News Links: Here’s why MF Global went under

The number that ended up killing MF Global Holdings Ltd. lay buried in a 139-page regulatory filing. The second row of a table on page 78 of the securities firm’s latest annual report reads: "Other sovereign obligations-$6.3." The column above bears the dull heading "Notional Value" and then, slightly more ominously, "in billions."

What the demise of Bear, Lehman, Merrill, MF Global — and the near collapses of Jefferies, Goldman Sachs Group Inc. and Morgan Stanley (before the latter two became bank holding companies in September 2008) — reveal in spades is that the age-old model by which these firms finance themselves is irreparably broken and should be outlawed.

Bonuses were paid to MF Global’s UK staff just hours before the company filed for bankruptcy protection in New York.

Robert De Niro is to play disgraced financier Bernie Madoff in an HBO movie he will produce, according to reports.

A record number of Americans – 49.1 million – are poor, based on a new census measure that for the first time takes into account rising medical costs and other expenses.

French Prime Minister Francois Fillon on Monday announced plans for further budget savings of 7 billion euros in 2012 and 11.6 billion euros in 2013 as the euro zone’s second-biggest economy seeks to protect its top-notch credit rating and avoid the financial market pressure now engulfing Italy.

The politicians may have had their say in Greece as a new government is being formed, but the people have not and their anger is real as the price for the bail-out deal is yet more austerity measures.

The new borrowing cost of 6.64% for Italy has increased fears of the European debt crisis deepening. The country has huge debts, says Louise Cooper of BGC Capital. She said Italy would require 300bn euro of debt relief "just to stand still". "This is contagion, this is what it looks like," she told the BBC’s Aaron Heslehurst.

Die neue griechische Regierung soll der Euro-Zone schriftlich zusagen, dass sie ihr Sparprogramm fortsetzt. Sonst gibt es kein Geld mehr.

A subtle point here is that Washington’s "no bail out" commitment is rendered credible by the direct support residents of California get from Washington, DC.  This support limits the economic/political fallout in California.  By contrast, the bankruptcy of the Greek government condemns the entire Greek financial system and sends the entire Greek economy down the drain.    

The U.S. economy is huge, and exports only a relatively small part. World demand alone cannot lift us out of a slow recovery. Furthermore, persistent slow growth in Europe — with a possible recession looming or underway — and slowing growth in other regions suggest that export growth could slow in the near term. If it does, it will simply be one more piece of evidence that when the economy is drastically below its potential, demand is a major determinant of output.

And what Davies’s post drives home is that implicitly at least European leaders went in for the doctrine of immaculate transfer – in effect, they wanted to believe that the huge payments imbalances could be ended without major changes in relative prices. So what’s happening instead is forced austerity in the deficit countries, not matched by expansionary policies elsewhere, in a low aggregate inflation environment

Factory output increased by 0.2% compared with August. From a year earlier, it added 2%.

António Horta-Osório ‘leave of absence’ was announced last week to a stunned City and the bank’s shares have slumped 25% in the past seven days, as his absence and the eurozone crisis has knocked confidence in the bank

Sales at stores open at least 12 months, measured by value, fell 0.6 percent from a year earlier, the London-based trade group said in an e-mailed report today. Sales of furniture fell the most since September 2010 and food-sales growth slowed to the weakest in four months.

Up to a third of Hong Kong’s 50,000 or so factories in China could downsize or shut by the end of the year as exporters get hit by cost rises and darkening global demand for Chinese goods, a major Hong Kong industrial body said on Tuesday.

Shares in scandal-hit Japanese camera-maker Olympus tumbled 30% in Tokyo after the company admitted it had been hiding losses going back more than twenty years, and sacked its vice president. The firm may consider criminal complaints against former executives, it added. The company’s shares have lost 70% of their value in the last month after British ex-CEO Michael Woodford blew the whistle on questionable fees paid as part of M&A transactions.

The yield on Italian 10-year bonds rose to 6.73%, the highest since the euro was founded in 1999. Investors fear that the eurozone’s third-biggest economy could become the next victim of the debt crisis.

What killed MF Global, Lehman Brothers, Bear Stearns, AIG, and other huge financial firms, after all, was the sudden refusal of short-term lenders to continue lending money to the firms. When the overnight lenders suddenly get suspicious and the money disappears, however, it’s as if the oxygen is suddenly sucked out of the room.

So far, the European Central Bank’s efforts to stabilize yields of Italian and Spanish debt by buying bonds in the secondary market have failed. That, analysts say, is because the ECB is only committed to buying a finite amount of bonds and counts as merely another – albeit large – player in the market. The key, they argue, is for the ECB to commit to unlimited bond purchases at a set price of, say, 200 basis points over German bonds. But this would mean printing more euros. Germany and a handful of other euro-zone governments strongly oppose such purchases out of fear they will cause inflation.

He beat Muhammad Ali in the Fight of the Century, battled him nearly to the death in the Thrilla in Manila. Then Joe Frazier spent the rest of his life trying to fight his way out of Ali’s shadow.

Eurozone finance ministers have failed to sanction measures to create the bloc’s crucial €1 trillion bail-out fund – despite warnings that Europe is dangerously ill-equipped to cope with the financial and economic crisis enveloping Italy.

Germany and Merkel under huge pressure to drop veto against European Central Bank rescue

Steve Jobs, Isaacson’s biography makes clear, was a complicated and exhausting man. "There are parts of his life and personality that are extremely messy, and that’s the truth," Powell tells Isaacson. "You shouldn’t whitewash it." Isaacson, to his credit, does not.

I am of the view that inflationary policy doctrine ("inflationism") is in the process of impairing the Creditworthiness of the financial claims that constitute the foundation of the global financial system.  Massive issuance of non-productive debt and central bank monetization have irreparably distorted the global pricing of finance and the resulting allocation of financial and real resources.  This backdrop has nurtured destructive speculative dynamics.  From my perspective, it is the "destructionist" forces of "inflationism" that today pose grave risk to global Capitalism.  And, to be sure, the "socialism" of Credit risk is at the heart of the monetary and economic quagmires imperiling Europe, the U.S and nations around the world.

IAEA says foreign expertise has brought Iran to threshold of nuclear capability – Washington Post

On Monday, a fourth woman accused Cain of sexually inappropriate behavior during his tenure with the National Restaurant Association. Represented by celebrity attorney Gloria Allred, Sharon Bialek was revealed to the media in a live-television press conference, putting a name and face to her accusation. Until then, Cain’s accusers had remained anonymous

Abramoff managed to positively charm CBS News’ Lesley Stahl, whom I think of as a tough and serious journalist, but who at times seemed delighted by the dashing rogue before her.

In an interview with Charlie Rose that is set to be aired on Monday, Facebook founder Mark Zuckerberg revealed that Steve Jobs advised him on how to build a better company, from management to overall mission, reports Bloomberg.

According to sources, the bankers had gathered around the large picture window in a mahogany-paneled conference room after an exhausting morning of foreclosing on more than 9,000 homes. "Five-thousand bucks says it’s V For Vendetta Guy," bank vice chairman Malcolm Grant said in reference to a protester wearing the stylized Guy Fawkes mask popularized by the 2006 film. "Look at him. He’s just asking for the cuffs with that thing on his face. Come on, who’s in?

The jobs crisis has left so many people out of work for so long that most of America’s unemployed are no longer receiving unemployment benefits. Early last year, 75 percent were receiving checks. The figure is now 48 percent – a shift that points to a growing crisis of long-term unemployment. Nearly one-third of America’s 14 million unemployed have had no job for a year or more.