Economic Stories of Relevance in Today's World -- December 18, 2011

Airport needs $207,584 - City Council to get proposal for funding Hickory operation - Hickory A tow crew from the new - Hickory Daily Record - Larry Clark - December 16, 2011 - The Hickory City Council will vote Tuesday on a proposed amendment that will carry Hickory Regional Airport through the remainder of the budget year. Assistant City Manager Warren Wood will recommend a $207,584 budget amendment that will fund Fixed Base Operator functions through June 30....            The FBO was a source of revenue for the city through property lease agreements and fuel sales. Wood said Riverhawk still owes Hickory more than $150,000 in revenue payments...                 Warren said revenue from Riverhawk to the city averaged about $200,000 a year, a small percentage of the total FBO income.
He said some details probably will be ironed out in court – perhaps in federal bankruptcy court, but most likely in North Carolina courts. Some Riverhawk creditors have indicated they will claim a portion of future FBO revenue should be used to pay off Riverhawk’s debts because the company apparently used future income to gain credit in some instances. Hickory officials reject the notion. Wood said the city never signed or verbally agreed to any deal that obligated fuel sales or other FBO services to creditors, and it was never a co-signatory on Riverhawk loans. Riverhawk’s status as a lease holder and because of the concession agreement between Hickory and Riverhawk, it’s the city’s position that future FBO income is off limits to debt claims, as are airport assets. “It is our intention to provide stability at the airport and build back its reputation,” Wood said. “Hickory has a huge investment in the airport.” The city owns the terminal and the tower and maintains firefighting equipment and personnel at the airport.

If you would like to read this article without paying the ridiculous subscription fee that the HDR desires for what little real news they produce, then you have two choices. You can cut and past the article into a word precessing program such as Microsoft Word before the annoying pop up pops up or you can quickly scroll to the bottom of the screen and wait until the annoyance pops up and then read through the gray matter.

The Hound: I think it is wise that they put Warren Wood out as the spokesman on this issue, because I don't think he had much to do with the mistakes that took place 4 years ago. Mayor Rudy Wright and City Manager Mick Berry were at the forefront of allowing the transfer of the deed (Lease Arrangement) from Profile Aviation to River Hawk Aviation to go through even though the Aviation Attorney hired by the city recommended that they not go through with the deal. A deal that they were blind to until after it was already consummated.

Alders Sally Fox and Jill Patton were dead set against this deal going through four years ago. If city revenues from the contract with River Hawk were $150,000 in arrears, and total revenue was around $200,000, then that means that River Hawk hasn't been paying bills (to the city) for over 9 months and I have been told that this problem has been going on well back into 2010. Why did the city wait so long to deal with this issue?

A good thing is that the prices for aviation fuel at the Hickory Airport have come down substantially since the takeover by the city. The prices at Hickory Regional have now gone from being some of the highest in the region to being some of the lowest. That is what the Hickory Regional Task Force told the City would happen in their recommendations from 2006. This puts the Airport in a very good position competitively.

My only hope is that those who made the terrible decisions in 2007 will revisit their thought processes and understand the flawed logic so that the same flawed logic won't correlate to more bad decision processes related to other endeavors moving forward. This is a city that is continually managed in a risk averse manner and yet they were willing to move forward with a shaky arrangement (the deal with Profile) into another shaky arrangement (the deal with River Hawk) and this was done against the advice of an attorney the City had hired and a Task Force they had implemented. Are you starting to get the picture?

City of Hickory takes over operations at Airport - River Hawk Aviation OUT- 12/9/2011

Mind Blowing - The City's Mismanagement of the Hickory Regional Airport - 9/30/2009

Do people even know? Hickory Airport Operators (River Hawk Aviation) in Bankruptcy - 6/18/2011

Will Hickory Airport Operators be forced to liquidate -- and why is no one talking about this?!?!? - 9/16/2011



MF Global Told CME It Used Customer Funds: Timeline - Bloomberg - Matthew Leising and Silla Brush - Dec 16, 2011 - MF Global Holdings Ltd. used about $700 million of customer funds to “meet liquidity issues” in the days prior to its bankruptcy, according to CME Group Inc. (CME), which had auditing authority over the failed futures broker.             CME Group detailed its dealings with MF Global in documents released yesterday by the oversight panel of the House Financial Services Committee. Christine Serwinski, chief financial officer for North America at MF Global, and Edith O’Brien, a treasurer, told Mike Procajlo, an exchange auditor, at around 1 a.m. on Oct. 31 in Serwinski’s Chicago office that the customer money was transferred on Oct. 27 and Oct. 28 and possibly Oct. 26, according to a CME Group timeline.              About $700 million was moved to the broker-dealer side of the business to meet liquidity issues in a series of transactions on Thursday, Friday and possibly Wednesday,” Serwinski and O’Brien told Procajlo hours before the firm filed for the eighth-largest bankruptcy following record quarterly losses and $6.3 billion in trades on European sovereign debt.             The timeline, the most detailed account yet of what may have happened to as much as $1.2 billion of missing customer money, was released as Jon Corzine, the firm’s former chairman, chief executive officer and architect of the European trades, faced his third congressional panel in the past week. The former senator and governor of New Jersey said he doesn’t know what happened to the money. New York-based MF Global’s failure marks the first time a futures broker’s bankruptcy has led to the loss of customer funds, according to Terrence Duffy, CME Group’s executive chairman.

“A statement that $700 million was taken implies a rule violation,” said Ronald Filler, who was a managing director in the global futures business at Lehman Brothers Holdings Inc. for 16 years. “That is not a permitted use of customer funds under Commodity Futures Trading Commission rules,” said Filler, who is now a professor at New York Law School, specializing in derivatives and futures brokers issues.


Once customer money is moved from the customer segregated accounts to the broker-dealer unit of a broker it can lose its designation as protected funds, Filler said.               “No one knows it belongs to the customer” and treasury officers may mistakenly think the funds are available for general use, he said.
Investigators are attempting to determine which transactions involving customer funds were illegitimate, Jill E. Sommers, the senior CFTC commissioner overseeing the investigation said in a telephone interview this week.                   If a transaction that was legitimate in the beginning “becomes illegitimate” later in a chain of transactions, then the chances of recovering the funds could be slim. “It may be gone,” Sommers said.



50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe - The Economic Collapse - December 16, 2011 - Even though most Americans have become very frustrated with this economy, the reality is that the vast majority of them still have no idea just how bad our economic decline has been or how much trouble we are going to be in if we don't make dramatic changes immediately.  If we do not educate the American people about how deathly ill the U.S. economy has become, then they will just keep falling for the same old lies that our politicians keep telling them.  Just "tweaking" things here and there is not going to fix this economy.  We truly do need a fundamental change in direction.  America is consuming far more wealth than it is producing and our debt is absolutely exploding.  If we stay on this current path, an economic collapse is inevitable.  Hopefully the crazy economic numbers from 2011 that I have included in this article will be shocking enough to wake some people up.

At this time of the year, a lot of families get together, and in most homes the conversation usually gets around to politics at some point.  Hopefully many of you will use the list below as a tool to help you share the reality of the U.S. economic crisis with your family and friends.  If we all work together, hopefully we can get millions of people to wake up and realize that "business as usual" will result in a national economic apocalypse.

The following are 50 economic numbers from 2011 that are almost too crazy to believe....
#1 A staggering 48 percent of all Americans are either considered to be "low income" or are living in poverty.

#2 Approximately 57 percent of all children in the United States are living in homes that are either considered to be "low income" or impoverished.

#3 If the number of Americans that "wanted jobs" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.

#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.

#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.

#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.

#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job.  In July, only 81.2 percent of men in that age group had a job.

#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#16 As the economy has slowed down, so has the number of marriages.  According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married.  Back in 1960, 72 percent of all U.S. adults were married.

#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.

#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.

#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

#20 If you can believe it, the median price of a home in Detroit is now just $6000.

#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant.  That figure is 63 percent larger than it was just ten years ago.

#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.

#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.

#24 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

#27 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

#30 The retirement crisis in the United States just continues to get worse.  According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#31 Today, one out of every six elderly Americans lives below the federal poverty line.

#32 According to a study that was just released, CEO pay at America's biggest companies rose by 36.5% in just one recent 12 month period.

#33 Today, the "too big to fail" banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#34 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.

#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#40 Sadly, child poverty is absolutely exploding all over America.  According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#42 In 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for more than 18 percent of all income.

#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

#44 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars.  That was the third year in a row that our budget deficit has topped one trillion dollars.

#46 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars.  When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Of course the heart of our economic problems is the Federal Reserve.  The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence.  If the Federal Reserve system had never been created, the U.S. economy would be in far better shape.  The federal government needs to shut down the Federal Reserve and start issuing currency that is not debt-based.  That would be a very significant step toward restoring prosperity to America.

During 2011 we made a lot of progress in educating the American people about our economic problems, but we still have a long way to go.

Hopefully next year more Americans than ever will wake up, because 2012 is going to represent a huge turning point for this country.

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Hal Row's First Talk - CEG discussion about Ward Specific Voting - The Interview

Part 1 - Billy Sudderth gives his reasoning for the formation of the Citizens for Equity in Government and Joe Brannock begins the discussion about how the current voting structure came into existence.

Part 2 -  Joe Brannock continues on with the history lesson of what happened back in the 1960s that has led us to where we are today and Billy Sudderth talks about some of the political maneuvering that took place at that time

Part 3 - Billy Sudderth continues by talking about disenfranchisement and the lack of participation that he believes is a result of the system. Joe talks about the perceptions and how he is white, republican and young and Billy is black, a senior, and a Democrat and we need to cast off the labels to be able to move things forward. He talks about how 4 people on council made a decision that shut out citizen participation. There is no entry point into the pipeline of civic service.

Part 4 - Joe Brannock talks about council people representing the City of Hickory at the same time that they are directly elected by their ward. Citizens of Hickory don't vote on members of Congress from other districts and yet these representatives represent the welfare of the entire State of North Carolina. They give out contact numbers to sign the petition: Billy Sudderth 828-308-4669 / Joe Brannock: 828-455-3789

 1967 - How we got where we are today - November 11, 2011

1961 -- A lesson in Hickory's History - November 10, 2011

Hickory City Elections: The Results are in - November 9, 2011

Press Conference on Ward Voting Referendum -- September 20, 2011

Newsletter about the City Council meeting of June 7, 2011 -- Addendum on "The Newly Proposed Ward Boundary Map" - June 8, 2011

Big thanks to Hal and WHKY for having this educational interview on First Talk. I think he did an excellent job of hosting this interview and I believe that WHKY is now in the ball game when it comes to the discussion of this issue. All anyone has asked for is to be allowed to have a public forum to discuss the Direct Ward versus At-Large issue with the public and from there the chips shall fall where they may.

Tomorrow - Hal Row's First Talk - CEG discussion about Ward Specific Voting

Tomorrow morning on 1290 WHKY radio during Hal Row's First Talk program (Link to listen on the computer) there will be a discussion by the Citizens For Equity in Government about the issue of Ward specific voting. This issue has been addressed on this blog in the following articles:


1967 - How we got where we are today - November 11, 2011

1961 -- A lesson in Hickory's History - November 10, 2011

Hickory City Elections: The Results are in - November 9, 2011

Press Conference on Ward Voting Referendum -- September 20, 2011

Newsletter about the City Council meeting of June 7, 2011 -- Addendum on "The Newly Proposed Ward Boundary Map" - June 8, 2011

I hope that you will give Hal's program a listen in the morning and if you feel like calling in then do so. This is not a racial issue or about disgruntled people in Ridgeview. It is about whether the people of Hickory have a voice in making important decisions about how we elect our leaders. It was a conflict of interest to allow the City Council to determine how they would be elected 40 years ago and it was done without the consent of the electorate. All anyone who proposes going back to Direct Ward representation  is asking for is a fair hearing. All anyone is proposing is that Citizens of Hickory be allowed to determine how City Council will be elected. They tell people that they should exercise their right to vote, but then turn around and say, "but not on this issue."

It reminds me of the Second Bad News Bears Movie, The Bad News Bears in Breaking Training, when they are playing the game in the Astrodome and the people running the stadium don't want to allow them to finish the game when they start making a comeback against the team from Texas. The kids refuse to leave the field and finally the team starts chanting that they want to play and then the coach of the Bears picks it up and starts yelling "Let Them Play" and soon the people in the stadium pick up the chant until the authorities have no choice but to "Let Them Play."

All we are saying is "Let Them Vote." It is the American way. It is what the country is supposed to be all about. It is about fairness and opportunity. There are no guarantees of outcome and no one expects any. I think that is what scares our local leaders the most. They want to control outcomes. Let me ask you one simple question. Do you like being controlled?

Protesting is an exercise of the First Amendment - Silence DoGood

In my expansive internet readings, I’ve stumbled upon two new words that I simply have to share with you, learned readers. These two new words are political in nature describing, apparently for someone, new paradigms in political thought and expression. To what end they will be used in the future is quite beyond my grasp to comprehend, but I’ll tell you what they are.

Thugocracy: (thug-oc’ra-cy) “A system of government that follows no constitutional principles, propped up by union thugs, who make manufactured and transported goods more expensive, leading to a socialist/Marxist take over using force and the threat of force in which an illegal alien can circumvent the Constitution to become president of the United States elected by Ineptocrats.”

So, what do you think? Pretty cool so far huh? Of course, a quick and fast Google search of that word shows that it has been slathered across the web and certain media outlets by the likes of Glenn Beck, David Petraeus (talking about Iran), and appears on quite a few blogs with a rather, shall we say, slightly right orientation. And by slightly right, I mean if your middle of the road guy is Karl Rove. The other word, married to Thugocracy is

Ineptocracy: (in-ep-toc’-ra-cy) “A system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.”

(DoGood): If you think I might be making them up or just pulling them out of the air, the link where I found the definitions to the words can be found here: http://dancingczars.wordpress.com/2011/11/04/merriam-webster-says-thugocracy-and-ineptocracy-go-hand-in-hand/.


While there is a reference to Merriam Webster and no doubt an attempt at giving validity to the words, there is no link to Merriam Webster on that sight nor are those words listed or available on Merriam’s website in their on-line dictionary. In addition, both seem to have made an appearance in the previous decade. 2002 for Thugocracy and 2006 for Ineptocracy seems to be the first references for both.


But in the sense of both or either, it would appear that the words are used to describe those with a more liberalized political viewpoint. Contrived by those with a slightly less tolerant temprament for people who are poor, in a minority classification because of their skin pigmentation, or perhaps even, because they’re professed democrats.


Why did we need these words? I’m not really sure. The nexus of beginning puts them squarely within the Presidency of George W. Bush and the absolute control of both chambers of Congress by the Republican party. Given the obvious view of the writer as to the meaning of those words, it would appear they do not appear to be aimed at that administration or the party of ‘right’.


So in the interest of levity, I’d like to offer up some different words. Words that have been around for slightly longer than the two new ones proffered. Words that have quite a bit more meaning, for quite a few more people, and nations.

Democracy.
1.a. Government by the people; especially, rule of the majority.
   b. A government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections

2. A political unit that has a democratic government.

3. Capitalized : the principles and policies of the Democratic party in the United States .

4. The common people especially when constituting the source of political authority.

5. The absence of hereditary or arbitrary class distinctions or privileges.

(DoGood) - Notice that sentence contained under number 4 in the definition of Democracy? “The common people, especially when constituting the source of political authority.” But more about that in a bit.

Theocracy. First known to be used, 1622.
1. Government of a State by immediate divine guidance or by officials who are regarded as divinely guided.

2. A State governed by a Theocracy.


Oligarchy. First known to be used, 1542.
1. Government by the few.

2. A government in which a small group exercises control, especially for corrupt and selfish purposes.

3. An organization under oligarchic control.

(DoGood) - I’m going to stop there and explain why I wrote a piece a couple of months ago that wasn’t that well received, steeped in language and meaning that apparently had all the appeal of a dentists’ drill. So why am I making another trip to the dentist? Look at the words folks. We communicate in language. Look at how they compare to the new ones I shared with you. Someone wants to attack things that we have a right to engage in, in this country, and someone(s) wants to strip you of that ability and paint those rights as sedition, communism, socialism, and being a traitor. It even says that in Thugocracy, there is no adherence to Constitutional ideals. That gives me pause to wonder what Constitution it is that this writer is reading or referencing. I have little doubt that some of you may have already seen those two words before today. I likewise realize that some of you may even agree with the meaning they convey. That’s between you and your conscience. But if you read the definition of Ineptocracy and look at the definition of Democracy, you can see that the Ineptocracy pundit stands directly against those who believe in Democracy. I’m not going to ramble on, I know, tissues all around for that, but I’ll merely leave you with the following picture, also borrowed from that same website, as testament to what is being railed against.



I look at that banner and I see a plea to stop funding the rich, the affluent, and the military industrial complex and create jobs that pay a wage so that people can earn a decent and respectable living for themselves and their families. I don’t see a demand for handouts, welfare, or food stamps. How dare they!

The Dominoes are falling all around us -- MF Global is the Canary in the Coal Mine

Mathematical impossibilities and the current mega-leveraged markets. Get out of paper. The criminals who are running the economic markets look at us as rabble who are ripe for harvest. They are going to economically rape us. This interview between Warren Pollock and Independent Investment Banker Ann Barnhardt whose primary investments were in livestock and grain. She says it is a no-brainer to get out of the market, because there is no integrity in the market. You cannot react to these markets, because the market (CME) is not fulfilling its fiduciary responsibility.


‘Going Galt’: Hedge Broker Shuts Down Firm With Chilling Letter About the Market - The Blaze - Jonathon M. Seidl - November 18, 2011 - Ann Barnhardt describes herself as a an “an old-school commercial hedge broker specializing in CATTLE and GRAIN.” And she just shut down her business by delivering a passionate and chilling open letter posted on her website. “I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not,” she writes. And then she unloads:


"The Entire System Has Been Utterly Destroyed By The MF Global Collapse" - Presenting The First MF Global Casualty - Zero Hedge - Tyler Durden - November 17, 2011

Presented without comment, merely to confirm that the market as we know it, no longer exists.
BCM Has Ceased Operations (source)
Posted by Ann Barnhardt - November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”

With Best Regards-
Ann Barnhardt

Economic Stories of Relevance in Today's World -- December 11, 2011

City of Hickory takes over operations at Airport - River Hawk Aviation OUT - December 8, 2011 - ... the tale of this sordid mess with River Hawk obtaining a transfer of contract through the previous operator Profile Aviation. The City had every right to cancel the contract and went against Aviation Legal Counsel's wishes in granting the transfer of lease to a company that had previously operated a couple of other FBO's into bankruptcy. City Officials had been informed of several issues, but chose to ignore the warning and proceed ahead with the transfer of contract in late 2007.

Now four years later we are back to square one. In taking over the airport can we be assured that it will be run competently? Will this reacquisition cost tax payers anything? With the harm to the viability of the airport that has been caused, will those who placed the city in this position admit fault? Have any lessons been learned here?


Banks’ Q4 Earnings: Look Out Below! - Barron's.com - Avi Salzman - December 5, 2011 - Banks’ trading and investment banking results are expected to be lousy again in the fourth quarter, and today Wells Fargo analyst Matt Burnell got out the axe and started cutting his expectations. Burnell slashed his fourth quarter EPS estimates for the banks by an average of about 10%. Burnell is also worried about bank performance for the next couple of years, and cut estimates for 2012 and 2013 by an average of 1% “due to our concerns over a continuation of similar risk aversion in the future.”


Gary Gensler: A U-Boat Sent into the CFTC? - MFG Facts - When Gary Gensler was nominated to head the CFTC, most Americans had never heard of him. Yet he had been cruising the inner Beltway of D.C. and halls of influence for years, under the radar of most.  Genlser succeeded Brooksley Born who was given a very rough time by the club of Summers, Rubin, Greenspan and others when she sounded alarm bells on the rapid and unregulated growth of off-exchange derivatives. Born sought at least transparency as they “could pose potentially serious dangers to our economy.” Although appointed by Clinton, she never got his support and resigned from her post. For more on her prescient warnings, view this fascinating PBS documentary.  As more collapses happen, the failure to regulate off exchange derivatives from CDO’s to re-purchase agreements are increasingly understood to be a prime source of financial collapse....


Contagion Catastrophe - Europe is closer than you think to bringing down the American—and, therefore, the global economy - National Journal - By Jim Tankersley  - December 2, 2011 - This is the worst-case scenario from Europe, and it just might come true: Italy defaults on its debts. Every major Italian bank collapses. Recession grips the eurozone. Sovereign defaults and bank failures ripple across the Continent. Saddled with bad loans to nations and lenders in Europe, American banks hemorrhage cash. Credit freezes in the United States. Multinational companies, unable to raise money, curb U.S. investment and hiring. Wall Street demands, but fails to get, new bailouts. The entire developed world plummets into recession and, quite possibly, depression. This, in contrast, is the placid warning that President Obama gave Americans about the threat: “If Europe is contracting,” he said on Monday, “then it’s much more difficult for us to create good jobs here at home.” There’s still a chance that Europeans, through some combination of fiscal and monetary action, can stop the crisis before it shatters the feeble U.S. recovery. But the worst case is so much worse than Obama’s description, and Washington has failed to prepare voters for the possibility. “The [potential] shock we’re talking about is of very large magnitude,” says Viral Acharya, a New York University professor who studies financial risk extensively. “If you’re just having an Armageddon coming your way, [America’s] buffers may not be adequate.”


Barack Obama is Destroying Our Economy on Purpose - Worldview Radio - Brannon Howse - March 9, 2011 : A pair of radical Columbia University professors by the name of Richard Andrew Cloward and Frances Fox Piven wrote an article in the radical magazine known as The Nation. The article was published on May 2, 1966 and laid out what is now known as the "Cloward-Piven Strategy". The plan calls for the destruction of capitalism in America by swelling the welfare rolls to the point of collapsing our economy and then implementing socialism by nationalizing many private institutions. Cloward and Piven studied Saul Alinsky just like Hillary Clinton and President Obama. Listen as Brannon and his guest James Simpson explain how Cloward and Piven inspired the creation of ACORN that Obama worked for as a community organizer. This interview must be e-mailed all over the country. Americans must awaken and understand the goal of these radicals and what is to come if they succeed. Time is of the essence. Obama is not over his head as some have claimed; he knows exactly what he is doing. Understand the Cloward-Piven Strategy, the rules of Saul Alinsky and their Cultural Marxist worldview and you will understand that what is occurring is not by mistake.
Download the MP3

Bob Chapman - SBG Report - Part 1 - December 10, 2011

Bob Chapman - SBG Report - Part 2 - December 10, 2011

City of Hickory takes over operations at Airport - River Hawk Aviation OUT

According to multiple sources, with the authorization of the Bankruptcy Judge in North Wilkesboro, as of midnight this morning, the City of Hickory has taken over the Fixed Based Operations at the Hickory Regional Airport. According to a source River Hawk Aviation has been cleaning out their offices. FBO Employees were informed a few days ago that the transfer was imminent.

According to sources, River Hawk has been in deep debt for some time and has had trouble meeting time requirements to pay their lease for many months. When listening to Hal Row's First Talk program, Hal spoke about an e-mail that had been sent to him by a lady named Laney. When Mayor Wright came on the radio that morning for the Monday Morning meeting with the Mayor, he gave the full name Laynay Humphrey. Laynay Humphrey who complained about the City building a Fuel farm that would compete against the existing FBO (River Hawk) is the wife of one of the brothers who are owners of the FBO. The Mayor had to have known who this e-mail was from. I did. Anyone who has paid attention to this mess did, but the general public didn't, because they have been kept in the dark and local media has been clueless about this issue and the problems at the airport. That is the sad state of what (little) we are getting from our local media.

Below is a presentation of Hal Row's show pertaining to this situation:



I will ask further questions to get to the bottom of this issue, but I have been told that information from the bankruptcy court shows River Hawk, with its one operation here in Hickory, to be several millions of dollars in debt. A Letter to the Editor written upon River Hawk's behalf appeared in the Hickory Daily Record just last Saturday. With legal proceedings winding down, the closed session minutes to meetings involving this issue should finally start to see the light of day.

The links below will tell the tale of this sordid mess with River Hawk obtaining a transfer of contract through the previous operator Profile Aviation. The City had every right to cancel the contract and went against Aviation Legal Counsel's wishes in granting the transfer of lease to a company that had previously operated a couple of other FBO's into bankruptcy. City Officials had been informed of several issues, but chose to ignore the warning and proceed ahead with the transfer of contract in late 2007.

Now four years later we are back to square one.  In taking over the airport can we be assured that it will be run competently? Will this reacquisition cost tax payers anything? With the harm to the viability of the airport that has been caused, will those who placed the city in this position admit fault? Have any lessons been learned here?


Mind Blowing - The City's Mismanagement of the Hickory Regional Airport - 9/30/2009

Do people even know? Hickory Airport Operators (River Hawk Aviation) in Bankruptcy - 6/18/2011

Will Hickory Airport Operators be forced to liquidate -- and why is no one talking about this?!?!? - 9/16/2011

Joe Brannock article in the Hickory Daily Record on December 9, 2011

Response to Riverhawk better able to handle general aviation

I take issue with Mr. Byer's Letter to the Editor (Riverhawk better able to handle general aviation; 12/3). While I agree in theory with much of what Mr. Byer says, I believe he is also misleading in the picture he paints regarding general avaition at the Hickory airport. Mr. Byer leads the readers to believe that it is the City that is driving Riverhawk, a private FBO, off the airport. This could not be further from the truth. He continues to lead the reader to believe a "redundant" City-owned fuel farm has been constructed at the airport and has placed the City of Hickory in direct competition with a private company, Riverhawk. This too is simply not true.

Since 2007, Riverhawk has been operating the FBO at the Hickory airport. Moreoever, they have been the exclusive operator at the Hickory airport. Never have they been in direct competition with the City or any other party for that matter. The Hickory airport houses only two fuel farms. Both of which are operated solely by Riverhawk. The City has proceeded with plans to construct it's own, City-owned and operated fuel farm. However, construction on that fuel farm has not yet begun and certainly has not had any negative impact on Riverhawk.

Why is this relevant? It's relevant because there is much that Mr. Byer has left out in his defense of Riverhawk Aviation. Riverhawk Aviation filed for bankruptcy earlier this year. For much of the 24 months, Riverhawk has been in default with the City regarding the concession fees it pays for operational rights at the airport. In addition, it is a matter of court record that several local pilots have submitted testimony to the bankruptcy court detailing Riverhawk's inability to fill fuel orders.

I am most definitely for free enterprise. I agree with Mr. Byer's theory that government entities should not compete against private businesses. However, that simply is not the case currently facing the City of Hickory and the operation of the FBO. While Riverhawk Aviation is most likely finished as the FBO provider at the Hickory airport, the City is in no way responsible for Riverhawk's decline.

Shame on Mr. Byer for perverting the issue by laying the inevitiable downfall of Riverhawk Aviation at the City of Hickory's feet. Mr. Byer wraps up his letter by stating that Riverhawk Aviation should be lauded for the vital role they have played in the economy and "treated as the valuable resource they are." I have a slightly different opinion. I submit that Riverhawk pay off it's debt to Hickory taxpayers, apologize for the mismanagement of our airport, and simply be on it's way.

Joe Brannock
Local Pilot
Member, 2006 City of Hickory Airport Taskforce