Two Financial Nukes Explode

Greg Hunter
USA Watchdog

On Monday, I said at the end of my post, “I think someday we will “grow” our way out of the economic mess we are in but not before a very big fall.”  

I didn’t think the fall would come the very next day–but it did.

Two monster nukes exploded on the financial landscape.  They are the surprise MF Global bankruptcy and the equally surprising Greek referendum on the second bailout package.  Kaboom and kaboom!!!  I see not one, but two giant mushroom clouds on the horizon, and destruction is headed our way.  Anyone underselling these two bombs is on some pretty heavy Prozac.

This is a turning point, and the turn is decidedly bad. It’s a global financial crash.

Two weeks ago, I wrote, “When European banks start failing, there is no way U.S. banks will be able to avoid being sucked into a vortex of default.   For anyone who thinks this crisis can be resolved with a pain free plan—forget it.  Welcome to the age of bank failures.”  (Click here for the complete post.)  I didn’t think MF Global, headquartered in New York City, would beat everyone to the punch.

MF Global is bankrupt for dealing in European sovereign debt.  CEO Jon Corzine was trying to make a quick buck with what are reported as “risky trades” and got a bankruptcy pie in the face.  There are allegations of missing money and possible criminal activity.  Considering this is coming from a former Primary Dealer in U.S. Treasuries, the Federal Reserve looks like it was asleep at the wheel of regulation once again.  Don’t forget the SEC and CFTC!  Where were the regulators?  There is no telling the amount of leverage and counterparty risk MF Global has, but we’ll be finding that out in the days and weeks to come.

And get this, for blowing up MF Global (a 200 year old company), Mr. Corzine might get a severance package of $12.1million!!  Let’s hope bankruptcy limits his pay to zero.  Heck, he should be paying money back to the company and its shareholders!  You wonder why the Occupy Wall Street people are protesting greed and corruption?  Even if MF Global does not turn into a Lehman Brothers event, it surely is one giant dead canary in the world’s financial coal mine. (Click here to read more on MF Global.) 

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