Events at MF Global might now vindicate Ann Barnhardt for imitating Atlas Shrugged. She now calls for a general financial market strike.
Latest MF Global allegations
On Saturday, December 17, some news broke about the bankruptcy of MF Global Holdings that would have shocked the world, had it broken during the week. Erin Arvedlund at Barron’s reported that the trustee overseeing the MF Global bankruptcy proposed paying that firm’s customers only 72 percent of the value of their holdings. Those holdings would include anything in a customer’s account: gold, silver, cash, options, futures, and commodities.
In other words, while traders already may have paid the full price for delivery of specific bars of gold or silver—and hold “warehouse receipts” to prove it—they’ll have to forfeit 28% of the value.
The problem seems to be that the bankruptcy occurred before several customers, who held gold and silver futures contracts, could take delivery. To make matters worse, these customers still must keep paying their warehouse storage fees, this while the trustee has frozen all customer accounts.
The same article quoted several traders as blaming the Chicago Mercantile Exchange for the mess. One trader said flatly that the CME is not making customers’ accounts good, as one of Ann Barnhardt’s detractors had said they would.
The author of “Jesse’s Café Américain” picked up the story and accused the trustee of trying to seize the gold and silver bullion.
The bottom line is that apparently some warehouses and bullion dealers are not a safe place to store your gold and silver, even if you hold a specific warehouse receipt. In an oligarchy, private ownership is merely a concept, subject to interpretation and confiscation.
Karl Denninger at Market Ticker picked up Jesse’s commentary and expressed himself more strongly still.
A warehouse receipt is not an unallocated, nebulous claim. It contains a serial number of one or more specific bars sitting in a warehouse. You are in fact charged a storage fee for the service of maintaining security over your property and you have had to tender payment in full as well. This is a bailment in any sense of the word and under any theory of law I’ve seen — and yet now, suddenly, it is proposed that your property held under bailment by this institution can be seized and stolen to pay unallocated bankruptcy claims against the bankrupt company’s estate!
Hence Ann Barnhardt’s latest outraged comment. (Free Republic has a permanent excerpt.) But in addition to this, Barnhardt commented on this story from ZeroHedge, saying that the entire bankruptcy is fraudulent. MF Global is a commodity trader. Normally when a commodity trader goes bankrupt, his customers come first. But MF Global filed as a securities dealer, so that MF Global’s counterparties come first. Barnhardt calls this a case of Wall Street taking care of its own interests ahead of customer interests. And if half of what ZeroHedge and Barron’s reports is true, she’s right.
A source at a major gold-and-silver-trading firm could not immediately confirm the Barron’s report. But he told CNAV that he “wouldn’t be surprised.”
More Atlas Shrugged parallels
The parallels to Atlas Shrugged are twofold. First, the bankruptcy trustee seems to be doing something similar to what President Franklin D. Roosevelt did: confiscating private property. Worse yet, he proposes to repossess gold and silver, which have objective values, and pay less than three-quarters of their worth.
Second, once again Ann Barnhardt proposes the same remedy that Ayn Rand proposed in Atlas Shrugged. And so have the two commentators who picked up the story ahead of her. “Jesse” called for everyone to “get your money as far away from Wall Street as possible.” Barnhardt went further, and urged “all decent people of good will” to take all their money out of all financial markets, including stocks and bonds as well as commodities.
If this is how they’re going to play, I say let’s shut the whole damn thing down. Let’s show these rat bastards how we do things in the Civilized World.
That might not be the full solution that Ayn Rand had in mind. She came up with her theme for Atlas Shrugged after a friend made the mistake of saying that people somehow “needed” Rand to write a non-fiction philosophical guide. Rand shot back:
Oh, they do, do they? What if I went on strike? What if all the creative minds of the world went on strike? That would make a good novel.
That novel is, of course, Atlas Shrugged. In it, not only did the investors go on strike, but so also did the entrepreneurs. But the objections are the same: the law does not seem to respect private property anymore, and fails to punish friends of the government, or those who support the government’s philosophy, for stealing other people’s money. At least three evil influences are at work here, all of which Rand illustrated in Atlas Shrugged in one way or another:
- Cronyism. The spectacle of Jon S. Corzine, the prize example of a crony, was bad enough. Obviously someone is protecting more cronies.
- Support for bad ideas. Two kinds of bad ideas are in view: support for governments who go into debt to give their people bread and circuses, and a market in objective stores of value that looks for all the world like fractional-reserve banking. The second part is exactly why many people buy gold and silver: they want to know that what’s theirs is theirs, and no one has lent it out without telling them. (This also vindicates those who want to make fractional-reserve banking flatly unlawful in all contexts.)
- Taking private property without due process of law.
Almost every “progressive” scheme in Atlas Shrugged involved a payoff to a crony or cronies at some level, and sometimes many levels. And the support for “sovereign debt” recalls the “relief cargoes” to the People’s States of Wherever.
What would a general financial market strike look like?
If the “decent people of good will” did go on such a strike, they would need to convert all their holdings into gold and silver, take physical delivery of it at once, and store it on their own property. They would also do well to store other things like foodstuffs, drinking water supplies, and weapons.
The reason is that they could bring about the endgame in Atlas Shrugged, in which civilization collapsed totally. The entrepreneurs wouldn’t need to repair to some hidden valley in the Rockies, or a “sea-stead” off the Atlantic or Pacific Coast as others have proposed. Without capital, the entrepreneurs couldn’t even get started. And once they realized that their property was no safer than the gold and silver that MF Global’s customers might now lose, they wouldn’t want to.
This Atlas Shrugged kind of strike might come even without Ann Barnhardt’s urging. Jim Willie at The Golden Jackass reports today that the gold futures market is broken already. Physical gold is rising in price, because it is running short. At the same time, commodity brokers are selling gold futures contracts short to force the “paper” price down. Willie says that the problem will get worse, not better, as governments manipulate the gold futures contract in a desperate try to seem solvent. Franklin Sanders at Goldprice.com confirms part of Willie’s account: the COMEX prices of gold and silver have trended negative for months, just because the “Nice Government Men” have manipulated both contracts. That cannot last. As CNAV’s gold-and-silver-trading source (see above) said tonight, soon everyone will realize how out-of-balance physical gold and gold futures really are. When that happens, he said, the silver contract will more than double. The gold contract would rise sharply as well.
Most people remember Atlas Shrugged for the gradual economic decline, the foolish government policies, and the secret society of the strikers. They don’t remember it for the total collapse of civilization that happens after the last strikers join the movement. But in view of the latest reports from the MF Global bankruptcy, and of the manipulation of the gold and silver contracts, no one can blame Ann Barnhardt and others for saying, in effect,
I’m gone. Don’t try to find me. You won’t. I am on strike.
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Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.
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