most important to you.  I plan on continuing my research as I have the time and will post back my findings, for whatever they are worth.  Unfortunately you can't really know until you go there!

Feel free to PM me with anything else if you are so inclined.

Have a great day!

Be Prepared's picture

Tipping Point

I posted the Black Swan article because it calls the U.S. Government out and because it talks about the concept of a "tipping" point.  Most of us, here, are very familiar with this concept but we are all also very susceptible to its effects as well.

Realitybiter put together some great perspective....

The whole thing makes you want to puke, grab your stash, build enormous walls and wait for the rule of law to return.  If you are continuing to trust the solvency of markets, you are foolish, IMHO.  MFG is a Godsend.  It is a warning to all, without creating catastrophic damage.  It is the tsunami siren.  Get to higher ground.  You have time.

The belief that calamity is on the horizon and even knowing that calamity is going to happen should, in of itself, be enough to get people to act, but its usually not.  The reason varies between it won't hit my house (disbelief on how much impact) or it won't be coming for quite awhile yet (timing the event).

Yep....We all like to try to time things and its because we have families to take care of and lives to lead.  We all want to leave the flood plain just before the water hits to maximize our opportunity in preparing or achieving a certain financial level.  Nothing wrong with that....as long as you don't get stuck at the door as everyone else now sees the water.

Fact - We now know that Banks, Clearing Houses, Brokerages are corrupt and run by thieves....pretty much anywhere we put our FRNs is not completely safe.  So can we, as individuals, continue to play the crooked game to gain a few more FRNs in our fight to prepare?  It's a crap shoot....there is a lot of historical evidence that suggests most of the sheep get sheared.  The trick is you have to remember that anything in paper on file with a brokerage may well be lost.  If you can't stand that loss, then you best leave the game now or pull down & convert to hard assets to a ratio you can live with...

Is there more time in the game....probably.....how much?  I don't know, but I can't see it being more than 5 years and can see it being as soon as late next year.  The event won't be "An Event"....it will be a series of increasingly large calamities that will cause a multitude of surges to pound away on you and yours.  Just image a sledgehammer pounding on a wall and that's what it will be like....unrelenting and pervasive.

I still have a brokerage account, but when I trade I watch it like a hawk and if I can't give it that attention...I don't trade.  Even then, one day I might get an email or letter saying "Thanks for playing but the doors have been closed and what's yours is now ours."

Mike7.62's picture

401k cashout

Correct me if I'm wrong, but as I understand it there are only three ways to cash out of a 401k. The first is to quit your job-or get laid off, the second is to have either a medical hardship which exceeds the amount that your insurance/savings will cover, and the third is to prevent a foreclosure on your primary residence. One other way is to take out a loan against the balance, but that is limited to a percentage if you have less than a certain amount, or a maximum of $50,000, usually over a 3 to 5 year term depending upon the purpose for which the loan is to be used.

I would agree that cashing out and purchasing physical would be the thing to do in this environment, but there's no way that I am going to quit my job to access the funds, especially in this employment market. I have stopped contributing to my 401k/IRA's since the first inkling of nationalization surfaced in 2008, but I am at a loss as to how one can access the 401k funds except through the four ways listed above. If anyone has better gouge, I'm all ears.

Tyler's picture

Mike

I tried to get out a few years ago and found the same thing.  I didn't have a ton in it and stopped contributing completely - bought PMs instead.

CreditCrumbs's picture

Double standards in this forum

There are some in this forum having a double standard when they look at Wall Street folks vs. the welfare poor class. I won't name them as that is not the point of this post. The point of this post is to help the rest to be aware of the double standard. 

When there are protests on Wall Street, they say blame the government, not Wall Street. Wall Street's thefts of public money would not have been possible if it were not for government allowing them. 

But when the welfare poor class get their welfare checks, they say blame the welfare poor for their entitlement mentality. They do not blame the government despite the welfare would have not been possible if it were not for government allowing them. 

Blame government for Wall Street greed, but blame the poor for welfare checks. Some consistent logic (not). 

Not that I am endorsing the oversized welfare policy. But I am pointing out the inconsistent logic and the double standards. 

opticsguy's picture

401K withdrawal

Don't fear the 10% penalty, especially if you're in the 28% marginal tax rate.  When the Obamacare 4% tax kicks in (2013), and the Bush Tax cuts go away (maybe next year), you would be looking at possibly 38% marginal rates anyway. 

This isn't tax advice, but paying 10% on top of 28% will seem like a bargain in the near future.

zman's picture

When has anyone ever had

When has anyone ever had a stock account that was seized like MF Global?  If investors have to start worrying about losing their positions to a clearing house, then we got bigger problems than even physical metal on hand could solve. 

Mike7.62's picture

@ Tyler

That's what I found out when I looked into it. I too have been averaging in to physical every month with the same amount of FRN$'s that I used to place in my "retirement" accounts. I also called the broker in charge of my IRA, EuroPacific, and was informed that getting a stock certificate or direct registration is impossible in an IRA. I am thinking of cashing out of my mining and oil stocks and placing it all in a Perth Mint allocated account.

Bay of Pigs's picture

This isn't Tin Hat conspiracy crap

Everything is in danger by the looks of it...so prepare accordingly. More cash and PM's in the safe sounds sensible.

And yes CC, I have been saying that since Day One around here. The double standards are obvious, and even to the point of embracing trolls because of PC attitudes. 

We better cut through all that crap and start calling a spade a spade and quit wasting time "trying to be nice" to everyone.

I have had some of my posts moved and deleted for simply challenging that kind of pathetic nonsense. 

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