Crony Corruption Could Collapse America

Several months ago, astonishingly, former New Jersey Governor Jon Corzine was thought to be the leading candidate to replace Timothy Geithner as Treasury Secretary. Both President Obama and Vice President Joe Biden were very fond of Corzine, a former Goldman Sachs CEO, and his economic knowledge and leadership.

That was before MF Global, the commodities boutique Corzine was CEO of went bankrupt and is missing 1.2 billion of customer funds.




Oh, the company that you keep.

Corzine failed miserably as Governor of New Jersey, blowing a hole the size of the Meadowlands in the Garden State checkbook. Residents there, who gathered their senses and elected Chris Christie to clean things up, are witnessing a telling turn around.

But it is Corzine's latest failure that will ultimately have a ripple effect that will engage each of our tax paying citizens. Ann Barnhardt, CEO of Barnhardt Capital Management, Inc., a small independent introducing brokerage, has been some kind of spot in analysis of this case, and recently shut down her operations due to a lack of trust in the commodities futures market. MF Global has exposed what many had feared; that the rule of law in our capital markets can be absent at any given time, and a lawless entanglement with uncertainty is toxic for any investor.

Few think Corzine is an idiot, so the concept that, as he testified in front of Congress, he has no idea how the money went missing is beyond laughable. This money is not mistakenly misplaced; it was stolen. As as George Bailey astutely pointed out, there should be a bank examiner, if not the FBI, with a warrant for the arrest of the firms officers. But surprisingly, perhaps due to the close relationship Corzine has with Obama, there is not. The thought that this event was orchestrated has crossed many a mind, and swamped with supporters of Cloward and Piven in Washington, it gains validity.

As Ms. Barnhardt points out, customer money is gone and the MF Global "trustee" has begun seizing customer assets who traded in precious metals and housed the investment collateral through contracts brokered by MF Gobal.

A form of retracing through the chain of investors, bankrupt or not, to recover losses can be referred to as part of hypothecation. Zero Hedge has been covering the recent emergence of this action like Deion Sanders covering a hobbled tight end. The term was originally making the rounds with respect to a potential collapse of the Euro, but it plays with any loss of collateral where re-pledging has occurred. Sadly, it creates the opportunity for investors on the outside to suffer huge losses, with little legal recourse.

David Buckner got with Glenn Beck to attempt to provided an example of how this could impact the economic system, and it could make your ears bleed. Take a listen:



Fast and Furious, Solyndra and the Chevy Volt are many of the scandals of the Obama administration, but the The MF Global collapse is a canary in the coal mine, and the scandal is much deeper than you know. The MF Global players are part of the crony capitalism set up by the Obama administration. While JP Morgan Chase and George Soros are snapping up the fallout at handsome profits, it seems more likely every day investors will not get their money back.

It has been stolen, by a cast of crony capitalist thieves, with full backing of the corrupt leaders in Washington. More is sure to follow in this case, and the lack of trust in the capital markets Ms. Barnhardt spoke of is growing. Technocrats, in many cases, are in control, operating against the will of the people and the rule of law.

Should a catastrophic economic collapse hit our shores, will your assets be protected from hypothecation from government owned banks? I have often been cited as a master of stating the obvious, but the time to keep your investments on a short lease is staring you in the face.