Vice President Joe Biden said Jon Corzine was the person they called between the November 2008 election and inauguration day. They wanted his advice on the economy. He was the most brilliant person they knew on the economy. Corzine advised the Stimulus Package.
We know how that worked out.
Jon Corzine must have been brilliant. The tenant farmer’s son with an MBA from Chicago rose to become Chairman of Goldman Sachs at age 44. The wunderkind is a true genius.
So why last week did he not plead the 5th Amendment before Congress, but even worst, ignorance? He had no answer for how $1.2 billion in client funds went missing shortly before his company, MF Global, entered bankruptcy: “I simply do not know where the money is.”
Neither did the CEO and CFO he appointed at MF. Their defense is one of abject ignorance. The reality is one of gross mismanagement.
$1.2 billion is not petty cash, even for Goldman Sachs. How could MF’s senior management not know where it is? The farmers, grain elevators, and others who invested the $1.2 billion only know where it is not. The man who ran the company claims not only not to know where it is, but also that he never authorized an illegal transaction.
How can the brilliant head of Goldman Sachs be so ignorant and incompetent?
Of course, Corzine’s record is not that brilliant.
He was Chairman of Goldman Sachs from 1994 to 1999, when he was ousted from the firm.
His consolation prize was $400 million in GS stock.
He spent $60 million of it in 2000 securing a Senate seat in New Jersey. The seemingly arch-capitalist discovered his inner self of a clueless progressive. His voting record was to the left of Senator John Kerry.
His 2003 divorce cost him half of his fortune – the price to pay for openly cavorting with a mistress. The consolation prize, the girlfriend, did not work out. He then spent several million cutting his ties with her, a union official.
Strikes 3 and 4!
Don’t you only get three strikes in baseball?
He spent an additional $40 million in 2005 winning the New Jersey Governorship.
He then presided over 4 years of mismanagement, incompetence, infidelity,
arrogance, and corruption, while taxes, especially property taxes, keep rising. He also raised the sales tax to 7%.
The voters toss him from office; a progressive Democrat in one of the bluest of blue states, is defeated for reelection.
Strike 5! He’s on borrowed time, but doesn’t realize it. Hubris pride.
A new consolation prize awaited. An old friend from Goldman Sachs, J. Christopher Flowers, offered him MF in March 2010.
He assumed control, and within 20 months drove MF into bankruptcy. It had a debt/capital ratio of 40:1. This leverage exceeded even those of Bear Stearns and Lehman Brothers when they folded.
He bet $6.3 billion in the debt of five European countries: Belgium, Ireland, Italy, Portugal, and Spain. At least he avoided Greece. He was warned against it, but felt the rewards were great, while the risk low. Leverage; he was betting with other investor’s money. The firm had assets of $39.7 billion and liabilities of $41 billion when it folded. The securities firm was out of cash. He learnt nothing from the 2010 Crash. A fool doesn’t learn.
He’s not so smart after all.
By the time he’s finished with litigation, settlements, and attorneys fees, he may be a pauper.
He never learnt to cut his losses.
It’s not easy to blow $400 million.
Jon Corzine is a stupid fool.