MF Global is in bankruptcy after acquiring $40 billion of debt – that is with a capital “B”.
It actually borrowed $40 for every $1 in capital. That is not a misprint either. How does this happen – today, especially after we almost had Armageddon in the Fall/Winter of 2008?
Only after MF Global reached such stratospheric heights of leverage (I recognize 40 times is not a record), did the Financial Industry Regulatory Authority step in and require them to reduce their leverage. Unfortunately, it was a little too late.
Thus, another company is going away – a company with its roots to the Man Group, which was founded as a sugar broker in England in 1783. That is not a misprint either – unfortunately.
Greed and hubris once again seem to be the culprits. It is rare when one person or one company knows more than the market.