Systemic Risk – 2 Reader Questions (20:52)
Some thoughts on 2 reader questions today – one about the Euro and the other about MF Global. Remember, this is not advice just what I’m doing (in the case of the Euro question) and thinking about doing (in the case of the MF Global question).
Janet Tavakoli, expert on derivative and off-balance sheet transactions, has more detail on what MF Global was up to: MF Global Revelations Keep Getting Worse.
And 3 weeks later we have news from Reuters that all the brokerage houses are gambling with your money: The Great Wall St Re-hypothecation Scandal.
Isn’t it amazing that 3 years after Lehman and 10 years after Enron we are back talking about systemic risk and off balance sheet games. The system is more leveraged, more interconnected, more unregulated, more opaque and off balance sheet than ever before and any of us imagined.
You can’t build a functioning society on promises, lies and hope. The finance sector has grown too big and will implode under it’s own avarice. Unfortunately, the general public will be collateral damage.
Over the weekend, a great friend of mine, Guy Spier who runs Aquamarine Capital in Switzerland, sent me a copy of “The Rational Optimist” by Matt Ridley. I haven’t started it yet but on the jacket it says “A wonderful overview of how human civilizations move forward” and “Makes you think twice and cheer up”.
Well I can’t help but think we had a great opportunity over the last 3 years to come clean and move forward. Instead we chose to hide the truth from the sheeple, lie about our situation and in the process take 2 or 3 huge steps backward.
Good luck with your Emini trading.