When you suddenly learn that the game has risk that you never considered, it's probably a good time to take some bets off the table.
The Barnhardt Capital decision to stop placing futures and options trades, means that at least a few consider the new risks intolerably large. Ann Barnhardt offers some further explanation that connects this to the European debt topic that has been well covered at IU -
There is massive industry-wide exposure to European sovereign junk debt. ... I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.
Emphasis in the original.
Wow.
PC
Re: consolation
Phoenix
11/19/2011 12:37:40 PM
Yes I agree. This is not what we needed at a time when the global financial system is in turmoil. Instead of building investor confidence which would have helped in economic recovery this has created more chaos. It could be argued that MF global's mistakes were made because of the global crisis but I feel it was the lack of integrity. The system has to change and more transparency and accountabIlity should be there. Do you this incident would change the way Wallstreet now operates?
Judgment Day is Fast Approaching
Street Smart
11/19/2011 12:37:38 PM
When the crisis first broke, I said that I was reserving judgment because I had such great respect for Corzine during my Goldman Sachs years. And to be honest, I thought the trades would settle and the money would turn up.
The more dire scenarios are looking more likely now. @Scott, I'm so sorry for you personally, and for the many others who are in limbo while the regulators search through what, by all accounts, appear to be sloppy and terrible records.
It's one thing to take investment risks; it's quite another to find out that the man behind the curtain couldn't even be bothered to keep decent books, much less ethical standards.
The only wizards here are the forensic accountants getting by on caffeine and two hours' sleep per night!
They have locked up a large portion of the CME futures volume by some measures, hundreds of millions of dollars in professional money, and caused a major crisis in the futures/options market at exactly the wrong time... serious credibility issues w/ the system at this point.
Too little too late seems right, Scott...
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