I kind of like Celente (though he is a perma-bull when it comes to gold.) I suppose that even when I don't agree with him, he has passion, a long history and some interesting points. I have heard way too many stories of MF global, and his ranks up there with some of the worst. When segregated funds go missing, the customers end up screwed and nobody is held accountable it makes you think.
He said that MF Global will undermine trust in the exchanges; I disagree. I heard the same argument made when the government screwed the bondholders of the automakers. In both cases, it should make people think carefully about the security (and insecurity of their investments.) Instead, people will realize that there are really no safe options and it will be "business as usual."
Has anybody followed MF Global? I wish Celente would have explained some of the really horrid decisions that had been made. The bankruptcy trustee will be taking around $900 per billable hour from the funds. They sought (and received) permission to continue transfers and trading (which may be fine) but also got the courts to grant inter-company claims superior status over segregated customer deposits (completely unheard of.)
I had to look up the two articles because I know it is hard to believe. I also know that most people don't care that much. The last article allows MFGI (not bankrupt) to "loan" cash to MF Global (bankrupt.) Nice. I wonder if they will allow me to keep assets separated between "bankrupt" and "non-bankrupt" and allow me to transfer cash between them if I ever go under?
29. To ensure that each individual Debtor will not, at the expense of its creditors, fund the operations of another Debtor entity…all intercompany claims against a Debtor by another Debtor arising after the Petition Date as a result of intercompany transactions and allocations (“Postpetition Intercompany Claims”) be accorded superiority status
and
30. In addition, in connection with their role under the Cash Management System facilitating the operations of the non-Debtor affiliates, the Debtors may, in the ordinary course of business, periodically infuse capital into certain of their subsidiaries and affiliates, including non-Debtor non-U.S. affiliates. These infusions of capital generally are accomplished through the making of intercompany loans. The Debtors use repayments of such loans as a tax efficient method of managing cash throughout their worldwide business enterprise. Because the non-Debtor affiliates are part of the same group of affiliated entities as the Debtors, the entirety of intercompany transactions among Debtors and non-Debtor affiliates alike remain within the spectrum of the debtors control.
