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"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.
1983 Rich and partner Pincus Green are indicted on 65 criminal
counts; income tax evasion, wire fraud, racketeering, trading with Iran during
oil embargo.
Maxxam 1985 A Texas based corporation owned and
operated by Charles Hurwitz, a United Jewish Appeal-Federation official,
succeeds in a $900 million
hostile takeover
of Pacific Lumber, a incorporation with local ties stretching back to the
1850s.
Maxxam's hostile
takeover could not have taken place without the financing arranged through
the sale of junk bonds by
Michael Robert Milken.
Maxxam kept the Pacific
Lumber name, but tripled the rate of its logging operations threatening the
last redwood forests on earth.
Protests ensued (treesitters) and 10 years later the Headwaters
Forest exchange between the US government and Pacific Lumber was
enacted.
Maxxam owns some 210,000 acres in Humboldt County.
The
accelerated logging of Maxxim and others has polluted some 85% of the waters in
California's North Coast region, uprooted protected redwoods and damaged
private property.
Maxxam was given $480 million in taxpayer money for
some 7,500 acres of ancient redwoods - the Headwaters Forest. The "deal"
included a 50 year ban on logging within an additional 7,000 acres but allowed
Pacific Lumber to bypass many logging restrictions which including protections
for endangered species and limits on the rate of logging.
Officials
continue to permit logging corporations to avoid complying with environmental
regulations.
1986 Ivan Frederick Boesky, an arbitrageur,
has amassed over US$200 million 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.
Ivan F. Boesky & Co. was founded in
1975 with $700,000 (equivalent to $3.3 million in
2018) worth of startup money from his wife's family.
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 is fined US$100 million.
In a 1991 divorce
settlement his wife agrees to pay him $23 million and $180,000 a year for the
rest of his natural life.
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.
Milken Settles S.E.C. Complaint for $47 Million
Junk bond king Michael Milken looms large in L.A. finance
industry
1990
Peter Lynch reveals he has identified and invested in numerous tenbaggers as
the manager of the Fidelity Magellan Fund.
Magellan Fund grew from $18
million in assets when Lynch took it over to $19 billion.
Lynch
preferred stocks that had a price-to-earnings ratio below the industry mean and
less than its five-year average.
He looked for stocks where the
five-year growth rate in operating earnings per share (EPS) was high but below
50 percent as such earnings growth rates are unsustainable as companies growing
at this pace attract competition.
A tenbagger is Peter Lynch's term for
an investment that returns 10 times its initial purchase price.
Lynch
cited Wal-Mart as an example of a tenbagger.
Investors who purchased
Wal-Mart 10 years after it went public in 1970 still made 30 times their
money.
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 is touted as the 'Dot-com
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
Simmons 'earns' $1.6 billion.
T. Boone Pickens 'earns' $1.5
billion.
Kenneth C 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'.
Financier George Soros
funds population control.
Soros, like
Ted Turner, has five
children but worries that other people are having too many.
His
foundations include the Open Society Institute (OSI), which has a unit
that supports abortion.
1998 International
Women's Health Coalition after receiving generous grants from OSI publishes
a strategy booklet on how to spread abortion in poor nations.
Focusing
on legal change, it suggested using documents from recent international
conferences to promote abortion.
Training "health professionals in
basic abortion techniques."
Exploiting loopholes so that abortions can
be done "even in settings where laws are restrictive."
Changing
administrative practice so that, for example, paramedics can do early
abortions.
Using research on illegal and "unsafe" abortion to campaign
for legalization. |
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.
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.
2009 Bernie Madoff is incarcerated and then hospitalized
within a year for "severe facial fractures, broken ribs, and a collapsed
lung".
CFO Frank DiPascali and five former colleagues were also
convicted.
$36 billion was invested: $18 billion to investors with $18
billion missing.
"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
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
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
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forged a populace unable to discern propaganda from
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