They are bringing in the big guns here

Now this also goes in the "this scares me department." See below article from www.billcara.com:

October 13, 2005

Refco hires Goldman Sachs, Thurs., Oct. 13, 2005, 11:43 AM

ALERT

CNBC reports that embattled commodities and futures broker Refco Inc (NYSE: RFX halted) has retained Goldman Sachs as its financial advisor. Interestingly Goldman, one of the most credible of Wall Street firms, was a chief underwriter of the recent Refco IPO.

Isn’t that like going from frying pan to the fire?

Actually a better analogy might be that the Wall Street club seems to be huddling together under the same old oak tree on the golf course at the onset of a thunderstorm.

That’s ok by me. Lightning now just has to strike once.

And btw, if this was not Refco, but say a Brazilian wireless telco operator, do you really think the NYSE would have halted trading so much?

Remember, these people are all in the same club. It’s called the Buy Side.

And unfortunately they own the media, if not directly then for certain by virtue of their advertising contracts.

Thank goodness for blogging.

ALERT: Refco has just this minute announced that the major profit-generating subsidiary has been shut down on account of not having the capital needed to continue.

I tell you, lightning is striking here.

Posted by Posted by Bill Cara on October 13, 2005 11:44:31 AM | Category: Cara Today in the Market

So let me get this straight. Refco is one of the largest providers of liquidity in the derivatives markets and they may have to shut down for "a few days" because they don't have enough capital to continue operations. Hmmmmm........

Then they bring in Goldman Sachs, Former SEC head Arthur Levitt, etc. to try and achieve damage control. This is going to be really interesting, except this damage control job isn't just for Refco - it is for the US financial system. If Refco fails the repercussions are going to be felt in the means of higher risk premiums, interest rates, etc. I am not selling my XLF position here. No way...........

Regards,

BG