You may recall that former Democrat Senator and Governor, top Obama fund-raiser, and Obama Administration economic guru John Corzine got into a lot of trouble after some of the client funds managed by his MF Global corporation went missing.
And by “some,” I mean $1.2 billion dollars. It might even be more than that.
So what happened to all that money? Well, according to the Wall Street Journal, it was… vaporized.
Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.
In essence, MF Global was grabbing prohibited client funds to cover Corzine’s disastrous bets on European debt. Their last-ditch gamble to win back their losses, by doubling down with someone else’s money, didn’t pay off. The crime scene is covered with fingerprints, so no one will be arrested.
You can see why the Obama Administration turned to Corzine as a key economic policy advisor. Obama is fantastically gifted at wasting money, and slipping huge payoffs to his big contributors, but he hasn’t been able to vaporize a billion dollars yet. Only the Sith grand masters learn how to shoot lighting from their fingertips.
ZeroHedge ponders the deeper significance of financial “vaporization”:
Which means one of two things: i) the “vaporization” is merely the phrase that so called investigators use to avoid the far more troubling sounding “stolen” as it would imply guilt, something which the former NJ governor and Goldman CEO (and not to mention JP Morgan which most likely was on the receiving end of the $1.2 billion + transaction) will, under guidance from counsel, sternly disagree with, or ii) the capital markets are such an unprecedented and manipulated fraud, that nobody has any clue at any moment, where any client money is, and that any residual capital still “invested” in mythical representations of “assets”, which are likely rehypothecated so many times, that not even Bank of America’s robosigning division would have a clue where to start unraveling, will promptly be converted into tangible manifestations of capital. So when someone asks what happened to stock market volume, and to investor confidence in the “stock market” feel free to use just that phrase: “it vaporized.”
(Emphasis mine.) It sounds like those capital markets fit right into the centrally-controlled economy, run by a government that would “unravel” if tugged with the most cursory private-sector audit. No one really knows what happens to a lot of the money pouring out of Washington every year.
ZeroHedge speculates that no one will be held accountable at MF Global, because everyone – management, regulators, and the recipients of misappropriated customer funds – was responsible. That sounds just like Big Government, too. The new concept of “accountability” is that nobody is accountable, because everybody is. Top officials routinely mutter about “taking responsibility” without actually losing their jobs. You’ll get to watch Attorney General Eric Holder do it again today, when he testifies before the House Oversight Committee about the Fast and Furious scandal.
Nevertheless, Corzine was the top guy at MF Global. Customers make investments with such firms because they believe in a pyramid of responsibility, atop which a chief executive sits. The idea that no one is ultimately in charge, and no single person can ultimately be held responsible – with jail time, if necessary – would destroy investor confidence, if it became our general perception of the financial system. The last thing we need right now is a further hit to investor confidence.
What’s interesting, without being the least bit surprising, is the way Corzine is treated by the media, compared to the corporate crooks of old. Individual people became the face of far more complex financial scandals, which most of the public (and quite a few regulators) never really understood: Michael Milken and Ivan Boesky, to take two examples of household names at the time. How many people came to hate Ken Lay personally, without really understanding what he did wrong – or, for that matter, what Enron was ostensibly trying to do, when it was functioning properly?
These things enter the public consciousness when they become personalized. To paraphrase Jean Rostand, steal one dollar and you’re a thief; steal $1.2 billion and you’re a hapless CEO; steal them all and you are the federal government. Corzine might escape the pantheon of pop-culture boardroom devils, because his misdeeds have been ruled unimaginable, and therefore unsuitable for insertion into the public imagination.