Posted on 12/14/2011 10:41:07 AM PST by Kaslin
I think what MF Global and John Corzine did is called “cooking the books”. Here is a link to the hearing. Some may jump to Corzine’s defense. If they cooked the books, then he lied at his Congressional Hearing, which is perjury.
The question I have is this. If someone had the lack of ethics to capriciously steal customer funds and fill a hole in their firm’s books-what makes you think they wouldn’t lie at a Congressional hearing to protect their own butt?
The funny thing is that the $CME is giving an exact timeline of their data. They can account for all the money that they had their hands on-and it’s critical to point out-CME isn’t at fault and isn’t a target of the investigation. Their hands are clean, and their books are transparent. Terry Duffy did a good job of correcting Senators that either made statements, or asked leading questions to position MF favorably. It was a strong and needed statement by CME.
On the other hand, MF is liable, and it looks like criminal activity took place in the firm. No different than Enron. Of course, I think Enron donated to Republicans and MF was run by one of the most liberal of Democrats.
Wonder how Corzine feels about wearing orange?
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One of the government programs started under the Obama administration is Start Up America. It has lead to efforts in various states. Today, they are unveiling Start Up Iowa. The key question to ask comes down to this. Is the money spent on Start Up America offset by an increase in GDP growth from start ups?
The short term answer is “No”, because for any real measurement to take place it will take 5-7 years. Start Ups are not accretive to the economy overnight.
However, the long term answer might be different depending on a lot of variables. The one bad thing about government programs is they never end. I really don’t care that this one says it’s not spending taxpayer dollars, it is using government resources so there is a cost that corresponds with that.
As long as the organization keeps its goals extremely broad, and does some very simple tasks, it should be a net positive for America. However, if it starts to take a blueprint and replicate it similarly area by area of the country we are inviting trouble. Micromanaging by any government organization is inefficient. Iowa is not like Illinois even though the two states border each other and they grow corn. They have different strengths and weaknesses and have evolved over time to be good at different things.
There are a lot of platitudes one could assume about Start Up America. Lofty sentences and goals. But the truth is that starting up companies takes capital, money. Without people willing to risk capital in unproven businesses and business models, nothing happens. The present occupant of the White House has destroyed wealth, reducing the ability of people to take risks. Not only have his policies destroyed wealth, he has personally attacked it. That’s not conducive to starting up a country.
Starting a company isn’t easy work. It’s really, really hard. It will be the most challenging thing you do, but even in failure you find that it can be extremely rewarding. There is a theory of motivation out there called Hackman-Oldham Theory. There are a lot of variables to it, but essentially the more self determined a job is the more satisfaction you get from it. Start ups are the ultimate in self determination!
Governments shouldn’t fund store fronts or start ups. What can they do?
That is pretty much it. The market will determine the winners and losers.
If MF Global isn’t prosecuted, and people don’t go to jail, CME knows the whole business model is over.
If MF Global gets away with this, who’s going to use a broker, ever? IF MF is allowed to establish some effective criminal defense that allows them to transfer customer funds without their knowledge FOR ANY REASON, then the moral hazard is there forever, which means 100’s of 1000’s out of work, maybe millions.
It is in the interest of EVERY FIRM to see that Corzine goes to jail forever for this. He crossed the line - nobody will ever do business with a brokerage ever again.
My impression is that the MSM is downplaying this story.
Could that be because Corzine is a good Democrat????
Regardless of politics, what kind of mananger is this guy? He says that he has no idea where the money has gone? Money invested with his firm, which he and his people are ultimately responsible for, just disappears, and he has no explanation as to what happened??????
The funny thing is that the CME promised to police the action, to prevent the unauthorized transfer and "rehypothecation" of client funds, and to guarantee customer losses in the event such actions took place.
They failed their duties and responsibilities miserably in the case of MF Global, and although they have chipped $300 million into the loss pot, have nowhere the resources necessary to make good on all their promises.
Statements such as the claims that the CME, "can account for all the money that they had their hands on ... isn’t at fault ... isn’t a target of the investigation ... has clean hands and transparent books" ... are ridiculous.
This mess isn't over by a long shot. In fact, it is just beginning!
Sarbanes-Oxley specifically prohibits that statement as a defense...unless the defendant is a well-connected insider, then we're supposed to look the other way.
Can there be such a thing as a nationwide “run” on brokerages equivalent to the 1930’s “run” on banks?
One thing is for certain though, if the MF’ers are allowed to just walk away then something like that must happen.
It will happen.
It nearly happened to investment banks in 2008 when the British froze all investment banking brokerage accounts when Lehman went under. It didn’t matter who your banker was, the accounts were frozen.
That led to customers closing their accounts in the US in droves. It happened very quickly, and by December, they were all on the ropes.
That led to the nationalization of all of them.
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