The following comments from Jefferies Group Inc. (JEF) this morning regarding the fiasco at MF Global (MF) perfectly crystallize everything that is wrong with our current financial system:
9:37 AM Still trying to distance itself from MF Global, Jefferies Group issues a statement saying it "has no meaningful exposure to the sovereign debt of the (PIIGS)," nor does it have "any repo-to-maturity activity or related off balance-sheet derivative activity."
Why is this statement necessary? Why should investors have to worry about the risks of “…repo-to-maturity activity or related off balance-sheet derivative activity"? Why isn’t every single obligation of a financial company ON THE BALANCE SHEET?
And the bankers wonder why their common equity trades at half of stated book value. Here's your answer: These firms are basically un-analyzable, and will remain so until the reporting rules change.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.