Models Behaving Badly Led to MF’s Global Collapse – People Too: Emanuel Derman

Looks like felony theft to me... why isn't this criminal in jail? Oh, I see... too many other criminal friends in high places. In other words. too big to prosecute.

Criminal Activity? Failure of the CFTC & SEC? Complicity and Coverup by the Justice Department? Political Cronyizm? Goldman Sachs & JPMorgan benefitting? Take your pick...

So, where is the perp walk? The Feds have not even interviewed Corzine yet. Why not? I say "OFF WITH HIS HEAD!!"

Leverage and big egos are the problem. MF was leveraged $40 of debt to $1 in assets. When the positions went against them the lenders required additional capital. Rather than liquidate, they put-up customer assets hoping the positions would turn around.

600 million 1,2 billion 1,6 billion what is matter?
The important thing is that we arrest and take away the kids of a lady who shoplifts a 5 dollar sandwich in Safeway...
Or we give a 3 year jail term to a Missisipi woman who received $4,000 in food stamps illegally (and paid the sum back)
Now sure these other two people were guilty of a crime.... but when someone steal 1.2 billion and gets away scott-free...
Or all the other collaborators in the 50 billion dollar Madoff ponzi scheme who never got arrested.
Or the CEOS or pillaged or the funds from bankrupt companies.
Or Fannie and Freddie mack CEOS getting huge bonuses from taxpayer bailouts
You think thats fair...
To arrest two poor ladies who commited minor crimes?

Is "behaving badly" the new, politically correct way to refer to criminal behavior?

Plain and simple, the US financial system, and Wall Street in particular, is corrupt to the core. There is no way to fix it under the current "system". Too many insiders, too little regulation and, most importantly, no incentive on the part of the gaurdians of We the People, those in Washington who are benefiting from the current process. Wall Street with its subprime paper has damaged the world economy to the point where there likely will be a worldwide depression when the Eurozone fails.

The problem is that the conventional wisdom that crime doesn't pay has become as politically incorrect as racial epithets. During the S&L scandal of the eighties, which is dwarfed by what is going on now, over a thousand crooks were convicted. This time around, none have even been indicted. It's olly olly ox in free for the crooks, and they know it. Why would they stop when they know they'll get away with it free and clear.

Americans had better wake up and smell the foulness while they still have a country to save.

Mathematics nearly buried the Roman Catholic Church when the Cardinals refused to believe Copernicus was correct. They changed a central tenant of the church to match the new reality that the earth really does revolve around the sun. Wall Street needs to see the new reality that the financial world revolves around a country far away which is in light when we are in darkness. Our debt is crushing us, and gamblers like Corzine continue to bet on bad actors. Until the US political system changes we will continue to see the trifecta of Wall Street-Bankers and Congress leading our country and our precious assets down a rosy path to poverty.
Term limits, an end to Lobbyist controlled legislation, and stopping the revolving door of politics to wall steet will go a long way to preventing catastrophies such as MF Global. The occupy movement is just the first breeze of a Hurricane of Middle Class Revolution (suggest you read or re-read Millenium People) unless we can achieve real solutions to preventing greed from running our government.

Corzine = Crook ...............p.s. My apologies to all the crooks out there.

corzine=jail time

Dammit. Here I sit, bleary-eyed and without enough coffee in me to start the day, when I come across an article on Yahoo’s main page with the words “models behaving badly” in it. Through the haze, I am intrigued, thinking that we might have some Wall Street scandal involving pretty young things and corporate big wigs. Financial models. Crap. What a let down! Heck, back in the day when I had something to invest, my broker told me that the market was run by neurotics employed by psychotics. Have the neurotics become so lazy that they rely on financial models for all their decision making? Lazy neurotics. Never thought I’d see the day.

Oh, that $1.2 billion that is “missing”? I checked under my couch cushion. No dice. Looked for five minutes before realizing I no longer have a couch. Check under the management’s individual couch cushions, then confiscate their couches.

I need more coffee. (mumbles to self, “models, yeah right.”)

So you can't apply mathematical concepts to human behavior? East is east and west is west and never the twain shall meet. Apparently, neither shall the psych and math departments of universities.

my family laughed and thought I was "crazy" when i sold my 401k back in 2007. now they struggle to get to retirement, while I'm better off than before. when are people going to realize that you need to keep the cash where you can see it?

This isn't someone behaving badly, but more like domestic terrorism.They should be treated as such and all of their assets seized and the individuals put in Guantanamo.Better yet take away their citizenship and pay the Mexicans to house them in their prison system because it'll be cheaper.

This guy may be a genius, but his information is of no value to the financial short comings of playing derivatives. It is a market that should never have been allowed to operate in the first place. It attempts to insure poor financial decisions- that would perhaps never been made without this market. The people, the financial market, all suffer when this type of encouragement exists for those who make unsupported or even fraudulent deals. There is no controls on any deal made in this market, no government oversight, and little penalty when a disaster strikes-much like the wall street bunch. Control it or stop it!!

Excessive Leverage and robust risk taking appetite were also major contributing elements of the MF Global failure. Read the Michael Lewis' book "Boomerang" and concentrate on the chapters concerning Iceland and Ireland for incite into what makes for such stupidity.

Models are only as good as the people that devised them. They don't create themselves.

"It was undone by an over-reliance on short-term funding" intentionally at the request of Goldman Sachs, and the theft was intentional. Remember, this is one of the "smartest" men in the US John Corzine.

The whole system is corupted. total collapse comming soon to a 401k to you.