The Metamorphosis of Jon Corzine

The economy gained 120,000 jobs in November, said the Labor Department last Friday.  The jobs number included 140,000 new private sector jobs and a loss of 20,000 public sector jobs.  More importantly, the unemployment rate fell to 8.6 percent – its lowest since March 2009.

Based on the headline numbers, the jobs market appears to be improving.  However, a scratch below the surface reveals a more modest picture…

For instance, November’s increase of 120,000 jobs does not keep up with population growth, which is about 200,000 people a month.  To significantly reduce the unemployment rate, new jobs must be created at a rate that exceeds population growth and, by extension, growth in the labor force.  Nonetheless, even with a gap of about 80,000 people last month, the unemployment rate still fell.

How is that possible?

Simple.  The number of people looking for jobs fell by 315,000.  Additionally, the number of people not counted in the labor force increased by 487,000.  Remember, according to the Bureau of Labor Statistics, people are not counted as unemployed if they have not looked for a job in the last four weeks.  For now, this counting rule helps push the unemployment rate down.  But, in the future, this will have the reverse effect and will push the unemployment rate higher as these people begin looking for jobs.

Still, we won’t disparage the jobs report any further.  Considering all the financial calamities and fraud taking place, which aren’t good for the economy, this report could’ve been much worse.

More Politically Connected Fraud

The latest calamity, for example, hit the futures market on Halloween.  If you hadn’t heard, that was the day it was discovered that MF Global, a futures broker, had somehow lost $1.2 billion in customer funds.

Apparently, MF Global stole money from their customer’s accounts, mixed it with their own funds, and lost $6.3 billion betting the wrong way on European bonds.  After that, they filed for bankruptcy.  Then, wouldn’t you know it, Jon Corzine, the CEO, and former Goldman Sachs CEO, former Governor of New Jersey, former U.S. Senator, and major Obama campaign financier, vanished.

“Where in the World Is Jon Corzine?” asked one headline on CNBC.com.

On Thursday Corzine will be seen – in the flesh – making a dishonorable return to Congress.  The House Agriculture Committee has subpoenaed his testimony on the collapse of his brokerage firm.  The main point of inquiry, of course, will be to find out where the missing $1.2 billion of his customer’s money is.

Unfortunately, given that a month has already passed since the money first went missing, we are doubtful it will ever be recovered.  Moreover, the fallout from this is wreaking havoc on famers and futures traders in another ugly scene of a politically connected financial firm perpetrating fraud on a grand scale…

The Metamorphosis of Jon Corzine

Farmers and ranchers use the futures markets to lock in a sales price for delivering their grain, hogs, cattle, or other farm products to market.  By setting a contract price in advance farmers are able to manage their operations accordingly.  This hedging practice has been common to farmers for over a century and helps reduce the risk of quickly fluctuating agricultural prices and uncontrollable factors – like the weather – from turning their hard work into a value subtracting enterprise.

But now, thanks to the shenanigans of Jon Corzine, farmers and ranchers have more to worry about than crop yields and hog feed prices…

“Mike Mouw, co-owner of Mouw’s Feed and Grain Inc. in the southwestern Minnesota town of Leota, said his business relies on the futures markets both when it buys grain from farmers and when it sells feed to hog producers,” reports AP.  “That makes it possible to for the company to plan two or three years ahead.  Now, though, Mouw estimates he’s out about $250,000.

“Dean Tofteland, who raises corn, soybeans and pigs near Luverne in southwestern Minnesota, has about $200,000 tied up with MF Global.

‘“It’s like having your house burn down without insurance,’ Tofteland said.

“Grain farmer and rancher Marty Klinker of Fairfield, Mont., has lost about $336,000.”

In addition to farmers, futures investors and speculators have been robbed of their capital too…

“Highridge Futures Fund LP, a customer of the MF Global Inc. brokerage, said its $50 million account with the defunct company is ‘missing,’ reported Bloomberg.

“Queen’s Quay Avante Ltd., which opened a Canadian dollar account of $7 million at MF Global on Sept. 21, said it hadn’t received any money from the all-cash account.”

The examples provided above total about $57.8 million…or about 4.8 percent of the $1.2 billion in stolen funds.  No doubt, the other 95 percent of the missing money is just as devastating to those it has been stolen from.

“Members will hear me say repeatedly words are important; deeds are a reality,” said Jon Corzine, back when he was Senator.

By all accounts, the reality of Corzine’s words and his deeds make clear his public to private metamorphosis…at the post of Senator he was merely a lying mountebank, at the post of MF Global he was a destructive one too.

Sincerely,

MN Gordon
for Economic Prism

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