Better late than never: Is MF Global a Canary in the Coal Mine?
Reported to be levered 40-1, a quick check of the calendar starkly reveals the Wall Street - Washington revolving door but a gateway connecting two wings of an insane asylum. Indeed, if there was a shred of honesty in Washington, they'd have declared moral bankruptcy this afternoon.
After closing at $1.20 on Friday, the only thing left now is a gas-filled coal mine. This just in from the North Pole: Santa was spotted inside doing his banks and financials Christmas shopping. Rumor has it Santa knows how to read a chart. Peering into the mine's depths he sees a lot of naughty MFers among banks and financials whose recent months' stock performance is just as sickly. Regrettably, a dead canary now leaves him with but one fitting gift to give the group: a pack of matches.
Learning late today the reason why MF Global filed for bankruptcy, such increasing systemic risk as is emanating from Europe now finds added cause to fear a collapse in confidence with wonder over how many other über leveraged pigs are dipping into customer accounts to plug holes whose hyperinflationary filling is no longer politically possible.
At this rate we might expect the Federal Reserve to announce tomorrow that the number of Fed regional banks will increase from 12 to 120, if only to notch up the number of lunatics clamoring for QE. Even if the Fed could, however, further quantitative easing would not matter one wit if confidence is collapsing. In such a climate the Fed's panic would but likely accelerate the same in the market.
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