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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (83015)	11/10/2011 9:16:10 AM
From: TobagoJack	3 Recommendations Read Replies (1) \| Respond to of 217576

Just in in-tray Bill Fleckenstein had an account with MF. Here is what he wrote yesterday. Now We Know What "MF" Stands For Lastly, those who have been following Ask Fleck have seen that -- even after having been as careful as possible my entire life, by only having my cash in T-bills or government debt, and keeping my assets in a custodial bank whenever I could -- I have been caught in the nightmare of MF Global. I had concluded (based on conversations with very knowledgeable industry veterans) that I was fully protected, but I never spoke to a financial industry bankruptcy lawyer (until yesterday). Had I done so I would have known that I bore this risk, and I would have closed my MF account two weeks ago, when it was obvious they were in deep trouble. My account was 100% collateralized by T-bills, as I was led to believe that protected me in all cases, as the collateral was held in my name; but, it turns out if there is fraud, T-bills do you no good. (In which case, all assets and all accounts are equal, and share losses proportionately.) The only protection they offer is that they have no credit risk. What's more, SIPC insurance does not apply to commodity accounts (because cash is supposedly segregated). Thus, if there is fraud at a commodities firm, you have absolutely no protection for any of your money. That raises the question, if SIPC doesn't protect your cash and securities up to $250,000 and $500,000, respectively, as it would in the liquidation of a stock brokerage firm, why is it handling MF Global? (And why does MF Global's commodity statement say "Member SIPC"?) On the subject of stock brokerage firms, unfortunately, if a firm is involved in fraud, your T-bills (or any other securities) will be treated just as mine have been at MF Global, though you will have SIPC protection up to the limits stated. The bottom line is, if you are in any brokerage firm where there turns out to be fraud, you have no protection for your cash or securities, ex the SIPC amount. Of course, if there is no fraud, you don't need any protection. "M" As In Massively, "F" As In Fraudulent (Among Other Things) As for exactly where this leaves us in terms of how to be 100% safe, it would appear (subject to change as this process works itself out) that you should have the smallest amount of money possible against any commodity positions and not hold securities at a brokerage firm in excess of $500,000 if you are worried about any sort of fraud. Having said that, I don't know that we should all go through our lives thinking that the brokerage firms we are involved with are engaged in fraud, and MF Global might be the one-in-a-billion chance, but nevertheless here we are. In theory, it could happen again. I don't know that more regulations are the answer, as the regulators were examining MF Global in one way, shape, or form as recently as just a couple of days before it filed for bankruptcy. This may all blow over, in that the missing money may be found (however unlikely that seems), but the lessons survive: it appears that there really is no protection above SIPC limits at any kind of a securities firm if there is fraud involved.

To: 2MAR$ who wrote (83015)	11/10/2011 9:30:51 AM
From: TobagoJack	Respond to of 217576

My wager on china and India is Gold My hedge on india and china is also gOld My hedge on gOld is platinum, My hedge on platinum is goLd, and silver, and My hedge on silver is ... golD I agree re burma, and Burma would likely be tee-ed w/i 3-5 years, as would be Cuba, I guess. Both Burma and Cuba should do well.

To: 2MAR$ who wrote (83015)	11/10/2011 6:46:14 PM
From: TobagoJack	Respond to of 217576

just in in-tray · Silvio Berlusconi can leave office and the Italians can pass an “austerity” package. But it does not mean the Eurozone crisis is over. That end game has not been reached until there is either fiscal union or a break-up. GREED & fear’s base case remains fiscal union. · It is going to take more of a market-led panic to force a Draghi-led ECB into full scale monetisation. For now the ECB can continue to increase bond purchases and still technically claim to be sterilising. · GREED & fear continues to believe that another deflationary wave in markets is coming, characterised by falling commodity prices and a rising US dollar; though it is just possible that this can be delayed into the New Year if an Italian austerity package buys some time. · Equity investors should keep an eye on the relevant credit markets which continue not to give reassuring signals. The most relevant point for GREED & fear is that the 10-year French government bond yield reached another euro-era record high spread over German bunds this week. A blow out in the key French spread will mark the end game for Germany’s preferred incremental approach to the path to fiscal union via the EFSF. · The contortions gone through to make the proposed 50% haircut of the privately held Greek debt voluntary has raised the issue of whether the CDS market any longer provides a realistic way of hedging European sovereign or European bank credit risk. The widespread view inAmerica is that it does not. · Systemic risks remain real courtesy of the fault line in Euroland, with the systemic risk concentrated in the European banking sector. Financial institutions with a dependency on wholesale funding remain vulnerable to abrupt withdrawals of financing. · There remains two positive points about America, amidst the abundance of negatives such as the dreadful trend in real income growth. The first is the dramatic implications of the shale gas revolution in terms of America’s long-term access to cheap energy and resulting end of reliance on imported energy. The second is America’s continuing role as a catalyst for inventing and embracing new technology. · The near term issue for the US economy remains the extent of fiscal drag in 2012. Still the likelihood is that the Republicans will agree to extend the payroll tax cuts and unemployment benefits into 2012, and also may be the 100% depreciation allowance for new investment spending. Such measures would help but fiscal policy would still be marginally negative with continuing ongoing retrenchment at the state and local government levels. · The 23 November deadline for the “Super Committee” in Congress to come up with supposed savings of US$1.5tn in federal government spending over the next decade, and the debate surrounding it, has the potential to upset markets and renew discussion of potential further sovereign credit rating downgrades for the US. Still GREED & fear’s base case remains that the focus on Euroland will continue to cut the USslack in terms of its funding of its own deficit. · Chinese Premier Wen Jiabao reiterated this week in a public comment that the Chinese leadership has no interest in backing away from property tightening. This confirms GREED & fear’s base case for 2012; namely that the restrictive polices in residential property will remain in place. Investors should keep an eye on growing price cuts as well as falling transaction levels. · There is a better mood towards Chinese equities on the “selective” easing theme. The most important aspect of this seems to be a decision to cut the banks some slack in loan growth in the final two months of this year. GREED & fear’s base case remains a move from tightening to neutral in monetary policy and continuing tightening in the property area. · GREED & fear would expect the policymakers to keep credit growth, including social financing, broadly in line with nominal GDP growth. A more pre-emptive easing is only likely to happen in the context of more deterioration in the external environment, most particularly in Euroland. · The weighting in China in the Asia-Pacific ex-Japan relative-return portfolio will be raised by 1ppt to maintain a neutral position with the money taken by shaving the substantial overweight in Thailand, where the floods have raised a question mark over the economy as well as the administrative competence of the Yingluck government. The investment in China internet play, Tencent, in the Asia ex-Japan long-only portfolio will be replaced by Sina. · The disclosure this week that Japan’s Olympus’ US$1.5bn payments were tobashi operations to hide losses shows that unrecognised losses from corporates’ zaitech activities during the late 1980s bubble are still emerging. This episode is also a reminder of how damaging it is not to own up and take losses. · America is facing a political choice. That is whether to descend further down the path of the European-style welfare state or whether to return to its populist anti-statist tradition. GREED & fear’s base case is that the trend will remain toward continuing bailouts and the like until the sovereign credit or the currency is destroyed, or a combination of both. The bullish view on gold is maintained here. CLSA is committed to reducing consumption for a better environment and is ISO14001 certified. The content of this communication is subject to CLSA Legal and Regulatory Notices These can be viewed at clsa.com or sent to you upon request.