Posts Tagged ‘Hedge Funds’

A few years ago, congress approved and President Obama signed legislation called Dodd-Frank, which was supposed to regulate the actions of Wall Street banks by curbing the financial crimes and other unethical shenanigans of the big banks. Dodd-Frank was weak legislation, badly watered down by Wall Street lobbyists, so the press told us. What the corporate press didn’t tell us is that it was created to be ineffective.

That’s because of Hedge Funds. Hedge funds are unregulated investment firms not impacted by Dodd-Frank, or any other federal regulations.

The big banks all own hedge funds, which are many times larger than the big banks. So, for example, if Goldman Sachs is worth $20 billion, then its two hedge funds are worth closer to $100 billion each. That means only the front company of these investment banks are being “weakly” regulated.

Under the above scenario, only 8 percent of Goldman Sachs is being weakly regulated by Dodd-Frank and whatever other rules are in the federal books. The same holds true for Citibank, JP Morgan/Chase and all the other big banks that have hired the Clinton’s to give speeches on topics they don’t know much about.

In ballyhooing Dodd-Frank, the Democrats achieved virtually no regulations on Wall Street, but they did create a smokescreen by which they could claim they did something significant. Blow away the smoke screen, and they achieved almost nothing in the way of regulating Wall Street.

Hedge Funds were created in 1940. They were small wealth managing companies that were limited to having 99 clients or less via a loophole in the New Deal Reforms.

“The Investment Company and Investment Advisers Acts of 1940 prohibited firms operating with pools of investor money from engaging in risky practices like short sales (bets that a stock will go down instead of up), leverage (investing with borrowed funds to amplify returns and heighten risk), and corporate takeovers. Meanwhile, investment companies had to register with the Securities and Exchange Commission (SEC), disclosing their portfolios and their corporate structures. The 1940 laws also restricted certain types of fund manager compensation. The purpose was to eliminate the kind of speculative risks with pools of capital that generated the Great Depression.”

Hedge Funds were never a big player in today’s financial markets until one day in 1996 “President Bill Clinton signed the National Securities Markets Improvement Act (NSMIA), which overhauled state and federal responsibility for securities market oversight. It was part of a series of financial market deregulations in the Clinton era, advanced with broad Wall Street support and almost no resistance in Congress: After bipartisan agreement, the House and Senate finalized NSMIA with a voice vote.”

BarclayHedge now estimates hedge fund assets under management in the third quarter of 2015 at $2.7 trillion, up from about $100 billion in 1995. And that doesn’t count the borrowed money also invested by the same firms, which likely total trillions more.

After Clinton left office, Wall Street investment banks rewarded Bill and Hillary Clinton for their loyalty by paying them millions of dollars in speaking fees. No doubt, President Obama will get the same deal if he can get the Trans Pacific Partnership passed through congress via partnership with the Republican Party.

The game is still rigged and Dodd-Frank is almost completely useless thanks to the big banks and their Hedge Funds.

As for Hedge Funds, they are now the preferred vehicle of ripping people off, manipulating markets via their trillions of dollars, helping the big banks keep millions of homes off the markets so as to create the current (as well as the last) housing bubble, and so much more.

The Clinton’s have exacerbated our current crisis of democracy. Vote Bernie Sanders!

As for the rest of the story, stay tuned.

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Hillary and Bill Clinton have made millions giving speeches to Wall Street investment banks. Did Wall Street CEO’s get what they wanted from the Clinton’S?

1. Begin with Nafta, which exported millions of American jobs. The difference between the old higher US wages and the new lower Mexican wages went straight into the pockets of the rich via higher corporate profits, rising share prices, and surging dividends, which pushed the stock markets into sizzling record territory during the 1990’s in a massive stock market bubble.

2. Then think about the repeal of Glass-Steagall, the passage of the Telecommunications Act, and giving China temporary most favored nation status in 1994, and which cost the US millions of jobs.

3. In 1994, President Bill Clinton signed legislation lifting the restrictions limiting Hedge Funds from having fewer than 100 clients, and this has allowed for them to grow into hundreds of billions of dollars each, and all of this at the expense of the 99 percent.

4. And that’s just a few of the favors the Clinton’s did for Wall Street at the expense of the 99 percent.

4. We can’t forget Hillary voted for the war in Iraq, the South Korea Trade Treaty, the Colombia and Panama trade treaties, and, of course, who can forget Hillary’s gold standard for trade agreements, the trans pacific partnership, which will cost the US millions of jobs and send trillions of dollars of income from the 99 to the 1 percent.

What I don’t understand is how anybody could trust any Clinton, especially given that Bill and Hillary have gotten millions of dollars for speeches to Wall Street investment firms.

Maybe if we elect Hillary, could we trust in her to reverse Billy boy’s gross favors to the Clinton’s Wall Street friends?

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The Democrats in congress are mostly against the Keystone Pipeline, which will transport crude oil from Canada to the Gulf of Mexico, if approved by congress and not vetoed by President Obama. The Republican senators and representatives are, by and large, for this potential environmental disaster.

If the pipeline doesn’t make it past a veto the Republicans will blame environmentalists that supposedly influence the Democratic members of congress and President Obama. However, one can rightly suspect that there is something more to this than meets the eye.

Perhaps the Democratic position has something to do with billionaire investor Warren Buffett doling out $15 billion to purchase the Burlington Northern Santa Fe railroad earlier this year, the largest railroad shipper of crude oil in the nation, according to its website. Buffett is a big financial supporter of the Democrats, but he financially dabbles a little bit with some Republicans.

Buffett heads Berkshire Hathaway, one the largest hedge funds in the world. Its stock price is currently over $200,000 per share. A hedge fund is nothing more than an unregulated investment firm that buys and sells stocks and bonds, sort of like a Goldman Sachs without any rules.

The Keystone Pipeline will transport oil from Canada and the United States to the Gulf of Mexico for export elsewhere. If completed, the pipeline may take a lot of business from Burlington Northern Santa Fe. In which case, the share price of Burlington Northern Santa Fe will likely drop as its profits decline. The profits from Burlington that Berkshire Hathaway receives will also fall, which could put downward pressure on its stock price. The result would be less money for all of those Democratic politicians who count on that money.

The billionaire Koch Brothers are a major financial player behind the building of the Keystone Pipeline. They invest billions in the Republican party and its candidates. They stand to make billions from building the pipeline, and the pipeline will service one of their Texas oil refineries.

Quite naturally, the pipeline represents a conduit of future cash for Republican Party candidates, whereas Burlington and Berkshire Hathaway represent a stream of cash for Democratic Party candidates.

There are other perks candidates of both parties receive from big contributors, such as vacations in Scotland and cushy jobs that make them rich after they leave office.

Notice none of the major corporate news media is mentioning issues such as these. That’s because the job of reporters and editors of the corporate news media is to keep you ignorant, and biased against the political party you don’t like.

In government, in legislation, in negotiating trade treaties, the Democrats represent a fraction of the 0.01 percent richest Americans, the Republicans represent another fraction of the 0.01 percent wealthiest Americans, and a third fraction of the richest Americans play both sides, such as Goldman Sachs and JP Morgan, both of which are corporations whose primary interests are to increase the amount of income and wealth of the 1 percent at the expense of the 99 percent.

When the president vetoes the legislation approving the Keystone Pipeline, and the Republicans won’t have sufficient votes to override that veto, the press will dutifully quote Republican Party leaders about the alleged jobs lost due to not building the pipeline. They will, conveniently, not mention the jobs that might have been lost because of a decline in Burlington Northern Santa Fe profits had the pipeline been approved.

They will blame the environmentalists, and turn that word into an epithet. Naturally, the environmentalists will have played no role in the failure of government to approve of the pipeline because it’s all about who gets the money. Follow the money folks!

Republican and Democratic Party leaders don’t want the 99 percent to know that the real political battles in Washington D.C., and in state capitals across the nation, are being fought between a small group of billionaires at the expense of everyone else. And the corporate news media will continue to ensure that the debate over this issue is vigorous, but limited enough to deceive the American public. In other words, the corporate media intends to keep us in the dark over this issue, and then lie to us and point their fingers at the environmentalists for the failure of government to approve the Keystone Pipeline.

The battle over the Keystone Pipeline is all about money, and keeping us ignorant of this fact. Because once you know this fact, then you’ll begin to understand how the political and economic games, and the games the corporate media plays with information, are all rigged against the 99 percent.

One last note, the second job of the corporate news media is to keep the 99 percent divided over social issues, such as abortion, gun rights, the war against Christmas, red vs. blue state, gay marriage, and immigration, among many others, while keeping our eyes off the things that really matter, and that is what’s in your wallet. The corporate news media has done a marvelous in this respect.

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The Wall Street Journal continued its role of propaganda machine for the 1 percent by issuing a story about how our current economic recovery is the weakest since the Great Depression.

The Journal picked up the story from the Associated Press, another piece of the propaganda machine of the 1 percent. Other parts of the machine picked up the story, including the Oregonian newspaper, one of the most viciously anti-middle class mouthpieces of the 1 percent.

The purpose of these corporate propaganda machines is to keep any discussion having to do with income redistribution from the 99 percent to the 1 percent under raps. And so, the story of our economic recovery went like this:

“Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.

More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.

Many economists say the agonizing recovery from the Great Recession, which began in December 2007 and ended in June 2009, is the predictable consequence of a housing bust and a grave financial crisis.

Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. And a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill.”

Note that the authors blame the “housing crisis and a grave financial crisis” for our lame economy. There is no mention of the redistribution of income that began during the reign of the “Great Liar,” President Ronald Reagan.

For example, politicians of both political parties know that free trade treaties are vehicles for redistributing income and wealth from the 99 to the 1 percent. These treaties make it easy for US corporations to ship, or create, jobs overseas. The difference between the old, higher wages in the US and the new, lower wages overseas are directed into the bulging wallets of the super rich via higher corporate profits, rising dividends and soaring share prices.

That’s precisely why the 1 percent have been able to rob the 99 percent of much of their income, curtailing the demand for goods and services, making the current recovery the weakest on record.

The 1 percent received about 7 percent of the total income produced in the US thirty-two years ago, but now their ability to purchase legislation (free income redistribution trade treaties, for example) from their plutocrats in public office, such as Wall Street Senator Ron “Hedge Fund Lover” Wyden, have allowed the 1 percent to steal between 27 and 30 percent of the total national income.

Nowadays, the 99 percent receive between 70 and 73 percent of the total national income compared to about 93 percent 32 years ago. By any statistical measurement, the economy was much stronger way back then and the most significant difference between then and now is that a ton of income has been legislatively redistributed from the 99 to the 1 percent. Demand for goods and services is weak now compared to then. It’s obvious. That’s how we have such a weak economy.

And that’s why consumer spending is so weak. That’s also why there was a housing bubble, and that’s why there was a “financial crisis.” In other words, the propaganda machine is working overtime to distance their readers and listeners from the reality of income redistribution to pure bull shit. We’re frogs in the water that is slowly heating up, but now the water is near to boiling. Wake up!

One behalf of the 1 percent, the corporate propaganda organs, such as the Wall Street Journal and the Oregonian newspaper, lied to us about Trickle Down Economics, deregulation, free trade and numerous other income redistribution scams. They’re still up to it. Don’t let them lie to you any more.

Related stories

US economic recovery is weakest since World War II–Wall Street Journal

Where Have All the Good Jobs Gone?– Johnhively.wordpress.com

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There’s a reason why the middle class of Oregon continues to shrink while the income of the 1 percent soars. Senator Ron Wyden and Congressman Earl Blumenauer of Oregon continue to vote to redistribute income from Oregon’s middle class to the 1 percent. Wyden is a senatorial whipped puppy completely subservient to his Hedge Fund Master’s of Finance. So he votes for free trade treaties that he knows redistributes income from the 99 to the 1 percent. Ditto for Blumenauer.

The voters of Blumenauer’s third district ought to take a close look at Blumenauer’s opponent in the upcoming November election. Republican Ron Green is a working stiff who’s tired of the income redistribution legislation that Blumenauer and Wyden have continuously voted for.

There’s a reason why the middle class of Oregon continues to shrink while the income of the 1 percent soars. Senator Ron Wyden and Congressman Earl Blumenauer of Oregon continue to vote to redistribute income from Oregon’s middle class to the 1 percent. Wyden is a senatorial whipped puppy completely subservient to his Hedge Fund Master’s of Finance. So he votes for free trade treaties that he knows redistributes income from the 1 to the 99 percent. Ditto for Blumenauer.

Thank you Wall Street Senator Ron Wyden for betraying the 99 percent of Oregon. Ditto Wall Street Congressman Earl Blumenauer.

Related Stories

Click here for the complete story from the Oregon Center for Public Policy

Charts that Show Tax cuts for the Rich Destroy Jobs and Weakens the Economy

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A hedge fund is an unregulated investment firm, pretty much like Goldman Sachs, only hedge funds are off the public radar for the most part. There are tons of hedge funds. One of them is headquartered in the basement of the DC home of Senator Ron Wyden. Wyden is a Wall Street legislative whore disguised as a liberal Democrat. Anyway, take a look at the story below from Reuters.

(Reuters) – Nervous hedge funds managers are stress-testing their portfolios and searching for ways of protecting themselves against their worst nightmare — a potential break-up of the euro zone.

With talks on restructuring Greece’s debt mountain still deadlocked, and the exit of one of more countries from the euro seen as a small but definite possibility, funds are modeling scenarios ranging from a 50 percent slump in European stocks or a 45 percent fall in the oil price to a 30 percent rise in gold.

Managers are also trying to dig out old computer programs they once used to model the behavior of currencies such as the drachma or the deutschmark as they prepare for an event for which — even after the 2008 collapse of Lehman Brothers — they effectively have no precedent.

Many, having already trimmed risk, are piling into credit default swaps or deeply out-of-the-money options, hoping they pick a counterparty that can withstand the shock of a break-up.

“You can’t conceive what this event will be like, but it doesn’t absolve you of looking at it,” said the chief risk officer at one hedge fund firm who asked not to be named.

“People are asking the questions, ‘do I have the historical records on how things worked when there was a deutschmark?’ and ‘did I throw away those computer programs (modeling the deutschmark)?’.”

Funds are also trying to figure out how they might be affected if different asset classes that normally have a low correlation start to fall sharply at the same time.

“Anyone who’s a chief risk officer is running these scenarios — say if the euro falls 15 percent, stocks fall 25 percent, if the possibility of default increases, what if recovery rates falls, which prime brokers, administrators get hit?” said Mark Wightman, head of strategy for Asia-Pacific at specialist technology group SunGard.

“The scenarios are getting quite complicated and people are starting looking at correlations between things to understand the likely impact.”


While hedge funds, which can put on short positions, have more tools at their disposal than long-only funds to cope with market falls, their performance has been patchy.

Last year they lost just over 5 percent on average, according to Hedge Fund Research, while the S&P 500 delivered a total return of 2.1 percent. That was their second calendar year of losses in just four years after heavy losses during the credit crisis in 2008.

Many hedge funds have already cut exposure to assets seen as directly in the firing line such as the euro or European stocks, insiders say, but are finding their options limited.

“We’re all still trying to run our businesses right now. I’d like to say I’ll put everything in U.S. dollars, but you can’t,” the hedge fund chief risk officer said.

“Part of it is contingency planning — what you need to get out of first — and part is proactive — ‘I don’t need so much emphasis in a certain area right now’, such as European stocks or the euro,” he said.

“Certainly we are taking smaller positions in some of these markets.”

Some funds also rejigged their equity short positions after major differences between stronger, core economies such as Germany and weaker peripheral economies became more apparent, said one investor who spoke on condition of anonymity.

For instance, a manager who owned shares in a German bank whilst shorting a Greek bank has switched to hedging the German bank with a short position on another German bank, after the Greek bank’s shares “started to take on a life of their own” as a result of the country’s debt crisis, the investor said.

However, with uncertainty over which currencies would exist after a break-up and how they would behave, funds are still unsure how far their hedges would protect them.

“A hedge fund may have a hedging program that is very highly attuned to dealing with its positions. But the day after something happens there’s no program to deal with this and their hedge may be denominated in a new currency,” the risk officer said.


Part of the dilemma is a mistrust of value at risk (VaR), a standard measure used by banks to show estimated potential loss, expressed with a certain percentage level of confidence.

“A traditional measure of risk like VaR has nothing to say on this,” said Lance Smith, CEO at U.S.-based Imagine Software, which has been working with hedge funds to assess the impact of a euro zone break-up on their portfolios.

“A euro break-up could be a 7 standard deviation event. A 6.5 standard deviation event occurs once every 34 million years, while a 50 percent fall in the Eurostoxx would be a 21 standard deviation event. This just highlights the flaws in a standard statistical approach.”

Credit default swaps (CDS), which are meant to pay out in the event of default, currency options or deeply out-of-the-money options, are among the favored hedges, industry executives say, which has driven up option prices.

However, even here there is a concern over whether the counterparty can pay up.

“You watch the counterpart if (it’s) OTC (over-the-counter) to avoid contagion,” said Sungard’s Wightman. “Thus you do your euro trades with say Japanese, U.S., Asian or Australian institutions.”

Meanwhile, one hedge fund manager has structured a trade to buy German bunds whilst offsetting this with credit default swaps, one fund selector told Reuters.

“His base case is that if someone comes out of the euro, the German bund will be the place to be.”

(Reporting by Laurence Fletcher, editing by Sinead Cruise and Mark Potter)

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iceland-arrests-bankersThe Former Federal Reserve Bank of the United States gave out $26 trillion in loans to the banksters under the leadership and authority of Ben Bernanke. The Fed printed the money, then handed it out. It’s that simple. The Fed saved the corrupters of Democracy and gave them more financial clout to increase their corrupting abilities.

A few years later, the Fed claimed the money was paid back, even though it’s statistically impossible. Why borrow $26 trillion if you don’t need it? Once you use it, how can pay it back when the entire value of all goods and services in the USA is about $16 trillion a year. Even if you assume a highly unrealistic average profit margin of 20 percent per year, that’s only $3.2 trillion in profits for all the businesses combined in the USA. That includes earnings from Wall Street parasites all the way down to every dry cleaning business, grocery and auto repair shop. That’s why it’s more than likely the Fed has cooked its books to make it look as though the loans were repaid. The businesses that received the money also had to have cooked their books to make it appear as though they repaid the loans.

In another article, Breakdown of the $26 Trillion the Federal Reserve Handed Out to Save Incompetent but Rich Investors, I wrote that some of the unrepaid loans had to have been used to enhance corporate earnings. How else could the banks and hedge funds have managed to muster record earnings quarter after quarter during the worst economic crisis since the Great Depression, when the demand for goods and services hit rock bottom.

There’s something significantly more to this scandal and it goes something like this. But first, we need a definition.

A credit default swap is an insurance policy, usually provided on bonds backed by home mortgages. According to some sources, there were $60+ trillion worth of these insurance policies at the beginning of the housing collapse in the summer of 2006.

You didn’t need to own any of these bonds to insure them. It’s the same as being able to insure your neighbor’s house, without their knowledge, even if you don’t know the owner. Needless to say, you’d have a fair degree of incentive to burn your neighbor’s house down.

Institutions such as Goldman Sachs and a ton of unregulated investment firms called hedge funds took out insurance policies on mortgage backed bonds. These people were betting the market would collapse. They were right, even though some of them were selling the bonds up to the housing collapse and even a little after it began, even while telling hapless and really stupid (but wealthy) investors what wonderful investments the bonds were.

This leads me to believe that trillions of those dollars of unrepaid Federal Reserve loans went toward reimbursing the holders of the credit default swaps, which may be why all of those Goldman Sachs and Citicorp executives and hedge fund managers have been getting wonderful bonuses during the economic collapse they helped to craft.

Think about it. The government bailed out the insurance company AIG because of the billions of dollars of mortgage backed bonds it had insured, and that subsequently become worthless when the housing market melted down.

Let’s be clear about one thing. The government didn’t bail out AIG, although they technically did. The government actually bailed out the rich investors by bailing out AIG. These were the foolish folks that had bet that the mortgage-backed-bond market would collapse, and they’d get rich when their insurance policies (credit default swaps) bore fruit. And then came the fat surprise!

The entire insurance industry of planet Earth couldn’t possibly pay out $60+ trillion to those who’d bet on the housing market collapse. That means a bunch of rich fat cats made a bet on a market (credit default swaps) that could not sustain itself. They lost their shirts because they were dumber than a cat’s fart. Unless, of course, they expected the Fed to save their worthless hides.

The Fed’s rescue was most likely negotiated by Fed officials and Wall Street executives in one or more secret meetings. It’s possible executives simply begged Bernanke for financial salvation and he relented, but that’s unlikely.

Either way, the Fed stepped in to save their extraordinarily wealthy friends, like Goldman Sachs, their investors and numerous hedge funds.

In other words, if you were rich and dumb and placed your money in a market that was doomed to collapse, like the credit default swap market, you should have lost all of the premiums that you paid out. Coincidentally, although sizable (probably exceeding a trillion dollars), the money paid out in premiums represented only a fraction of the $60 trillion sized market.

The Federal Reserve doesn’t serve the common people or the nation. The officials at the Fed have only one thing in mind; to serve the wealthy people that control them.

So let me restate this succinctly: The Fed has paid out trillions of dollars in alleged loans and claimed they were paid back when it was impossible to have done so. The recipients of the money, the richest of people and investment companies that control the world’s most powerful government, also had to have cooked their books in order to make it appear they paid the money back.

That means they couldn’t have paid any taxes on trillions of dollars of free income provided by the Federal Reserve Bank.

Ben Bernanke is part of this crime wave. We’re also talking about hedge fund managers, investors of all stripes and sizes, basically, a ton of rich people. Obama may have even known of this crime. Why else would the Department of Justice be totally blind to this issue? Where is the investigation? Even if we had one, the crimes would be white washed in an ocean of corruption.

But then there’s the fear factor. If common people even knew there was an investigation, the demands for justice would be massive since most people now know or suspect how corrupt the financial sector and the government are, and how much and how tightly they are entwined.

I’m no attorney, but I can kind of guess what crimes have been committed, at least some of them. How about tax evasion? How about Accessory to Tax Evasion? How about obstruction of justice? Racketeering? Money laundering? And probably lots more. If you’re rich, you own enough politicians and Supreme Court and other justices that no charges will ever be brought against you.

The folks at http://criminal.laws.com/rico define racketeering this way, “Racketeering is classified as a crime that takes place through or while undertaking an illegal business or commercial venture. The activity of Racketeering is neither specific to solely illegal nor legal business operations. A wide array of the types of Racketeering exists.”

Goldman Sachs and other banks are businesses. So are hedge funds. So racketeering applies.

Criminal.laws.com also defines money laundering as “a financially-based criminal act that is employed in order to purposely conceal, misrepresent, and disguise all applicable nature or details with regard to financial income in the form of monies. Money Laundering can be instituted in order to attempt to hide the source of generation of a particular flow of income or to mask the process of the spending of monies. Furthermore, Money Laundering can be utilized in order to mislead investigations involved in the determination of the particular spending pattern or trend with regard to an individual or entity. While Money Laundering is not specific to commercial activity, it most commonly takes place within the scope of business activity.”

Money laundering clearly applies and it should be obvious to anybody with a second grade education.

Ben Bernanke is up to his neck in these crimes. Perhaps more realistically, he buried himself completely in it.

Crimes have been committed on a massive scale, but our government is totally corrupted by big money, and that’s especially true of the corporate wing of the Supreme Court. So don’t expect anything to happen soon. Join the Occupy Movement. Get Busy. Get Politically active if you want to see justice served, if you want to see our government washed clean of corruption.

Related Links

Click here for The second draft: The Enormous Implications to the 99 Percent of the $26 trillion in Federal Reserve Loans. How Much Did Obama Know About the $26 Trillion the Federal Reserve Handed Out?

Who Holds the Federal Reserve Responsible for Its Actions

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