The Rule of Law is disintegrating

Let’s get complicated for a moment:

MF Global bet on European Bonds, lost, and filed bankruptcy on October 31st and the brokerage accountholders got tricked!  Happy Halloween!  $869 million were frozen since October 31 across commodity customer accounts that contained only cash, bankruptcy trustee James Giddens has said.  Gerald Celente, a customer of a subsidiary Lind-Waldock tells a different story.   Lind-Waldock operated as a full-service futures brokerage firm primarily serving individual traders, or as known in the industry, “retail” clients.  Celente had bought a gold futures contract and had sufficient funds to take possession of the gold next month.  The futures contract locks in the price of gold to be settled at a specific point in the future.  Most traders close their position before expiration and settle for cash thus producing a profit or loss depending on the price the day of settlement.  Celente put enough money (over $100,000) in his account to actually take delivery of the gold at expiration of the contract.  Celente received a phone call last week indicating that the Chicago Mercantile Exchange (CME) who handles the commodities trading exchange, “and others”, had confiscated his cash in a totally separate account without his knowledge or approval AND he was receiving a “margin call”.  The broker will initiate a margin call when there is not enough money in the account to cover the futures contract.  Celente in his own words suffered a major loss.

The essence of this story is that the rule of law is  being broken and anybody with bank accounts, brokerage accounts, safe deposit boxes, etc., may not have the safety net they think they have.  If an entity can extract your funds without your consent or knowledge then you no longer have the safety of Law to insure your wealth won’t be confiscated.  This fundamental right of Americans is why the rest of the globe wants to live here.  Other countries have dismantled the rights of the individual and stolen their wealth by various means.  The global financial system is based on the rule of law.  How can we conduct business without a consistent set of rules?  What if Our Heavenly Father decided to change the law of gravity from time to time?  Chaos went ensue.  That may happen soon in the global financial markets if this action is a true indication.

Who is in the middle of this?  MF’s chief executive, former New Jersey governor and Goldman Sachs head Jon Corzine.

The European crisis is moving toward the extraction of wealth from bondholders and banks who bet on European bonds.  If the banks take a loss, who do you think will backstop them?  The American taxpayer once again.  Italy has replaced its Prime Minister with Mario Monti.  Who is Monti?  Monti is a member of the Presiderium of the Friends of Europe, a leading European think tank, and was the first chairman of Bruegel, a European think tank founded in 2005. He is the European Chairman of the Trilateral Commission, a think tank founded in 1973 by David Rockefeller.  He is also a leading member of the exclusive Bilderberg Group of economists.  Monti is an international adviser to Goldman Sachs and The Coca-Cola Company.

Greece is in the same shape. Lucas Papademos has been selected to head up Greece.  What are his ties?  He has served as Senior Economist at the Federal Reserve Bank of Boston in 1980.  He has been a member of the Trilateral Commission since 1998.

Goldman Sachs has had a major impact on global finance.  Former employees include Robert Rubin and Henry Paulson who served as United States Secretary of the Treasury under Presidents Bill Clinton and George W. Bush, respectively, as well as Mark Carney, the governor of the Bank of Canada since 2008, and Mario Draghi, governor of the European Central Bank.

Gary Gensler is the chairman of the U.S. Commodity Futures Trading Commission under President Barack Obama.  This agency’s job was to regulate MF Global to insure this event did not happen.  Who is Gensler?  Gensler spent 18 years at Goldman Sachs, making partner when he was 30, becoming head of the company’s fixed income and currency trading operations in Tokyo by the mid-’90s, and eventually the company’s co-head of finance.  Why would he take a low paying position with the CFTC?

The rule of law depends on fair practices and a single standard of doing business.  Favoritism and preferential treatment compromise the rule of law.  Celente’s explicit statements about what happened to him cause concern whether this event is a symptom of a bigger problem.  The overall trend of the average guy being thrown under the bus seems to be in place.  It’s going to get crowded under there!

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