The country’s seventh largest trading firm, MF Global filed for bankruptcy October 31 and sent shock waves through the investment fraternity. MF Global was a brokerage that acted as a counter party to investors who wanted to buy or sell commodities, including crops like corn and soybeans. In a recent letter the CME Group, owner of the Chicago Board of Trade admitted that MF Global’s bankruptcy created “a difficult period for many of our customers”. However, CME assured everyone that commodity trading investors will still be able to access their accounts despite the bankruptcy.
Nevertheless, the trustee has frozen the customer funds of the firm and as a result, some commodity traders and also farmers have not been able to access their money since the bankruptcy.
MF Global was run by John Corzine, formerly of Goldman Sachs and ex-governor of New Jersey. The firm made bought extensively into European debts, particularly in countries like Italy, Spain, Portugal and Belgium. They are also believed to have dipped into so-called segregated funds held by trading customers in a way that is similar to bank deposits. Regulators have discovered about $600 million in investor funds that went missing and are now investigating the matter.
Some investors blame CME for the malady, saying that the CME guaranteed their funds when invested in any member company. One owner of a commodities brokerage in Delaware County, Ken Ries, said he could potentially lose as much as $1 million if the money remains frozen. But he is determined to make good any losses incurred by his 100 farmer customers. Ries wrote in a letter to his customers, “For the past 30 years we have been operating under the assumption that customer funds are guaranteed under the umbrella of the CME and its clearing members. However, with the events of this past (week) we have come to learn that in this instance of rerouting segregated customer accounts the Exchange will not, in fact, guarantee customer funds.”
CME Group issued a statement explaining their own limitations, “the US bankruptcy code requires that free credit balances be frozen at least on an interim basis, and that fully paid securities and warehouse receipts may not be made immediately.” Hence, it said, its hands were tied.
Commodity Futures Trading Commission chairman Gary Gensler recently recused himself from the investigations on the basis of his close personal ties with Corzine as both had been colleagues in Goldman Sachs in the past.
US Senator Chuck Grassley (R-Ia) commented, “MF Global’s case is a big collapse that requires a lot of work from the commission to try to figure out what went wrong and minimize further investor losses if possible.”
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Filed under Chapter 7 (Tampa) by on Nov 9th, 2011. Comment. 
The Head of the European Commission, Jose Manuel Barrosso is not optimistic about the future of Spain, Portugal and Greece. In view of these countries’ enormous debt problems, Barrosso warned that unless stern measures are taken to address the problem, the repercussions may be apocalyptic. The countries might slide back to dictatorship rule and democracy will be no more. That was what Barrosso, a former Prime Minister of Portugal, revealed at an extraordinary briefing with the Trade Union Chiefs (TUC).
In the meantime, European Union (EU) chiefs have begun talks aimed at arranging for the bailout of Spain which is anticipated to run into hundreds of billions of pounds. Greece has already accepted a bailout package amounting to £650 billion. John Monks, the head of the European TUC, expressed his personal shock at Barrosso’s prediction. According to Monks, Barrosso sees no other alternative except for these countries to embrace austerity measures, however painful they might be.
If Spain, Portugal and Greece fail to adopt austerity measures, then there is a very real possibility of a takeover by the militaries which might then usher in a dictatorship. Bearing in mind the recent riots and popular uprisings in Athens and Malaga and elsewhere, a military coup is not too far-fetched a notion in these three countries. They do have a history of military uprisings and themselves only became democracies in the 1970’s.
Greece has already had its share of street protests as interest rates and taxes soared and public spending was drastically cut. Similarly, Portugal and Spain have announced austerity measures to avoid defaulting on their national debts. Likewise, other European countries that have had similar incidents of riots and protests include Hungary, Italy and Romania where public sector employees’ salaries are to be cut by 25%.
Mr Barroso’s warning exposes the concern of the EU that that the economic crisis could also lead to the collapse of the beleaguered euro and the unraveling of the EU itself.
On the other hand, Mr. Monks feels that the austerity measures themselves could push the EU back to the 1930s during the time of the Great Depression. He revealed that union chiefs throughout the EU are preparing for a coordinated ‘Day of Action’ to protest the cuts on September 29.
Meanwhile, EU leaders are meeting to discuss a rescue package for Spain. It is expected to come up to at least £100 billion to start with, although this figure could very well balloon as the economic crisis deepens.
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Filed under Chapter 7 (Tampa) by on Sep 1st, 2010. Comment.
In what seems like the only way out of a catch 22 situation, Greece has to borrow money from the International Monetary Fund (IMF) and its fellow EU countries to avoid national bankruptcy. The country is two weeks away from defaulting on €8.5 billion worth of bonds maturing May 19 for which it does not have the money to pay.
During a heated debate in parliament, Greek Prime Minister George Papandreou said the government has to avail itself to the €110 billion three-year package comprising of loans from other eurozone countries and the IMF. But the package comes at a price. The government must agree to severe austerity measures over the three year period. These measures include slashing salaries, pensions and increasing taxes. The government was trying to rush through legislation in parliament to authorize the austerity measures.
The loan package is also aimed at preventing the debt problem from spilling over to other European countries with vulnerable economies such as Portugal and Spain. Portugal and Spain has had their debt ratings downgraded which contributed to the depreciation of the value of the Euro from as high as $1.51 to below $1.28.
The austerity measures have sparked outrage among the Greeks, with approximately 100,000 people spilling into the streets last Wednesday, torching buildings, destroying public property, smashing windows and fighting with police. Three bank employees – a man and two women, one of whom was pregnant – died when they were trapped inside their building set ablaze by rioters. Another four people were rescued by fire fighters using a crane from the balcony of the bank. The deaths were the first protest-linked ones in more than 20 years and have shocked the nation in which protests are common but rarely result in fatalities. A makeshift shrine with flowers and candles was set up in a charred window of the Marfin Bank, the scene of the deaths.
41 policemen and 15 civilians were injured in the riots, while 25 people were arrested. When the journalist union canceled their participation in the protests, newspapers were rushed through the press on Wednesday just in time to report on the riots and deaths. But despite the fatalities and general carnage, unions and far left groups were planning for more protests on Thursday.
The bank workers’ union called for a strike Thursday to protest the deaths of their members and at the same time laid the blame for the violence on the government’s austerity measures. However, most banks in central Athens remained open.
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Filed under Chapter 7 (Tampa) by on Jul 27th, 2010. Comment.
In what seems like the only way out of a catch 22 situation, Greece has to borrow money from the International Monetary Fund (IMF) and its fellow EU countries to avoid national bankruptcy. The country is two weeks away from defaulting on €8.5 billion worth of bonds maturing May 19 for which it does not have the money to pay.
During a heated debate in parliament, Greek Prime Minister George Papandreou said the government has to avail itself to the €110 billion three-year package comprising of loans from other eurozone countries and the IMF. But the package comes at a price. The government must agree to severe austerity measures over the three year period. These measures include slashing salaries, pensions and increasing taxes. The government was trying to rush through legislation in parliament to authorize the austerity measures.
The loan package is also aimed at preventing the debt problem from spilling over to other European countries with vulnerable economies such as Portugal and Spain. Portugal and Spain has had their debt ratings downgraded which contributed to the depreciation of the value of the Euro from as high as $1.51 to below $1.28.
The austerity measures have sparked outrage among the Greeks, with approximately 100,000 people spilling into the streets last Wednesday, torching buildings, destroying public property, smashing windows and fighting with police. Three bank employees – a man and two women, one of whom was pregnant – died when they were trapped inside their building set ablaze by rioters. Another four people were rescued by fire fighters using a crane from the balcony of the bank. The deaths were the first protest-linked ones in more than 20 years and have shocked the nation in which protests are common but rarely result in fatalities. A makeshift shrine with flowers and candles was set up in a charred window of the Marfin Bank, the scene of the deaths.
41 policemen and 15 civilians were injured in the riots, while 25 people were arrested. When the journalist union canceled their participation in the protests, newspapers were rushed through the press on Wednesday just in time to report on the riots and deaths. But despite the fatalities and general carnage, unions and far left groups were planning for more protests on Thursday.
The bank workers’ union called for a strike Thursday to protest the deaths of their members and at the same time laid the blame for the violence on the government’s austerity measures. However, most banks in central Athens remained open.
Filed under Chapter 7 (Tampa) by on May 24th, 2010. Comment.
