Presenting The Bond That Blew Up MF Global

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Mon, 10/31/2011 - 13:20 | 1828921 Mongo
Mongo's picture

Blame the Bunga!

Mon, 10/31/2011 - 13:27 | 1828923 redpill
redpill's picture

 

If you're gonna go out, you might as well go out big.  And boy did they exceed expectations.

 

This story coming soon to a French bank near you.

 

Mon, 10/31/2011 - 13:34 | 1828967 MillionDollarBonus_
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I hope this teaches European politicians a valuable lesson about the dangers of indecisive economic policy. The delayed EFSF expansion may just have caused the BANKRUPTCY of a primary dealer institution. It's time for European officials to get organized and start pushing for decisive and coordinated fiscal policy so that we do not have to witness a tragedy like this in the future. Politicians need to stop worrying about populist referendums and start showing some LEADERSHIP. I and many others with financial equity portfolios are counting on them.

Mon, 10/31/2011 - 13:35 | 1828972 redpill
redpill's picture

Good point MDB.  I wish they would stop allowing people to experience pain and just start printing in earnest.  Let's get this party started!

Mon, 10/31/2011 - 13:59 | 1829067 Miss Expectations
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Just a guess, but I bet you laugh out loud while you're typing.

Tue, 11/01/2011 - 04:17 | 1831003 Bollixed
Bollixed's picture

True dat. He's gotta be a junk collector and loving every minute of it. Funny stuff.

Mon, 10/31/2011 - 14:00 | 1829070 Alvaro de Esteban
Alvaro de Esteban's picture

Hey MDB it´s great that an slovakian earning 900 USD/month  has to pay to ensure your financial equity portfolio.

I would be willing to pay the plane ticket to that slovakian to allow him to discuss the issue "face to face" with you.

Hope Obamacare covers your hospital bill

Mon, 10/31/2011 - 13:58 | 1829061 Another Texan
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But, i thought Timmy G said the Euro cluster would not come to our shores???  WTF?

Mon, 10/31/2011 - 14:03 | 1829093 max2205
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Naked long the Italy 1 year... got to be more to it TD

Mon, 10/31/2011 - 17:12 | 1829794 Hedge Fund of One
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Well, apparently, even if they were hedged with CDS, they were effectively naked as illustrated by worthless Greek CDS. 

Mon, 10/31/2011 - 15:01 | 1829362 FinHits
FinHits's picture

Very useful benchmark to see if there will be "a Lehman event" from this to MF counterparties.

I wonder how many rotten American asset schemes will be blowing up? I guess the MBS investors and funds will be next. Will the US Government bail any of them out? I guess yields will explode in risk assets again.

Mon, 10/31/2011 - 19:21 | 1830066 Buck Johnson
Buck Johnson's picture

The one CNBC anchor said this afternoon that Corzine's decisions where akin to hailmary passes.  The problem is if you do throw those you have to make them, pure and simple.

Tue, 11/01/2011 - 01:55 | 1830934 honestann
honestann's picture

Then I guess this was an interception on the 1 yard line plus a 99 yard runback.  Good going, Corzine.

Mon, 10/31/2011 - 13:22 | 1828925 The Deleuzian
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Who's next coming up to bat?  There has to be someone on deck or the game can't continue...

Mon, 10/31/2011 - 13:22 | 1828926 DoChenRollingBearing
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Great job there Corzine.

Mon, 10/31/2011 - 13:41 | 1828997 Snidley Whipsnae
Snidley Whipsnae's picture

Whats up DCRB? I'm still stacking. :)

This one is for Corzine...

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."

John Kenneth Galbraith

 

Mon, 10/31/2011 - 14:01 | 1829076 Schmuck Raker
Schmuck Raker's picture

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."

So I got that going for me...which is nice.

Mon, 10/31/2011 - 14:38 | 1829250 DoChenRollingBearing
DoChenRollingBearing's picture

@ snidley

Doing alright, thanks.  I hope you are too.

Nice quotation from Galbraith, looks very true for Corzine, who has had multiple opportunities to show what a complete POS he is.  The world's worst?

Drop me a gmail at my name if you would like to visit my blog.

EDIT:

Still stackin'

Tue, 11/01/2011 - 03:26 | 1830988 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

+1

Nice quote there

Mon, 10/31/2011 - 15:03 | 1829366 pelican
pelican's picture

Smuck.  First he screwed NJ now he is moving into screwing up the remainder of the economy. 

Mon, 10/31/2011 - 15:19 | 1829409 pelican
pelican's picture

I am a beginner when it comes to the economy, however doesn't this mean a bunch of CDS come into play, thus dragging other shitty firms down?

 

Corzine is such a jackass, yet he is still going to make a bundle.

 

The market has only dropped 200 today.  I am surprised this hasn't caused a massive crash.

Mon, 10/31/2011 - 13:24 | 1828930 Duke of Con Dao
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'He was simply early and will be proved correct'

heard the very same words spoken about John Merriwether. 'if only they had more capital to withstand that August battering...'

Mon, 10/31/2011 - 14:37 | 1829272 Cplus
Cplus's picture

 

There's a lot more to the LTCM comparison.

If you rememeber, it was Meriwether's investment in BTP Italian bonds financed with Lira repo and hedged with Lira Interest rate swaps that blew them up.

Of course there was also a tax dodge thrown in, in the form of a spurious withholding exemption, all being funded by a carry trade.

 

plus ça change...

Mon, 10/31/2011 - 13:24 | 1828933 Deadpool
Deadpool's picture

Based on MF Global’s disclosed assets in its bankruptcy filing, it is likely to slot in just ahead of Chrysler as the eighth-largest U.S. bankruptcy.

1) Lehman Brothers Holdings, September 2008: $691 billion in assets

2) Washington Mutual, September 2008: $327.9 billion

3) WorldCom, July 2002: $103.9 billion

4) General Motors, June 2009: $91 billion

5) CIT Group, November 2009: $80.4 billion

6) Enron, 2001: $65.5 billion

7) Conseco, 2002: $61.4 billion

MF Global: $41 billion (as of Sept. 30)

8) Chrysler April, 2009: $39.3 billion

9) Thornburg Mortgage May, 2009: $36.5 billion

10) Pacific Gas & Electric Co., 2001: $36.15 billion

Source: BankruptcyData.com; SEC filings for MF Global asset size

Mon, 10/31/2011 - 13:27 | 1828946 GeneMarchbanks
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In a quarter or two they'll be out of the top 10.

Mon, 10/31/2011 - 14:34 | 1829259 DoChenRollingBearing
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I wish I could give you 5 greens for that.  LOL...  Uh, I guess...

Mon, 10/31/2011 - 14:44 | 1829292 Forgiven
Forgiven's picture

Exactly...JPM, BofA, GS, WFC...don't forget DB, CS, BNP...when this crisis comes to an end the top ten will be measured in how many TRILLIONS they lost in BK.

Bankers should bring brown slacks back in fashion!

Mon, 10/31/2011 - 13:30 | 1828954 silver500
silver500's picture

JPM top creditor again.  Well done JPM!!

Mon, 10/31/2011 - 13:38 | 1828984 dwdollar
dwdollar's picture

Haha... 41B is nothing. The US prints that in a fucking day. The only reason the monkey in chief won't bail them out is because the signing of the paperwork would interfere with tee time.

Mon, 10/31/2011 - 13:56 | 1829048 azusgm
azusgm's picture

Stop the bailing!

Mon, 10/31/2011 - 13:24 | 1828935 Zero_Sum
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I hope all the OWS folks are moving over to Corzine's place to protest his $12.1M severance package. I wonder how much the MF Global analysts who warned him that this was a bad idea are going to be compensated when they get sent packing.

Mon, 10/31/2011 - 13:25 | 1828936 Piranhanoia
Piranhanoia's picture

So let's postulate for a mo.  If one of the 22 dealers has failed due to obvious incompetence, ignorance and stupidity....

Is there even a chance the remaining 21 are not insolvent as well?

Mon, 10/31/2011 - 13:40 | 1828996 old naughty
old naughty's picture

A very good question. Hummmmmmmmmmmm.

Mon, 10/31/2011 - 13:49 | 1829021 earleflorida
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levered-up @ 40:1 ,... i'm sure the 'others/them', are levitating or better said, straddling -- 25/50:1    

oops,... there goes another rubber-tree plant

Mon, 10/31/2011 - 14:01 | 1829078 Rynak
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There's a reason why they're called the "american zombie banks".

Mon, 10/31/2011 - 14:52 | 1829331 vote_libertaria...
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When you see asset price movement correlation of 0.999999999999999999999999 it does make you wonder.

Mon, 10/31/2011 - 13:25 | 1828938 GeneMarchbanks
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Eurozone blow-up of MF Global will be first of many.

Mon, 10/31/2011 - 13:25 | 1828940 lolmao500
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Now if only he could go as head of Goldman Sachs or JPMorgue to blow them all to hell it would be nice.

Mon, 10/31/2011 - 13:35 | 1828971 Dr. Engali
Dr. Engali's picture

I'm sure there is a spot at treasury for him.

Mon, 10/31/2011 - 14:35 | 1829264 DoChenRollingBearing
DoChenRollingBearing's picture

K St.

Mon, 10/31/2011 - 14:53 | 1829334 css1971
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Treasury?

 

Clearly presidential material! Eh MDB?

 

Mon, 10/31/2011 - 14:10 | 1829135 Rockfish
Rockfish's picture

He'll be back on CNBC.

Mon, 10/31/2011 - 13:27 | 1828944 mfoste1
mfoste1's picture

im just waiting for the sec investigation.....

Mon, 10/31/2011 - 13:31 | 1828966 pauhana
pauhana's picture

Right . . . like that will ever happen.

Mon, 10/31/2011 - 13:52 | 1829029 earleflorida
earleflorida's picture

start shooting-up some , hopium

Mon, 10/31/2011 - 13:28 | 1828950 Surly Bear
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Be first, be smarter, or cheat (pick two).

Mon, 10/31/2011 - 13:29 | 1828951 halflink123
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I think it was less so this 1 individual bond or another 1 individual security and more the fact that they were levered 40 to 1. Just my 2 cents.

Mon, 10/31/2011 - 13:38 | 1828982 NotApplicable
NotApplicable's picture

You think the rest of them aren't levered up?

I'd say you're looking at two sides of the same coin. Makes me wonder how many other single issue "trip-wires" lie unseen.

Tue, 11/01/2011 - 03:48 | 1830994 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

It's the combination of 40:1 leverage and making bad investments that causes things to blow up.  Leverage is great if your investments only go up.  I am captain obvious.

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