MF Global.......

[Mega]

http://www.telegraph.co.uk/finance/n...debt-bets.html

Mega F*cked !
700 UK Jobs in the "City" Oh Please God, Crash & Burn!
Mike

[doom&gloom]

Re: MF Global.......

Jon Corzine did to MF Flobal what he did to the state of New Jersey.

They should have known better when the hired him...

[BigBagel]

Re: MF Global.......

Corzine MAY possibly walk away with 12.1 million. Not bad. Not bad at all.

[jacobdcoates]

Re: MF Global.......

Or...........http://www.businessinsider.com/oh-wow-theres-hundreds-of-millions-of-dollars-missing-at-mf-global-and-regulators-are-investigating-2011-10.


I am shock, shocked I tell you...To discover uhmm... some......customer...uhmmmm money may have been misappropriated. Especially by a politician. it must be a one time event by a fine statesman with a tragic boyhood. Who by no fault of his own was lead into a despicable life of crime by irresponsible low life European goverment borrowers spendthrifts. I mean how could he see it coming. NO one could have predicted that something like this might even have been possible, a sigma 99 event.(sarc off)

How many time do we have to see the same story with different actors

[Slimprofits]

Re: MF Global.......

is this the type of event that can trigger the next crash or too small?

[jacobdcoates]

Re: MF Global.......

I think it depends on who/how much they owe money to and who if anyone panics.

[dcarrigg]

Re: MF Global.......

is this the type of event that can trigger the next crash or too small?

Too small. A couple of tens of billions won't change the game. Interesting how it happened just before the greek debt referendum came to light, no? Trillion or so there. Now we're talking. Almost as if Corzine and gang knew...

[oddlots]

Re: MF Global.......

Good discussion at Naked Capitalism here:

http://www.nakedcapitalism.com/2011/...mf-global.html

Takeaways to me...

What's notable is both a) the "low risk" strategy used (and it's apparent popularity should give pause to anyone who thinks this is surely minor) and b) the obvious problem with it.

As far as I can understand they were buying short duration Euro bonds at notional deep discounts with the intention of holding to maturity. The apparent safety of the trade would appear to be enhanced by the fact that they were re-poing the bonds as well... which would seem to suggest that they are really exposed to a narrow spread... except that a) because the payoff's small they have to lever like hell (40 to 1) and b) of course those with whom they've repoed them can demand that they post collateral - even if their holding to maturity - if the bonds fall in value... Or something like that. (I'm sure I've got it garbled somewhere.)

The point to me is they were apparently dumbasses for thinking that the repo part of the trade made it safe to lever up.

It really seems to me that describing any trade with leverage as safe is a "category mistake." If you can't make money (whatever that means) without it then maybe there's no trade there...

Silly me.

[BigBagel]

Re: MF Global.......

Too small. A couple of tens of billions won't change the game. Interesting how it happened just before the greek debt referendum came to light, no? Trillion or so there. Now we're talking. Almost as if Corzine and gang knew...

There's no such thing as just one roach. If trust starts to evaporate who really knows?

[kduffey]

Re: MF Global.......

I'd enjoy hearing EJ's thoughts on Jon Corzine - who from my perspective seems to be a great picture of everything that is wrong with the political economy. Now it's being reported that customer funds aren't safe from MF Global. What a disaster. If this is true, I sure hope Corzine finds himself in jail. Likely, he'll find himself in DC.

[Slimprofits]

Re: MF Global.......

Corzine is a poster boy of the Revolving Door

Goldman -> U.S. Senate -> N.J. Governor -> MF Global

[oddlots]

Re: MF Global.......

Joe Nocera shared this tidbit:

"When I read MF Global Finance’s second-quarter results, though, what popped out at me was its compensation expenses: 64 percent of revenues went to compensation. In any industry but Wall Street, that would be obscene."

http://www.nytimes.com/2011/11/01/op...1&ref=business

There was a good review of how this even became possible, much less the norm, here:

http://www.ft.com/intl/cms/s/0/83ce6...#axzz1cTCPbFRA

[BigBagel]

Re: MF Global.......

[QUOTE=oddlots;213301]Joe Nocera shared this tidbit:

"When I read MF Global Finance’s second-quarter results, though, what popped out at me was its compensation expenses: 64 percent of revenues went to compensation. In any industry but Wall Street, that would be obscene."

http://www.nytimes.com/2011/11/01/op...1&ref=business

There was a good review of how this even became possible, much less the norm, here:

http://www.ft.com/intl/cms/s/0/83ce6...#axzz1cTCPbFRA[/QUO

Hey, good help is hard to get.

[oddlots]

Re: MF Global.......

Apparently so...

Good roundup of the absurdities here:

http://www.marketwatch.com/Story/sto...F-002128040CF6

I'd draw attention to point 5:

"5. The honchos don’t really know what’s going on

These days more and more power lies in the hands of a smaller and smaller elite. Many people react by taking refuge in conspiracy theories. They assume the elite knows what’s really going on.

The more frightening view is the exact opposite: That the people steering the ship haven’t got a clue.

Look at Jon Corzine, the chairman and CEO of MF Global. He has remarkable credentials. He’s the former head of Goldman Sachs, a former Senator, a former governor. And MF Global was his baby. He took over there last year, on a mission to build it into a global financial firm.

Yet it turns out the company’s blow-up took him by completely surprise. How much? Consider this: Corzine actually bought about $450,000 worth of MF Global stock with his own money over the summer. Some of it as recently as August."

So what's worse an exec who knows the ship is going down and dumps his holdings while encouraging other punters into the burning theatre... or one that's the last to know?

It kind of reminds me of a Charles Hugh Smith about the euro bailouts here:

http://www.oftwominds.com/blogoct11/...rket10-11.html

"Recent anecdotal evidence out of Asia suggests that the flight training received by some civilian airline pilots is based entirely on the aircraft's autopilot functions. Recall that an autopilot is a mechanical, electrical, or hydraulic system used to guide a vehicle without assistance from a human being. This deficiency in their training has been revealed in a most disconcerting fashion: when the aircraft's autopilot malfunctions, the pilots do not know how to actually fly the airplane.

In other words, pilots are not actually trained to fly aircraft, i.e. to know how the aircraft responds in real time to actual human intervention/control; they're trained to monitor and manage the autopilot system which does the actual flying.

This is a precise analogy for the European Union's leadership: they don't know how the financial system actually works, they only know how to follow the banking system's autopilot. Now that the financial system's autopilot has been fried, they are clueless and increasingly panicky: what does this lever do? Why is the stick so sluggish? We're losing power... there must be an auxiliary power switch, like in Star Trek... Good God, doesn't anyone know how to actually fly this thing?"

It's not a bad analogy for a lot of things these days...

[lektrode]

Re: MF Global.......

and the hits just keep on a'comin...

this from over at the turd's place...

http://www.tfmetalsreport.com/blog/2840/mfing-global

Nutshelling the MF Global Collapse
Posted by Ann Barnhardt - October 31, AD 2011 11:14 AM MST
Yes, I called it late last week and strongly urged MF customers to make a hasty exit stage right, but I absolutely did not see what happened this morning coming. This is utterly unprecedented. The Chicago Mercantile Exchange issued an email circular this morning (I received mine at 8:39 am MDT) stating that all MF Global positions were limited to LIQUIDATION ONLY and all MF employees and brokers and traders were banned from the floor of the exchange.

1. As I mentioned last week, MF Global came to its present form back in 2005 when the then-biggest clearing firm, Refco, imploded and was bought by EDF Man. The new, huge firm was then renamed MF Global. When Refco imploded in 2005, NOTHING like this happened. It was a relatively smooth transition, trading was not interrupted, and most of the Refco employees were absorbed into the new company. There was absolutely NO interruption of customer access to positions.

2. Shutting off access of customers to their floor brokers and limiting them to liquidation-only is UNPRECEDENTED. If a big account did not have multiple clearing relationships, the risk exposure this morning for those firms is terrifying to ponder. I did not see this coming. The whole industry is pretty much in shock.

3. Let's not forget that a whole lot of people have just lost their jobs. All of the MF clerks, back office staff, everyone who worked for MF on Friday is now unemployed this morning. Those people matter. John Corzine views them as meaningless economic units who exist only to serve him and advance his power and increase his personal wealth, but John Corzine is an evil sociopath who should be permanently removed from society and imprisoned for the rest of his life so that he can do no more damage. Fricking jackal.

4. Speaking of Corzine, more info is coming out in the bankruptcy filings. First, Corzine stands to reap a $12.1 million severance package / golden parachute per the bankruptcy filing. But that isn't the worst. Corzine was hired by MF less than two years ago. He promptly went about loading the company up on European bonds. That in and of itself is damning enough. Remember, Corzine is Goldman Sachs. He knew EXACTLY what was going on in Europe and he knew that European paper was junk. But guess which European countries he loaded up on? Greece, Portugal, Italy and Ireland. The four little PIIGs. Corzine intentionally drove MF into the ground so that someone, and my money is on Goldman Sachs, could come in and buy the remains for 30 cents on the dollar or less. Watch the news. Watch and see who ends up buying the remnants of MF. If it isn't Goldman outright, I'll bet it is a "holding company" that is tied to Goldman. As an astute commenter over at ZeroHedge.com said last night, it looks like Corzine never really stopped working for Goldman. He just moved his office into MF Global's suite.

5. And now, ONE MORE TIME regarding the financial industry regulators in this country. Guys, they are evil, corrupt and incompetent. The regulatory bodies are run by evil, evil people at the top who are complicit in these goings-on. There is NO POSSIBLE WAY that MF Global could have passed any honest audit with the amount of exposure it was carrying in the European bond market. By the way, MF Global's audit would have fallen under the jurisdiction and oversight of the Chicago Mercantile Exchange itself AND the Commodity Futures Trading Commission on the Federal level. It is just impossible that the CME and the CFTC didn't know MF's position and risk exposure all along. The second tier in these regulatory agencies are a combination of evil, greedy and incompetent bureaucrats who could very well be classified as "useful idiots" who will do anything, say anything, or overlook anything just so long as their salary check clears the bank every month. The third tier are full-blown useful idiots - and by that I mean totally, completely and astoundingly unqualified and incompetent "foot soldiers", many of whom are affirmative action hires. When things like this happen (and there are other examples of massive ponzi schemes being ignored in recent history, like the Sentinel Management Group fiasco) what these regulatory bodies do is lay the blame for "missing" the red flags at the foot of the affirmative action hires who are the on-site auditors and who are made to sign off on the audits. Do you see this? Do you see the evil we are dealing with here?

6. And now here is a paragraph that everyone in the financial industry, but most particularly the futures industry, should send viral. Every Introducing Broker and Futures Commission Merchant in the world is being targeted for extinction by the megabanks. They want you GONE. Goldman, Citi, JP Morgan, etc. They are working with and through the financial regulatory bodies and with the Federal Government via such legislation as Dodd-Frank to force out of business every FCM and fold all of that business into the megabanks. IBs like me are also a target, but we IBs are meaningless guppies compared to whale-sized FCMs.

Corzine was SENT into MF Global with the objective of collapsing it and rolling the remains into Goldman (presumably). And he was paid eight figures to do it, AND promised SEC TREAS after Geithner. If you had said six months ago that the largest FCM in the U.S. would be taken down, everyone would have laughed in your face, but here we sit. The only question is, who is next? How long will an FCM like ADM last before looking at Dodd-Frank and saying, "Screw this. We're selling our clearing operations and we'll just go back to straight-up product merchandizing." Why shouldn't they? If the FCM profit center is made impossible by the government and the corrupt regulatory bodies, why would they continue to operate an FCM? Why not sell to Goldman or one of the other megabank entites and then do their exchange-traded hedge business through them as a customer? When will the old Chicago boutique firms be similarly forced out, either through regulation that makes their business impossible, or through outright sabotage as with Corzine and MF? None of you FCMs are safe.

THEY WILL COME AFTER YOU AT SOME POINT. You have been targeted for extermination. Either you wake up to this fact and expose these regulatory bodies, megabanks and the Federal Government and fight them, or you are going to end up like MF, being bought by Goldman or one of the other fascist government-connected megabanks for pennies on the dollar. You have been warned.

7. This MF Global collapse is a small-scale (yes, that's right, SMALL-SCALE) foretaste of what is going to happen to the entire system. When I say get your money out of the market, out of paper instruments, and turn it into something real that is physically located on your property, that you can then stand in front of with an assault rifle and physically defend, I'M NOT KIDDING.

**Just for the sake of clarity, I clear exclusively through Penson right now. I have previously cleared RCG, and worked in an RJO branch office which RJO purchased from LFG in 2000, before starting my IB in 2006. That is the extent of my FCM relationship history."

any questions?


how about comments?
just how unbelievable is it that our .gov, the fed, the treas is run by a cabal of GS alumni...
and these people are getting paid 10's of millions to step aside when they f up?
justice?
i mean chrikie mate, spitting on the street in singapore can get ya jail time and our white collar criminal class gets paid MILLIONS TO f__k up, sink the whole bloody economy, costing millions of innocent people their homes, jobs and lives

AND WHAT DOES THE POLITICAL CLASS IN THE BELTWAY DO ABOUT IT ALL?
sides blow smoke up our butts for the next 12months till their re-election...