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HomeThe European Shell Game
Posted by Larry Doyle on December 13th, 2011 11:43 AM |
I recently received the following message from a regular reader. Given the fact that every other piece of financial news seems to address developments in Europe, I would like to share his message and my response.
Hi Larry –
Hope you are doing well. I have read several articles in the last few days on this topic – rehypothecation – and how this is what really brought down MF Global, and also in a way what brought down AIG.
I’m still not completely understanding this. My primary question right now that I’d love to hear your opinion on is this – Was this the primary reason why David Cameron refused on Friday for Great Britain to agree to the EU treaty?
The reason I ask that is because the only way that MF Global could utilize rehypothecation is because in the UK, it is legal and there is no limit whatsoever on the amount that can be rehypothecated there (as opposed to in the U.S. where there are strict rules). (more…)
Where Will Euro-Dominoes Stop?
Posted by Larry Doyle on April 28th, 2010 8:34 AM |
While many eyes, including mine, were fixated yesterday on the Senate hearings grilling the Goldman Sachs’ executives, the fact is much more serious issues are playing out across the pond. Greece is literally on the precipice of default. Is Portugal far behind? Will Ireland be next? Will the financial train wreck in Europe be contained? Is that a pipe dream in a world interconnected via a massive credit derivatives market?
Who has a great pulse on the Euro-zone? Simon Johnson, former chief economist of the IMF, co-author with James Kwak (my BlogTalkRadio guest on April 11th) of 13 Bankers, and blogger at Baseline Scenario. Johnson sheds timely insights on moves within the European bond markets and potential for another wave of global financial crisis in writing, Wake the President:
Most days we can coast along, confident that tomorrow will be much like yesterday. On a very few days we need to look hard at the news headlines, click through to read the whole story, and then completely change a large chunk of how we thought the world worked. Today is such a day. (more…)
