Tuesday, November 1, 2011
Is MF Global the canary in the coal mine?
MF Global’s demise came about as a result of a huge, highly leveraged position in Italian bonds.
Corzine was the former Co-CEO of Goldman. You gotta believe he talks to all the top players and hedge funds on the street. And we all know that they all trade pretty much the same way. (Case in point…how many other hedge funds were short Treasuries and long gold, just like John Paulson’s fund, which ended up costing him BIG? Lots.) Given this, it’s hard to imagine that MF Global is the only firm that has a big Italian bond position.
Don’t be surprised if we hear news emerge a couple of days from now that another big hedge fund or worse—some major bank—has the same position on and is in trouble.