Capital Account -- 12/15/11
The German government has begun to prepare for a possible bail out of its second largest bank by assets, Commerzbank. Meanwhile depositors in the US have been pulling their money out of foreign-owned banks operating here, in what some call a "flight to safety." As a result, these banks have seen the largest six-month fall in their deposits on record. Are these signs that a bank run is currently underway? Meanwhile, show me the money! That's what lawmakers and customers have been telling MFGlobal executives to no avail. Jon Corzine , former CEO of the bankrupt MF Global was back on the Hill again today. And oh how things have changed over the course of the week, from when he first testified. Regulators now say they know where the missing money went. We know of course, the trustee has said up to $1.2 billion dollars of customer money could be missing. And CME, MF Global's frontline regulator has said MF Global misused customer money, and the head of CME has now testified saying Jon Corzine knew the firm used customer money. And today this Jon Corzine said the back-office staff "explicitly" informed him that funds transfers made before the company filed for bankruptcy were legal. How much has changed from a week ago when Jon Corzine was basically pleading the fifth before lawmakers without pleading the fifth. Now the questions are of course – will customers get their money back, how did this happen, and what does this say about how safe money is in accounts and trades that are supposed to be sacrosanct and overseen by regulators? We speak to Karl Denninger, of the MarketTicker.com and author of the book, "Leverage: How Cheap Money Will Destroy the World." And as gold plunges to a five-month low, are we seeing the end to investors saying “follow the yellow brick road.” Or, does the broader collapse in commodity prices signal investors are running to cash, selling anything they can get their hands on. Could this be the excuse the Federal Reserve needs for QE 3 and will that even be enough to stop the crash this time around? Again, we will speak to Karl Denninger of Market Ticker to get his thoughts on this as well.