MF Global Shortfall May Exceed $1.2B: Trustee

MF Global Inc.’s shortfall in U.S. segregated customer accounts may exceed $1.2 billion, more than double what was previously expected, said the trustee overseeing a liquidation of the failed brokerage run by former New Jersey Governor Jon Corzine.

That would mean customer accounts are missing about 22 percent of their total of $5.4 billion. A shortfall of 11 percent had been previously estimated by a person with knowledge of probes into the firm’s collapse. James Giddens, the trustee, said today that forensic accountants and investigators are working “around the clock,” and the estimate may change.

“Our goal is still a 100 percent return, and right now we’re very close to 60 percent,” said Kent Jarrell, a spokesman for the trustee. “If we continue to recover more, that will determine how much more we can distribute.”

Jarrell said the $1.2 billion estimate came from the team of accountants and investigators, who met with the trustee last night, prompting him to publish the revised figure. The spokesman declined to comment on whether there was news as to who was responsible for the funds or how they were withdrawn or used, citing ongoing investigations from the Department of Justice and other agencies.

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U.S. Debt Supercommittee Ready to Announce Failure

BLOOMBERG

A debt-reduction committee with special powers that was supposed to dissolve congressional gridlock in Washington is instead on the brink of failure, setting the stage for $1.2 trillion in automatic spending cuts.

U.S. Senator Jon Kyl of Arizona, a Republican on the 12- member panel, said on CNBC today that the supercommittee’s Republican and Democratic co-chairmen, Representative Jeb Hensarling of Texas and Senator Patty Murray of Washington, would make a formal announcement “toward the end of the day.” They are expected to say that the panel can’t reach agreement on determining deficit reductions of at least $1.2 trillion.

Today is the deadline for the Congressional Budget Office to receive information for analyzing how a proposal would affect the U.S. budget deficit, in advance of the supercommittee’s Nov. 23 target date for reaching a deal. Senate Republican leader Mitch McConnell of Kentucky has declared over the past few months that failure is “not an option” for the panel, which was created in August after rancorous debate over raising the nation’s borrowing limit that plunged congressional approval ratings to lows of between 9 percent and 14 percent.

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American spies outed, CIA suffers in Lebanon

WASHINGTON (AP) - The CIA's operations in Lebanon have been badly damaged after Hezbollah identified and captured a number of U.S. spies recently, current and former U.S. officials told The Associated Press. The intelligence debacle is particularly troubling because the CIA saw it coming.

Hezbollah's longtime leader, Sheik Hassan Nasrallah, boasted on television in June that he had rooted out at least two CIA spies who had infiltrated the ranks of Hezbollah, which the U.S. considers a terrorist group closely allied with Iran. Though the U.S. Embassy in Lebanon officially denied the accusation, current and former officials concede that it happened and the damage has spread even further.

In recent months, CIA officials have secretly been scrambling to protect their remaining spies - foreign assets or agents working for the agency - before Hezbollah can find them.

To be sure, some deaths are to be expected in shadowy spy wars. It's an extremely risky business and people get killed. But the damage to the agency's spy network in Lebanon has been greater than usual, several former and current U.S. officials said, speaking on condition of anonymity because they were not authorized to speak publicly about security matters.

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U.S. Billionaires Avoid Reporting Cash to IRS

When billionaire Billy Joe “Red” McCombs, co-founder of Clear Channel Communications Inc., reported a $9.8 million loss on his tax return, he failed to include about $259 million from a lucrative stock transaction. 

After an audit, the Internal Revenue Service ordered him to pay $44.7 million in back taxes. McCombs, who is worth an estimated $1.4 billion and is a former owner of the Minnesota Vikings, Denver Nuggets and San Antonio Spurs sports franchises, sued the IRS, settling the case in March for about half the disputed amount. 

McCombs’s fight with the IRS illustrates an overlooked facet in the debate over tax rates paid by the nation’s wealthiest. Billionaires -- from McCombs to Philip Anschutz to Ronald S. Lauder -- who derive the bulk of their wealth from stock appreciation are using strategies that reap hundreds of millions of dollars from those valuable shares in ways the IRS often doesn’t classify as taxable income, securities filings and tax court records show. 

“The 800-pound gorilla is unrealized appreciation,” said Edward J. McCaffery, a professor of law, economics and political science at the University of Southern California in Los Angeles.

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Officers in pepper spray incident put on leave

Two University of California, Davis police officers involved in pepper-spraying seated protesters are being placed on administrative leave as the chancellor of the school accelerates the investigation into the incident.

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Occupy Oakland: Iraq war veteran Kayvan Sabehgi beaten by police - video

Protester and three-tour American veteran Kayvan Sabehgi was beaten by Oakland police during the Occupy protest's general strike on 2 November. Sabehgi, who was 'completely peaceful', according to witnesses, was left with a lacerated spleen!

Clark Lytle Geduldig & Cranford has sided with the enemy -- the banksters

A well-known financial services lobbying firm based in Washington has come up with a plan that would funnel close to $1 million in funds towards undermining the Occupy Wall Street and other Occupy protests.

According to MSNBC's "Up With Chris Hayes," lobbying firm Clark Lytle Geduldig & Cranford sent a memo to the American Bankers Association with an outline for the plan, which suggests, among other things, doing “opposition research” on the Occupy movement in order to help construct “negative narratives” about protesters and the politicians who support them.

We're not scared of CLGCDC.COM. Maybe, we'll dig up some dirt on them!!! They are going to regret what they have done. It's not the same day as it was yesterday!

We're sick of the leeches and their evil helpers. When will it end?

CLGCDC.COM is committing a crime by helping the criminals stay in power.

Is the justice Dept going to investigate what CLGCDC.COM is doing? I don't think so.

The backlash will be shocking.

CLGCDC.COM won't know what hit them!!

For those of you that have been asleep, it's us against them! What more proof do you need?

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Ron Paul gaining traction in Iowa

ANAMOSA, Iowa (AP) -- Texas Rep. Ron Paul is emerging as a significant factor in the Republican presidential race, especially in Iowa.

He's been long dismissed by the GOP establishment, but the libertarian-leaning candidate is now turning heads beyond his hard-core followers - and rising in some polls - just weeks before the state holds the leadoff presidential caucuses and four years since his failed 2008 bid.

Paul's sharp criticism of government spending and U.S. monetary policy hasn't changed since then.

And while his isolationist brand of foreign policy may be a non-starter for some establishment Republicans, its appeal among independents is helping Paul gain ground in a crowded Republican field. His boost is an indication of just how volatile the Republican presidential race is in this state and across the country.

"The good news is the country has changed in the last four years in a way I never would have believed," Paul told about 80 Republicans and independents at the Pizza Ranch restaurant in this town on Friday.

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Bank Lobby Plans Attack on Occupy Movement!!!

The banking lobby has a new message for the Occupy movement: don’t mess with our money. 

A well-known financial services lobbying firm based in Washington has come up with a plan that would funnel close to $1 million in funds towards undermining the Occupy Wall Street and other Occupy protests.

According to MSNBC's "Up With Chris Hayes," lobbying firm Clark Lytle Geduldig & Cranford sent a memo to the American Bankers Association with an outline for the plan, which suggests, among other things, doing “opposition research” on the Occupy movement in order to help construct “negative narratives” about protesters and the politicians who support them.

The memo states, according to MSNBC, that wins by Democrats in 2012 elections would be detrimental to Wall Street firms — and suggests specific races in which Republicans would be more friendly to the financial industry. If Democrats fully embrace the movement, the memo says, “this would mean more than just short-term political discomfort for Wall Street…it has the potential to have very long-lasting political, policy and financial impacts on the companies in the center of the bullseye.” 

Another part of the memo — authored with the help of two former aides of House Speaker John Boehner (R-OH) — reportedly frets that the Occupy movement and the Tea Party movement might actually find common ground and become even more politically potent by joining forces.

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A growing storm over a secret memo

LAHORE, Pakistan — A growing storm over a confidential memo is laying bare the profound division between Pakistan’s powerful army and its civilian government, and the nation’s relationship with the United States is again at the center of the gulf.

At issue are allegations that the government of President Asif Ali Zardari asked for U.S. help to prevent a military coup after the Navy SEAL raid in May that killed Osama bin Laden in Pakistan. The claim is thought to have enraged Pakistan’s army, and the resulting controversy prompted Pakistan’s ambassador to Washington, Husain Haqqani, to offer his resignation this week. 

Zardari’s government has nominally been leading Pakistan since 2008. But real power remains in the hands of the military, which has ruled the South Asian nation for half its 64-year existence and was livid after the U.S. operation against bin Laden. Though both the army and the civilian government receive billions of dollars in American assistance, the military views the United States, and its support for Zardari’s unpopular administration, with deep distrust. 

That attitude is widespread in Pakistan, where patriotism is equated with support for the military and the United States is often seen more as bully than friend. 

Against that backdrop, a column published last month in the Financial Times has proved explosive. In it, Pakistani American businessman Mansoor Ijaz asserted that a senior Pakistani diplomat — whom he identified Thursday as Haqqani — asked him to help relay a request to the then-chairman of the U.S. Joint Chiefs of Staff, Adm. Mike Mullen, to stop the military from staging a coup. 

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Britain in Secret Talks with Syrian "Rebels"

Britain has formally opened talks with the Syrian opposition movement as international pressure continues to mount against the beleaguered regime of President Bashar al-Assad.

Frances Guy, a former ambassador to Lebanon, met members of the exiled opposition in Paris yesterday. The Foreign Secretary, William Hague, is to meet members of the Syrian opposition in London next week when they will also hold talks with senior officials in Downing Street.

Although the UK, along with other Western states like France – which appealed to the United Nations yesterday to impose tougher sanctions – has been in informal contact with the opposition for the last three months, the progression of the working relationship opens up the prospect of the rebels eventually being recognised as the country's representatives and supplanting the Assad regime.

The West's Libyan mission started in a similar fashion with the country's revolutionaries, but senior diplomatic sources warned against drawing parallels. "This is not about recognition of them as the government – that is not the case," said a senior diplomatic source. "The difference with the Libyan situation was that the Libyan National Transitional Council controlled swathes of the country. We are asking the Syrian opposition to present a coherent set of policies and organise themselves." The Syrian National Council and the National Co-ordination Committee for Democratic Change are among the groups whose leaders have been involved in the talks.

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GOP Hopefuls Getting Counsel From Bush-Era War Criminals

Republican presidential candidates Mitt Romney, Rick Perry and Herman Cain are turning for national security advice to former officials in the George W. Bush administration, including some who pushed hardest for the U.S. invasion of Iraq.

The former officials include Douglas Feith, undersecretary of defense for policy under Defense Secretary Donald Rumsfeld; John Bolton, former U.S. ambassador to the United Nations; and Robert Joseph, a White House National Security Council aide during Bush’s first term and later a State Department official.

Feith, Bolton and Joseph were in the Bush camp that favored U.S. unilateral action and was “skeptical of engagement” with allies as well as foes such as North Korea, said James Mann, a foreign policy scholar at the Johns Hopkins University’s School of Advanced International Studies in Washington.

In Bush’s second term, with the nation still at war in Iraq and Afghanistan, the pendulum swung back toward engagement. The return of the unilateralists to Republican inner circles “in that sense, it’s going back,” said Mann, who wrote 2004’s “Rise of the Vulcans: The History of Bush’s War Cabinet.”

The contenders in the Republican presidential primary field have attacked President Barack Obama’s foreign policies. They say Obama showed weakness by not leading the allied air campaign in Libya, where the U.K and France played prominent roles, and not being tough enough on Iran to stop its nuclear-weapons efforts.

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The MF Global Money Is Probably Gone: Source

Hundreds of millions of dollars of customer funds missing from MF Global is probably just gone.

A lawyer briefed on the progress of the investigation being undertaken by various government regulators tells me that investigators now believe MF Global used customer money to make trades, such as buying sovereign debt securities.

Earlier this week, there was hope the money would turn out to be held as collateral in an account with one of MF Global's creditors, such as JP Morgan Chase [JPM  30.62    0.13  (+0.43%)   ] or Deutsche Bank [DB  36.57    0.54  (+1.5%)   ] . But that does not now seem to be the case.

"What the investigation is focusing on now is who, if anyone, knew it was client money," the lawyer tells me.

MF Global used customer funds in a variety of ways, he says. In the futures business, MF Global was allowed to use "idle" cash in customer accounts to make investments on its own behalf. It would buy bonds and keep the coupon on them. The higher the coupon, the more profitable this was for the company.

The firm would also "borrow" from its clients accounts, posting collateral such as U.S. Treasurys. But as the New York Times has reported, the firm stopped backing the loans from customer accounts sometime in October. Basically, they just took the cash out.

If this is right, it is probably impossible to recover the missing funds.

Gerald Celente: CME, The White Shoe Boyz Club!

Retired officer: Cops work for the 1 percent

OWS: New York police drag young woman through the street

Banks Bracing for 2012 Euro Financial Apocalypse

As the European debt crisis threatens to spiral out of control, banks are scrambling behind the scenes to protect their balance sheets and hedge their exposure to ride-out an increasingly scary 2012. 

But while some of the moves may help mitigate the losses from Armageddon, market watchers say certain financial insurance policies — particularly credit default swaps on sovereign debt — may not work in a new financial crisis. 
 
Banks are loading up on hedges against a possible European financial collapse. The notional amounts outstanding of over-the-counter derivatives rose 18 percent in the first half of 2011 to $708 trillion as of June 2011, a record high, according to a report by the Bank of International Settlements released Wednesday. In the second half of 2010, the notional value rose only by 3 percent. 

Over the counter derivatives are private agreements between parties, different from derivative contracts that are traded through exchanges. The notional value of contracts provides a measure of market size, but not the actual measure of the value that is at risk among participants. 

"Given all the increased volatility — the unusual conditions with the dollar and the euro, the debt crisis in Europe, the debt problems of the U.S. — you are seeing an increase in hedging," says Steve Wyatt, professor and Chair of the Finance Department at the Farmer School of Business at Miami University, Ohio. "The more astute observers in the market have come to the conclusion that the ECB will not buy enough paper to change the market view on this because of inflation fears. The only way out of this is fiscal integration or some modification of the membership in the Euro. That is not going to be quick or clean. That is the risk participants are hedging against."

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OWS-inspired activism

By Glenn Greenwald

It was only a matter of time before a coordinated police crackdown was imposed to end the Occupy encampments. Law enforcement officials and policy-makers in America know full well that serious protests — and more — are inevitable given the economic tumult and suffering the U.S. has seen over the last three years (and will continue to see for the foreseeable future). A country cannot radically reduce quality-of-life expectations, devote itself to the interests of its super-rich, and all but eliminate its middle class without triggering sustained citizen fury.

The reason the U.S. has para-militarized its police forces is precisely to control this type of domestic unrest, and it’s simply impossible to imagine its not being deployed in full against a growing protest movement aimed at grossly and corruptly unequal resource distribution. As Madeleine Albright said when arguing for U.S. military intervention in the Balkans: “What’s the point of having this superb military you’re always talking about if we can’t use it?”

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Corruption in Afghanistan: Up to 30% of U.S. taxpayer money spent on certain aid projects is stolen

It’s not exactly breaking news that Afghanistan is rife with corruption.

But a new Congressional Research Service report obtained by Salon underscores just how bad things have gotten — and just how much taxpayer money is being lost to fraud.

“One USAID official estimated that on some projects, up to 30% of contracted project costs can be attributed to corruption. A number of government and industry officials stated that corruption is the ‘price of doing business’ in Afghanistan,” writes report author Moshe Schwartz, citing “more than a dozen interviews with officials from DOD, USAID, the Department of State, Industry, and coalition forces” in Kabul in recent months.

In the last decade, USAID has spent about $15 billion in Afghanistan on projects in areas ranging from agriculture to transportation to education.

So where is all that stolen money going? The report explains:

Corruption takes many forms, including government officials charging bribes for transporting goods across the border and extorting protection payments. Many analysts view large swaths of the judicial sector and the attorney general’s office as corrupt, as evidenced by the lack of prosecutions against high-ranking government officials or warlords accused of being involved in criminal activity or rampant corruption. In other instances, members of the Afghan security forces use their position to demand bribes and extort shipping companies at Afghan borders and airports.

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The next financial crisis will be hellish, and it’s on its way

FORBES

"There is definitely going to be another financial crisis around the corner," says hedge fund legend Mark Mobius, "because we haven't solved any of the things that caused the previous crisis."

We're raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. We raised it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.

Speaking in Tokyo, he pointed to derivatives, the financial hairball of futures, options, and swaps in which nearly all the world's major banks are tangled up.

Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius' guess of 10 times the world's annual GDP. "Are the derivatives regulated?" asks Mobius. "No. Are you still getting growth in derivatives? Yes."

In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.

What could it be? We'll offer up a good guess, one the market is discounting.

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