Something from an email from a City type.
Re MF Global, the company that John Corzine\’s just driven into bankruptcy. Basically, what he was doing was taking a broker (someone who does the technical bit of trading for other people) and turning it into a proprietary trading firm, one that takes risks for itself. That\’s a pretty hard to to do in itself.
Then the firm took huge bets on eurozone bonds. Bets which, obviously, didn\’t come off.
But now to Corzine\’s position. OK, so he\’s got massive option agreements as CEO. At which point, heck, why not bet the whole company? Turns up red, he makes hundreds of millions. Black? Oops, bye bye company but what the heck, we\’ve limited liability don\’t we? Only other peoples\’ money being lost.
It\’s that old principal/agent problem rearing its ugly head again.