A couple of really dumb moves highlight the massive sell-off seen in equity markets Tuesday. The first came from Greece where Prime Minister Papandreou after committing to a deal with the EU had a change of heart and wants a public referendum. That's nice but clearly blindsided markets and his EU brethren given this wasn't part of the deal. The concern is banks have agreed to a voluntary haircut in sovereign debt. Should the public reject it (and they're 58% against it per recent polls) then a default would become involuntary triggering massive CDS (Credit Default Swaps) events where counterparty risk is questionable. There may be over $500 billion of this debt with most held and/or issued by the top five U.S. banks. This creates more uncertainty than the markets can handle.
Next in the Focker household is Jon Corzine, CEO of now bankrupt MF Global (MF). He was a Goldman Sachs CEO, U.S. Senator and NJ Governor who destroyed NJ financially. As CEO of MF, earning $14 million in 2010, he evidently approved large speculative positions in euro zone debt which then blew-up that company. Given his background in securities management one would be shocked to know the company is alleged to have invaded and/or stole $300 million of segregated client assets. If true, this would be criminal fraud and we'll see those involved with some jail time.
Subscribe to our RSS feed