MISH: Perfect Storm Is the LIKELY Scenario....TURK: MF Global Disaster to Create Another Lehman Crisis

Perfect Storm the Most Likely Scenario; Is Europe Set to Declare a Chapter 11 in Early 2012?

This morning there is too much bad news.

US Super Committee failed to find the 1.2 trillion US Dollar needed to stop the automatic spending cuts being initiated from 2012, but the more acute problem being the expiration of the payroll tax and the emergency benefits by year-end 2011. It now looks less likely a deal can be struck as Congress now have even less incentive to find common ground ahead of next year US election.

The immediate impact could be a full one percent slower growth in the US – Goldman Sachs provided this excellent graph detailing the potential negative impact: The number could be -2.0% to -0.5% in first two quarter of 2012 – again underlining our believe in an economic perfect storm as the most likely scenario.

Is Europe set to declare a Chapter 11 in early 2012?

Read all: [link to globaleconomicanalysis.blogspot.com]

Turk - MF Global Disaster to Create Another Lehman Crisis

When asked about the possibility of contagion and the MF Global situation, Turk responded:

“First of all investors should be concerned because everything is so inter-connected today. People call it contagion and this contagion is real because the MF Global bankruptcy is going to have a knock on effect, just like Lehman Brothers had a knock on effect.”

“So the contagion is the first reason for concern. The second reason for concern is it’s taking so long for them to find this so called missing money, which I find shocking. It’s been three weeks now since the MF Global bankruptcy was declared and they started talking about $600 million of missing funds.

So I’m not too surprised that now they are talking about $1.2 billion of missing customer funds. I think they are just trying to delay the inevitable as to how bad the situation at MF Global really is.

...This thing has been dragging on and contagion is always the real issue in a inter-linked financial system like we have today.

I guess the biggest thing, Eric, is that when you are in a financial bust, promises are always broken and every time promises are broken it erodes confidence and more weak links in the chain are going to break....

“You know I have been expecting another Lehman event before the end of the year and the fact that MF Global has been dragging on to the extent that it has, this could actually turn into the Lehman moment.

[link to kingworldnews.com]

Last Edited by MARTIAL LAW on 11/22/2011 10:31 AM