Skip to main content

Misallocated capital, ctd

Image
By
The latest evidence that Wall Street has not changed at all since the financial crisis comes from former Goldman Sachs CEO and former New Jersey governor Jon Corzine, whose company MF Global just went down. They were, of course, leveraged to the teeth (meaning they borrowed about $40 for every dollar of capital), but the kicker is they weren't even investing in anything. Instead, they went all in on a Eurozone bailout:
Over the past year, most investors have been fleeing the sovereign debt of Spain, Italy and other euro-zone basket cases. Not Mr. Corzine. The onetime chief executive of Goldman Sachs and former New Jersey senator and governor who has run MF Global since early 2010, was all in, buying up $6.3 billion worth of discounted euro-zone debt.

As Azam Ahmed reported in The Times on Tuesday, Mr. Corzine appeared to be wagering that the European Union would come to the rescue of Europe’s troubled economies, averting a default. In other words, Mr. Corzine was betting on a bailout.
Apparently they were also dipping into depositors' funds, which is quite illegal. Financiers can never, ever, ever be trusted. Wall Street is different from a casino in that casinos have rules. Imagine if you could raise $10 billion, lever up to $400 billion, take that to the roulette wheel, and distribute the whole around all 38 slots. If you win, you're rich, if you lose, you quick pay yourself $50 million in severance, declare bankruptcy, and walk away. Nice work if you can get it.
Labels:

Comments

Post a Comment

Popular posts from this blog

Why Did Reality Winner Leak to the Intercept?

By
So Reality Winner, former NSA contractor, is in federal prison for leaking classified information — for five years and three months, the longest sentence of any whistleblower in history. She gave documents on how Russia had attempted to hack vendors of election machinery and software to The Intercept , which completely bungled basic security procedures (according to a recent New York Times piece from Ben Smith, the main fault lay with Matthew Cole and Richard Esposito ), leading to her capture within hours. Winner recently contracted COVID-19 in prison, and is reportedly suffering some lingering aftereffects. Glenn Greenwald has been furiously denying that he had anything at all to do with the Winner clusterfuck, and I recently got in an argument with him about it on Twitter. I read a New York story about Winner, which clearly implies that she was listening to the Intercepted podcast of March 22, 2017 , where Greenwald and Jeremy Scahill expressed skepticism about Russia actually b
Post a Comment
Read more

The Basic Instinct of Socialism

By
This year I finally decided to stop beating around the bush and start calling myself a democratic socialist. I think the reason for the long hesitation is the very long record of horrifying atrocities carried out by self-described socialist countries. Of course, there is no social system that doesn't have a long, bloody rap sheet, capitalism very much included . But I've never described myself as a capitalist either, and the whole point of socialism is that it's supposed to be better than that. So of course I cannot be a tankie — Stalin and Mao were evil, terrible butchers, some of the worst people who ever lived. There are two basic lessons to be learned from the failures of Soviet and Chinese Communism, I think. One is that Marxism-Leninism is not a just or workable system. One cannot simply skip over capitalist development, and any socialist project must be democratic and preserve basic liberal freedoms. The second, perhaps more profound lesson, is that there is no s
6 comments
Read more

Varanus albigularis albigularis

By
That is the Latin name for the white-throated monitor lizard , a large reptile native to southern Africa that can grow up to two meters long (see pictures of one at the Oakland Zoo here ). In Setswana, it's called a "gopane." I saw one of these in my village yesterday on the way back from my run. Some kids from school found it in the riverbed and tortured it to death, stabbing out its eyes, cutting off its tail, and gutting it which finally killed it. It seemed to be a female as there were a bunch of round white things I can only imagine were eggs amongst the guts. I only arrived after it was already dead, but they described what had happened with much hilarity and re-enactment. When I asked why they killed it, they said it was because it would eat their chickens and eggs, which is probably true, and because it sucks blood from people, which is completely ridiculous. It might bite a person, but not unless threatened. It seems roughly the same as killing wolves that
4 comments
Read more