MF Global Collapse Update – March 2012

Reading time: 274 words, 0.5 to 1 minute

If you have financial investments especially through American brokerages, you better read this.

The bankruptcy of MF Global, a major global financial broker is another step in the collapse of the global financial system and the repercussions are just beginning to be felt. This may be worse than the Lehman collapse that triggered the financial crisis in 2008.

MF Global improperly accessed customer accounts before declaring bankruptcy as a result of losses on Euro-bonds. As much as $1.2 billion in customers’ money may have been lost. Some may be recovered eventually but the biggest loss is confidence. Without confidence the legal and financial world collapses.

Rehypothecation is a word making the rounds since the collapse of MF Global. It is an ethically questionable but an entirely legal way for American bankster to use clients’ collateral for its own investment or borrowing. And, if the bankster loses the money, that’s too bad for the clients. Canadian investors will be glad to hear it is NOT legal in Canada.

However, this is another lurch into the abyss for the world financial system. Just because rehypothecation is not legal in Canada does not make Canadians immune to the repercussions. Honest brokerages are closing their doors. Even farmers are feeling the brunt and that means all of us will pay with higher food prices. Some farmers are unable to buy seed and others are unable to buy equipment because MF Global lost their money.

Jim Sinclair is advising equity investors to get their hands on paper stock certificates. Once in the hands of investors, equities cannot be rehypothecated.

For more detail you can read my article posted last November by clicking “Another Milestone in the Collapse”

March 24, 2012

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About gerold

I have a bit of financial experience having invested in stocks in the 1960s & 70s, commodities in the 80s & commercial real estate in the 90s (I sold in 2005.) I'm back in stocks. I am appalled at our rapidly deteriorating global condition so I've written articles for family, friends & colleagues since 2007; warning them and doing my best to explain what's happening, what we can expect in the future and what you can do to prepare and mitigate the worst of the economic, social, political and nuclear fallout. As a public service in 2010 I decided to create a blog accessible to a larger number of people because I believe that knowledge not shared is wasted.
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