Not this shit again, derivatives broker goes broke: MF Global declares bankruptcy.

[originalpckelly]

http://en.wikipedia.org/wiki/MF_Global

http://www.usatoday.com/money/markets/story/2011-10-31/stocks-monday/51012084/1

It is currently headed by former NJ Governor Jon Corzine.

[valerief]

1. I suppose taxpayers will have to bail it out. Socialism for the rich, extortion for the not rich.

[originalpckelly]

2. Especially because Jon Corzine is connected to it.

[RegieRocker]

3. The big turds are going to hit the fan. Just the begining...

[PassingFair]

20. I wonder how the Carlyle Group is faring these days.

http://query.nytimes.com/gst/fullpage.html?res=9A06E4DD103AF934A3575AC0A9679D8B63&ref=carlylegroup

[Turbineguy]

4. I think the derivatives

will become worthless.

It's really the only way to deal with them. The idea that somehow the rest of the world is going to cough up hundreds of trillions to give to speculators is ludicrous.

[bluestateguy]

5. It has been 3 years and I still don't know what a derivative is

Anything that can't be cogently explained in one sentence, without jargon or mumbo jumbo, can't be good.

[FarCenter]

6. I things could be explained in one sentence, all lawyers would be out of work

"A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties."

http://en.wikipedia.org/wiki/Derivative_(finance)

Or more simply, "A derivative is a bet on a financial event."

[indepat]

15. It's good that there is but little, if any, risk in the $65 trillion (?) in derivatives BofA has

moved down to the bank since derivative holders are reportedly paid before depositors. If so, the FDIC might then have to exercise its borrowing authority with the U.S. Treasury (the taxpayer). :patriot:

[Kablooie]

16. So it's high stakes horse betting.

And so would be handled by a bunch of back room bookmakers.

If a firm loses and doesn't pay it's debts someone should go in and break the legs of it's managers.

[KansDem]

9. I'm with you!

"Derivatives?" :crazy:

[econoclast]

10. That's because DERIVATIVES aren't just one thing

The term covers a whole menagerie of financial instruments with one thing in common.....they all DERIVE their price from some other instrument. Because this is a VERY broad category it's not unusual for folks to get confused. Plain vanilla options and futures are considered derivatives and are very straightforward.

Lots of things are like this. Consider the term "fossil fuels". Covers coal and diesel and gasoline and natural gas and all the various grades of crude oil
Whenever you see "derivatives" used in a story or post your next question should automatically be "what kind of derivative?"

Because just as coal does not share many of the same properties as gasoline, all kinds of "derivatives" are different

In MF's case they deal primarily in futures.

[coalition_unwilling]

18. Thank you. I hope you will consider making this an OP at

some point and elaborating on it. The fact is that some derviatives (like futures contracts on grain, for example) serve a valid social function in helping arbitrage risk to both seller and buyer. I know enough to understand the general rationale for some derivatives, but am a bit weaker on the policy wonk details.

[Hotler]

12. Try this...

A simple (humorous) look at bank derivatives
http://club.ino.com/trading/2011/10/a-simple-humorous-look-at-bank-derivatives/

[snooper2]

22. I couldn't explain what a nand gate is in one sentence but I'm pretty sure they aren't bad

:P :) :eyes:

[suffragette]

7. Yet another Goldman Sachs connection, too

http://news.businessweek.com/article.asp?documentKey=1377-aqHnI6CrAMp0-56PIBAQMOFCTPG4C2TQ1E13916

MF Global Files for Bankruptcy After Bad Bets on European Debt
Story tools


Oct. 31 (Bloomberg) -- MF Global Holdings Ltd., the holding company for the broker-dealer run by former New Jersey governor and Goldman Sachs Group Inc. co-chairman Jon Corzine, filed for bankruptcy protection as it seeks to reorganize after making bets on European sovereign debt.

~~~

Corzine, 64, who helped run Goldman Sachs from 1994 to 1999, sought to transform MF Global into a midsize investment bank after arriving there in March 2010. He increased the firm's risk and used its own money to trade, including investments in European sovereign debt that rattled markets.





Interesting how often that connection comes up in these slimy and risky ventures.

[lib2DaBone]

8. We are firmly in the grips of 1932 class warfare... robber barons vs humanity..

Just the concept of trading commodity futures and derivatives by the insiders is enough to blow your mind. It makes Berenie Madoff look like child's play.

A small group of men do actually control the entire planet.

[jimlup]

11. Not really a surprise... because the problem has not been fixed...

Or even meaningfully addressed. Why do we let these greedy bastards continue to ...

[Hotler]

13. k&r n/t

[meow2u3]

14. To make a long story short, derivatives are Ponzi schemes

Nothing more, nothing less.

You're not supposed to understand what derivatives are. The reason they're complex is that they're designed as "tools" to steal as much money from as many people as possible.

[coalition_unwilling]

17. For those who appreciate the lies the ruling class tells itself, please

consider this jaw-dropper from today's NYTimes:

Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.

"Diverted" indeed :)

http://dealbook.nytimes.com/2011/10/31/regulators-investigating-mf-global/?hp

[bullwinkle428]

19. Bottom line : Corzine bet on bailouts on the part of the EU, and when

they didn't happen, his company took a giant bath.

http://www.businessinsider.com/jon-corzine-flies-mf-global-into-a-mountain-2011-11

[MadrasT]

21. What about the Obama connection?

July 5, 2011

President Obama is desperately putting his Wall Street stock in an unlikely old buddy.

The beleaguered president has recruited former Goldman Sachs head honcho Jon Corzine to shore up re-election funds from the banking industry, which is furious over Obama's financial regulations.

Corzine, the former governor of New Jersey who was blasted out of office by Republican Chris Christie in 2009, has attended secret meetings with the president and has been working on Obama's 2012 campaign for months, The Post has learned.

The Democrat, who now leads Manhattan-based brokerage MF Global, has been tasked with scraping up the very little banking-industry support Obama can still get.

And, like any good executive, Corzine is looking out for his own bottom line.

Read more: http://www.nypost.com/p/news/local/bam_recruits_corzine_to_woo_back_rhuDmIaaH8fOvWAPSMTDOL#ixzz1cThfrbOF">Obama Recruits Corzine

This is really ungood.