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November 03, 2011

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Conscience of a conservative

Great trade. MF does a repo to maturity trade with
customer money(so it seems), moving the position off balance and hiding the leverage and the risk while exposing his customers to all the downside risk of the trade and leaving MF with a handsome spread if the trade worked. Basically Corzine treated his customers as a counter-party in the trade. Seems little different than Goldman Abacus deal.

mike

Can't wait to get my copy of that DVD!

Conscience of a Conservative

MF Global is indeed sad.
Here you have Corzine suffering from Bob Rubin envy who really believed in himself not having learned the Lehman lesson or his own lesson which caused him to leave the firm. He continued to invest in the company. Unfortunately when his 40 to 1 leveraged proved too much he seems to have panicked and according to press reports usurped and commingled client funds. In the end he was no different than a rogue trader. Only reason he wasn't called one is that he's been around long enough and aged enough to seem respectable.

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