Monday, December 12, 2011

JB Slear's Thoughts on the Missing MF Global Client Funds- Who's Going to Pay?

Many SD readers are familiar with commodites broker JB Slear from his postings and assistance to CIGA's at JSMineset. 
JB has written SD readers regarding his thoughts on the rehypothecated MF Global client funds, and believes that all MF Global clients will eventually be made whole- that the delay is due to the SIPC and the CME bickering over who has to foot the bill. 
He states that the real tragedy that no one is discussing is the food producers- an inability of farmers and food producers to hedge their production could result in hyperinflation in ALL food and energy products!JB believes that not making the MF Global clients whole would be suicide for the Big Boys and would break the market.
We couldn't agree more with that- if in fact they haven't done so already.

JB Slear's full missive to SD readers is included below:
Hey Doc,
I'm a Commodities Broker and am here to offer some clarifications and a viewpoint or two regarding the MF Global client rehypothecation. First, it's not your broker that's doing this "who's first to the money" clause, it's the biggest Market Makers , FCM (Futures Commodities Merchant) and the Stock Market Clearing houses that have done this while no one was looking. So it's not necessarily the broker but the Market Clearing Firms they clear through. I've worked at REFCO as a Stock and Commodities Broker when they blew up, none of my clients lost any of their money. I called the National Futures Association the day of the (REFCO) bankruptcy to get the exact articles that guaranteed the safety of my clients monies. When MFGlobal collapsed I wrote that everyone should get paid back, what word I didn't use was the word "eventually", my bad. SIPC and CME Group cover and protect commodity trading accounts (up to a certain amount) and what I think we're not witnessing on TV, is the bickering between these two guarantors to see who has to put out their money first. If my thinking is in line with reality (and it's probably not) there has to be another reason for this delay in repatriating client funds. If they move forward and not pay anyone back, the game is up and there is no market!! That's it!! Now why would they do that to themselves? Why would they kill the cash cow they have such control over? I can only think of 2 reasons here.
Firstly, they screwed up and it really is over.
Secondly, most humans react to fear quicker than anything else, and usually that fear makes traders make the wrong move right at the time their original thoughts would have profited. In earnest, I don't know what will happen next, but there are some things everyone should consider here. This is a game, this market we use to invest in, It's obvious there's some rigging going on, after all the CFTC has been investigating the Silver Market for over 3 years, that means to me they know it too. I agree many will say the governing bodies are dragging their feet, but what's wrong with making overly sure there's enough data obtained that can outdo any lawyers argument? So it's a game.
The other thought (which is a stretch for sure) is that what if panic and running out of the market is what "they" want the sheeple to do? If that's true, then those that run will never see that return they've been holding out for. The other thought I have here is what I hear the Money Honeys on TV keep telling me, that many people lost everything and cannot pay for their mortgages and other necessities because their money's not back in their accounts...Nobody in their right minds “should ever” have that kind of money in their risk. That's flat out foolish. I do not mean, in any way, the farmers and ranchers and other hedgers that produce our necessities.  This to me, is where the greatest tragedy lies, because if these food producers cannot hedge against they're normal risks, I can almost guarantee a major food shortage, or hyperinflation in every Food & Energy item because of a producers reluctance to sell. That's the real scary part here and no body's talking about it .... I for one am keeping into my investments because I'm betting on much higher prices, but I'm not sticking in all my funds, just enough to keep my feet in the game, but I will not lose my house or wife or anything of great importance. If you are in this situation and not involved with MF's failures, that is, you have unreasonable risk in your investment account, you'll be the next fool. Risk only what you can afford to lose and nothing else. There is so much to discuss and these are only my thoughts on the events as of now, I'm only offering my view and hope it helps someone in making the right decisions. I'm a Commodities Broker for close to 20 years, I stayed alive and am thankful, but if our governing bodies really screwed the pooch here, I'll be looking for another career, so I’m biased in my hopes 
JB Slear
Fort Wealth Trading Co LLC.
866-443-0868 Ext 104
Fax: 817-764-2537

Don't risk what you cannot afford to lose....