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hedge funds

The Leveraged Buyout of America

"Government cannot prevent nature from taking its course."
David Rosenberg, chief North American economist at Merrill Lynch


"Hedge funds are now targeting each other. Morgan Stanley and Goldman Sachs, who made obscene profits by shorting stocks in the past, are vociferously against the practice now that their stocks are the ones being destroyed." - Bruce Goodman

"Oil prices are largely not determined by supply and demand but the trading desks of large Wall Street firms." - Michael Masters, hedge fund manager

"Hedge fund riches helped inflate the price of everything from modern art to Manhattan real estate. Top managers raked in billions of dollars a year, and managing a fund became the running dream on Wall Street" - Louise Story 10/22/08


A hedge fund is a private investment fund.

Hedge funds are not subject to any direct regulation by the SEC, the National Association of Securities Dealers (NASD), now the Financial Industry Regulatory Authority (FINRA), or any other regulating commission.

Hedge funds may hold long or short assets, enter into futures, swaps, short selling schemes, structured investment vehicles and derivative contracts.

Structured Investment Vehicle

Some hedge funds focus on other financial instruments including commodity futures, options, and emerging market debt.

A security may be an electronic entry in a software system that is fungible - you can trade it for an electronic entry in a different software system.

As hedge funds typically lever debt to invest, the positions they can take in the financial markets are larger than their assets under management.

Only 17% of hedge fund managers see an economic downturn as a bad news.

1998   During the first phase of deregulation the financial industry had a near-meltdown triggered by a collapse of Long-Term Capital Management.

Although the shareholders lost their assets, the creditors are paid.

The loss of $4 billion in five weeks was touted as the 'tech bubble.'

The paper wealth of lower echelon corporate management, members of the middle class, in the form of 'under water' stock options, evaporated.

'Under water' stock options, granted at a share price higher than the current market share return the wealth to controlling corporate interests.

"A consortium of banks rescued Long-Term Capital Management, but it took 15 months, September 1998 to January 2000, to negotiate the way out of trades tied to more than $1 trillion in bets." - Richard Teitelbaum, Hugh Son





2000   Tiger Management fails after raising $6 billion.

2003   Aman Capital is set up by top derivatives traders.

Leveraged trades in credit derivatives resulted in an estimated loss of hundreds of millions of dollars.

Dissolved June 2005.

2004   Edward Lampert 'earns' $1.02 billion.

2005   Bailey Coates Cromwell Fund leveraged trades chop 20% off a $1.3 billion portfolio in a matter of months.

Dissolved June 20, 2005.

Marin Capital attracts $1.7 billion in capital and puts it to 'work' using credit arbitrage and convertible arbitrage making a large bet on General Motors.

General Motors' bonds downgraded to junk, fund crushed.

Dissolved on June 16, 2005.

James Harris Simons 'earns' $1.6 billion.

T. Boone Pickens 'earns' $1.5 billion.

Ken Griffin 'earns' $1.5 billion.

2006 Ospraie Management LLC closed a $250 million hedge fund specializing in commodity trading.

The Ospraie Point Fund lost 29% in five months. Losses from bad bets in commodities that fell sharply.

Dissolved June 08, 2006.

Edward Lampert 'earns' $1.3 billion.

James Harris Simons 'earns' $1.7 billion.




Amaranth Advisors, a hedge fund manager, loses $6 billion in wrong-way bets on natural gas derivatives in September.

Amaranth Advisors net asset value declined by 65% to 70%.

Amaranth Advisors controlled 40% or more of natural gas contracts in 2006 and in one month controlled 70%.

2007 Senate investigators conclude that Amaranth Advisors trading actions drove up the price of natural gas for the entire natural gas market.

Amaranth Advisors agreed to pay $717,000 to settle SEC charges of violating securities rules.

Bear Stearns hedge fund Enhanced Leverage Fund and High-Grade Fund together borrows $20 billion to invest in sub-prime mortgage backed bonds.

"Our liquidity and balance sheet are strong." - Alan Schwartz, CEO of Bear Stearns 36 hours before seeking emergency funding

Investors are told in July 2007 that their investment of $1.5 billion is gone.

In a survey conducted by Rothstein Kass 61% of hedge fund managers stated that a recission in America was very likely in 2008.

66% of hedge fund managers said a recission would bring 'opportunities'.



Soros and Koch Are Uniting to Fund a New Think Tank



George Soros 'earns' $1 billion.

Stephen A. Cohen 'earns' $900 million.

Bruce Kovner 'earns' $715 million.

Paul Tudor Jones II'earns' $690 million.

Tim Barakett 'earns' $675 million.

David Tepper 'earns' $670 million.

Carl Icahn 'earns' $600 million.


Hedge fund manager John Paulson makes $3 billion shorting financials in anticipation of the American housing market collapse.

John Paulson is believed to have made $428 million from September to February by short selling Lloyds Banking Group Plc and HBOS Plc.





"Bernie was known for generous philanthropy to Jewish causes.

Madoff was no Robin Hood, his philanthropic and charity contributions facilitated access to the wealthy who served on the boards of the recipient institutions proving he was a super-rich 'intimate' of the same elite class.

The shock following Madoff's confession he was 'running a Ponzi scheme' drew as much anger for the money lost and the fall from the moneyed class as for the embarrassment of knowing that the world's biggest exploiters and smartest swindlers on Wall Street, were completely 'taken.'

Madoff's fraudulent behavior was not the result of personal moral failure.

It is the product of a systemic imperial economic culture.

The paper economy, 'sophisticated financial instruments' are all 'Ponzi schemes,' as they are not based on producing and selling goods and services.

They are financial bets on future financial paper growth based on securing future buyers to pay off earlier cash ins." - James Petras



earned income

Hedge fund managers hold their assets one year and one day magically converting short term assets into long term assets.

"Since 1960 each of the seven previous recoveries ended with a greater percentage of women at work than when it began.

Working women now earn a third of America's total household income, and by and large, only those homes with a working wife have made real gains in their standard of living over the last eight years.

Yet, over that same period, the percentage of women employed outside the home has fallen to where it was 12 years ago.

Meanwhile, the median hourly pay of women 25 to 48 years of age has fallen from $15.04 in 2004 to $14.84 last year.

This corrosive pattern holds true, according to the federal statistics, for all American women, regardless of education, race, ethnicity or marital or familial status." - Tim Rutten 07/08


"Working mothers work because their families need their paychecks.

Therefore, by definition, families in which the wife is not required to work are families feeling a little less crushed by the new economy."- Renee Leask


"The real argument isn't that the top 1% pay 40% of federal income taxes.

Wage earners can be taxed up to 35%.

Capital-gains earners generally can be taxed as high as 15%.

Individuals whose wealth works by accruing wealth from investments are rewarded by the government for being wealthy enough not to have to work.

The rest are penalized for showing up to work." - Brain T. Finney



Intercontinental Exchange (ICE)

"Goldman Sachs was one of the founding partners of online commodities and futures market Intercontinental Exchange (ICE).

ICE has been a primary focus of recent congressional investigations.

It was named in both the Senate Permanent Subcommittee on Investigations, June 27, 2006 and the House Committee on Energy & Commerce hearing.

Those investigations looked into the unregulated trading in energy futures and concluded energy price climb to stratospheric heights has been driven by the billions of dollars' worth of oil and natural gas futures contracts being placed on the ICE, which is not regulated by the Commodities Futures Trading Commission." - Ed Wallace




Michael Milken invented the junk bond


Michael Robert Milken:

The "Junk Bond King", expanded the use of high yield debt in corporate finance increasing mergers and acquisitions, which in turn fueled the 1980s boom in leveraged buyouts, hostile takeovers, and corporate raids which were responsible for moving untold wealth out of middle American into the hands of men like Charles Hurwitz.

Milken was responsible for a large swath of Northern California clearcut pushing King Salmon to the brink of extinction through habitat destruction.

1989 Milken indicted on 98 counts of racketeering and securities fraud

Milken plead guilty to six felony counts of securities fraud and conspiracy, paid $600 million in fines was sentenced to ten years in prison but only spent 22 months behind bars.

1998 Milken Settles S.E.C. Complaint for $47 Million

Junk bond king Michael Milken looms large in L.A. finance industry



TOP ARBITRAGER:
IVAN F. BOESKY



1975 Ivan F. Boesky & Company is founded with $700,000 (equivalent to $3.3 million in 2018) worth of startup money from his wife's family.

1986 Ivan Frederick Boesky, an arbitrageur, who has amassed a fortune of more than US$200 million by betting on corporate takeovers and the $136 million in proceeds from the sale of The Beverly Hills Hotel, is on the cover of Time magazine.

1987 A group of partners sue Boesky over what they claim are misleading partnership documents.

The Securities and Exchange Commission investigates him for making investments based on information received from corporate officers.

Stock acquisitions were sometimes brazen, with massive purchases occurring only a few days before a corporation announced a takeover.

Although insider trading of this kind was illegal, laws prohibiting it were rarely enforced until Boesky was prosecuted.

Boesky received a prison sentence of 3 1/2 years and was fined US$100 million.

1991 In a divorce settlement his wife agrees to pay him $23 million and $180,000 a year for life.



Marc Rich

Fugitive trader

Marc Rich Tied to Russian Mafia?

Marc Rich, the man who invented the spot-oil


HOW MARC HELPED PLUNDER RUSSIA

Clinton pardon of Rich a saga of power, money

FBI Releases Files On Bill Clinton's Pardon Of Marc Rich

Billionaire Marc Rich invented the job of the buccaneering metals trader

THE CONTROVERSIAL PARDON OF INTERNATIONAL FUGITIVE MARC RICH

The Strange Case of Marc Rich: Contracting with Tax Fugitives






Ray Lee Hunt:

September 8, 2007 Hunt signs a petroleum deal with the Kurdistan Regional Government of Iraq.

Ray Lee Hunt spent most of the Bush administration serving on the President's Foreign Intelligence Advisory Board.

The Iraqi petroleum minister denounced the deal as illegal, though there was no specific law against it, claiming it undermined the country's negotiations to share profit between the Kurds, Sunni and Shi'a.






Richard Edward Rainwater:

Investment manager for the four Bass brothers from 1970 to 1986.





Bass Brothers:

Born into an extremely wealthy family with an uncle, Sid Richardson worth $810 million, Robert, Lee, Ed, and Sid Bass all attended Yale University.

Ed Bass is a classmate and personal friend of George W. Bush, and the brothers, especially Lee Bass, helped George W. Bush financially both before and throughout his political career.





Robert Rowling:

George Walker Bush campaign Pioneer



The Wilbur Ross Debacle

Conflicts of Interest: Wilbur Ross

Wilbur Ross’ Russian Conflict of Interest

Wilbur Ross major financial conflicts of interest

Wilbur Ross' growing conflict of interest problem

The Complicated World of Wilbur Ross’ Finances

Wilbur Ross Isn’t Even Pretending to Follow the Law Anymore

Watchdog Group Scores Win in Battle for Wilbur Ross Records






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