Turk - MF Global Disaster to Create Another Lehman Crisis

“So the contagion is the first reason for concern. The second reason for concern is it’s taking so long for them to find this so called missing money, which I find shocking. It’s been three weeks now since the MF Global bankruptcy was declared and they started talking about $600 million of missing funds.

So I’m not too surprised that now they are talking about $1.2 billion of missing customer funds. I think they are just trying to delay the inevitable as to how bad the situation at MF Global really is.

I go back to compare it to Refco, which I think collapsed back in 2005. The interesting thing is that there were huge losses in Refco and people ended up going to jail as a consequence of the fraud and misuse of funds and faulty accounting within Refco.

But the customer money was safe and was returned to customers within a matter of days, unlike what we are seeing today with MF Global. This thing has been dragging on and contagion is always the real issue in a inter-linked financial system like we have today.

I guess the biggest thing, Eric, is that when you are in a financial bust, promises are always broken and every time promises are broken it erodes confidence and more weak links in the chain are going to break....

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