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In reply to the discussion: STOCK MARKET WATCH, Wednesday, December 28, 2011. [View all]Demeter
(85,373 posts)7. A Run On The Global Banking System—How Close Are We? MUST READ
http://www.informationclearinghouse.info/article30085.htm
My own sense is, this is the first tremor of the earthquake thats coming to the global financial system. And how the central banks and financial regulators treated the Systemically Important Financial Institutions that had exposure to MF Globalto the detriment of the ordinary, blameless customer who got royally ripped off in its bankruptcyis both the template of how the next financial crisis will be handled, and an accelerator that will make the next crisis happen that much sooner.
So first off, what happened with MF Global?
Simple: It went bankruptbecause it made bad bets on European sovereign debt, by way of leveraging positions 100-to-1. Yeah, I know: Stupid. Anyway, they went bankruptwhich in and of itself is no big deal. Its not as if its the first time in history that a brokerage firm has gone bust. But to me, the big deal in this case was the way the bankruptcy was handled.
Now there are several extremely serious aspects to the MF Global case: Specifically, how their customers were shut out of their brokerage accounts for over a week following the bankruptcy, which made it impossible for those customers to sell out of their positions, and thus caused them to lose serious money; and of course how MF Global was more adept than Mandrake the Magician at making money disappearabout $1 billion, in fact, which still hasnt turned up. These are quite serious issues which merit prolonged discussion, investigation, prosecution, and ultimately jailtime.
But for now, I want to discuss one narrow aspect of the MF Global bankruptcy: How authorities (mis)handled the bankruptcyeither willfully or out of incompetencewhich allowed customers money to be stolen so as to make JPMorgan whole...
My own sense is, this is the first tremor of the earthquake thats coming to the global financial system. And how the central banks and financial regulators treated the Systemically Important Financial Institutions that had exposure to MF Globalto the detriment of the ordinary, blameless customer who got royally ripped off in its bankruptcyis both the template of how the next financial crisis will be handled, and an accelerator that will make the next crisis happen that much sooner.
So first off, what happened with MF Global?
Simple: It went bankruptbecause it made bad bets on European sovereign debt, by way of leveraging positions 100-to-1. Yeah, I know: Stupid. Anyway, they went bankruptwhich in and of itself is no big deal. Its not as if its the first time in history that a brokerage firm has gone bust. But to me, the big deal in this case was the way the bankruptcy was handled.
Now there are several extremely serious aspects to the MF Global case: Specifically, how their customers were shut out of their brokerage accounts for over a week following the bankruptcy, which made it impossible for those customers to sell out of their positions, and thus caused them to lose serious money; and of course how MF Global was more adept than Mandrake the Magician at making money disappearabout $1 billion, in fact, which still hasnt turned up. These are quite serious issues which merit prolonged discussion, investigation, prosecution, and ultimately jailtime.
But for now, I want to discuss one narrow aspect of the MF Global bankruptcy: How authorities (mis)handled the bankruptcyeither willfully or out of incompetencewhich allowed customers money to be stolen so as to make JPMorgan whole...
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Public Money for Public Purpose: Toward the End of Plutocracy and the Triumph of Democracy PART 1
Demeter
Dec 2011
#9
This is a right wing explanation of the financial meltdown using AEP stats (made up)
rfranklin
Dec 2011
#25
Just curious - any discussion of this around the rest of the site? (n/T)
bread_and_roses
Dec 2011
#39
"rip away the paralyzing shackles of corruption or else dwell forever in a neofeudal social order"
bread_and_roses
Dec 2011
#41