21st Century bank run, continued

Farm belt rage over MF Global could chill markets
Fed up and frustrated with his broker's collapse and what he sees as the CME's slow efforts to help him retrieve $30,000 in stranded capital, Rietzke says his faith in the futures industry has been shaken to its core. "I would be hedging some feeder cattle right now, but I'm not going to do it. I'm leaving them exposed to the cash market and I don't like that," Rietzke said. Rietzke may reside far from the trading pit in Chicago, but he and thousands of other ranchers and farmers across the country are at the heart of futures trading.
A breakdown in the futures market has immediate effects on the behavior of industry. Consider that futures have traded in Chicago for 150-plus years and you can imagine the disruptive effect this could have. The market isn't threatened yet, but this is a very, very bad sign—and fits Prechter's prediction of a grand super cycle top. Investors abandon the stock market during bear markets, but for industry to abandon the futures market, a critical component of their business, is a much bigger deal.
"The exchange should make this right. Let them hold the bag instead of us," says cattle broker Lynn Wagnon. "We can't trust the system anymore."

No comments:

Post a Comment