Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For Everyone

The full Zero Hedge title is "Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else." I edited it down to fit.

Meanwhile, read this and be Very Afraid.

Be Even More Afraid if this Zero Hedge commentary on a story originating in Reuters gets legs. For, if it gets legs, it will likely spark a run -- not on ordinary banks (tho that too will likely happen, until a bank holiday is declared) -- but on every brokerage house and investment bank in the land.

Doesn’t this zerohedge site run a financial end-of-the-world story about twice a month?

I’ll be back to read FR comments.

Here's the answer to the question of where the missing MF Global client money went.

And Corzine is such an evil lying cretin because he does know where the money went, but he just refuses to say so.

And this story will get legs: the Reuters story has Morgan Stanley and JP Morgan with almost a trillion dollars in off-balance sheet exposure between them. And for that trillion, there's another trillion - at least - in counter-party risk. And they're not the only ones doing it.

After reading this, my head is spinning.

There isn't one, but maybe dozens of AIGs out there.

I think I need a drink.

I’ll have a mojito and make it a double.

Doesn’t this zerohedge site run a financial end-of-the-world story about twice a month?

When you read the story linked to Zero Hedge, you'll see that this story is a commentary on an underlying story on international banking law at Rueters. The Reuters story (in case you don't want to sully your mouse by clicking on a link to Zero Hedge) is here.

The Zero Hedge commentary on the Reuters story displays no little glee that the "end of the world" charge which you level at Zero Hedge is in full flower in the prose of the Reuters article!

What are the names of the Federal Regulators, and why did these Regulators fail to do their jobs?

What are the names of the Federal Regulators, and why did these Regulators fail to do their jobs?

...I skimmed through the Reuters article...their take is that UK & international laws are more lax concerning collateral, allowing financial entities like MF Global dangerous amounts of leverage. U.S. laws are limited to the USA.

Thanks, Brandybux.

*PING* to blam, SAJ, decimon, ex-Texan.

Comments?

"Comments? "

Prepared and waiting for the end...in whatever form it takes.

I don’t know what to think. I suspect that the case for economic armageddon could have been made in the best of times.

Go back to the 1980s or the 1950s and it’s probably true that not individuals, banks or governments could have come close to meeting their obligations immediately.

Was not the US technically bankrupt at the end of WWII? Were not all of the major European countries?

The problem with commenting on this article/story is that, once one begins, one has no logical stopping point. One could write for hours, quite literally.

The "off-balance-sheet" dodge has been around forever in one form or another, with "social security" -- an off-balance-sheet item for decades, since the time the Regress started raiding its funds -- being likely one of the largest (although, given the rate at which dodgy derivatives are being created these days, perhaps not).

No one I know puts much credence in ZH's constant doom-gloom-death-destruction drumbeat as a rule, but here they (he? it?) do have a point. The daisy chain of re-hypothecation is nowadays enormous beyond comprehension by mere mortals, and it is utterly unsound. The slightest touch can, in a very literal sense, bring the whole structure down.

That said, it is in no one's interest TO bring the structure down (well, barring assorted jackoffs like Zerobama and his cronies), and therefore the structure has a considerable chance of survival. The trick here is to delever/unwind a large portion of the gigantic amount of rehypo'ed "assets" w/o triggering a stampede for the exit doors.

However, THAT said, I'm not at all confident that the current bankster class have enough talent to implement this remedy. Stay hedged; diversify some assets out of USD into NEK, SGD, ZAR and CHF, spread your brokerage and bank accounts around, put on some number of short positions, particularly in overextended or dodgy garbage like NFLX, on rallies.

Also, as a side note, have you realised that the MF Global affair, and especially the behaviour of this crooked bankruptcy trustee, are INflationary events? Yes, indeed. By dint of having their funds frozen or otherwise unavailable, NUMEROUS farmers are unable right now to buy seed for next year's crop. If this situation persists (and when have you EVER seen someone hurry up when he is billing $891/hour?), then expect planting next spring to take a sizable hit, good weather or not, and expect harvests to be correspondingly smaller. And which direction do you expect grain (and thus livestock) prices to go as a result of smaller harvests, hmmm?

Are we having fun yet?

Also, as a side note, have you realised that the MF Global affair, and especially the behaviour of this crooked bankruptcy trustee, are INflationary events? Yes, indeed. By dint of having their funds frozen or otherwise unavailable, NUMEROUS farmers are unable right now to buy seed for next year's crop. If this situation persists (and when have you EVER seen someone hurry up when he is billing $891/hour?), then expect planting next spring to take a sizable hit, good weather or not, and expect harvests to be correspondingly smaller. And which direction do you expect grain (and thus livestock) prices to go as a result of smaller harvests, hmmm?

I am *very* P.O.'d at the "outsourcing" craze, as it resulted in my having to leave a company which stood to make a mint off of this: and which said outsourcing occurred before my matching funds (paid in company stock) vested.

Phooey and Double Phooey!