Reply #43: Karl Denninger: there's really nothing more-serious than grabbing client funds internally [View All]

[DemReadingDU]

A few snippets from Karl Denninger...

11/1/11

Look folks, there's really nothing more-serious than grabbing client funds internally. It's black-letter wrong, and it appears to have happened in the case of MF Global:

The "mainstream media" outlets this morning are talking about this being a "risk management" issue. Nonsense. This is a trust issue and Corzine is a former Goldman guy and the former governor of New Jersey.

The obvious questions that this little "incident" raises are too many to count but at their core go straight to the credibility of our entire financial system. None of them are pretty. Our markets are responding pretty much as you'd expect and coupled with the European situation which is also a matter of confidence and lies we've lost 70 S&P points -- or about 5% of the the market's total value -- in the last 36 hours.

How much more of this is out there? There's no way to know and that's the root of the problem, just as it was in 2008.

But this much we do know: This is not an issue of a firm that allegedly broke every rule in the book when it comes to the sanctity of customer funds. Rather it is a story of utterly failed regulation and oversight that continues four years after the collapse that initiated in 2007.

It is the story of willful and intentional blindness by our government and the instrumentalities within it that are supposed to prevent this sort of crap from happening.

more...
http://market-ticker.org/cgi-ticker/akcs-www?post=196876