Elaine Meinel Supkis
Another hedge fund hell hound is dying. More will die this coming year. Japan's economy roars along while the Bank of Japan insults us openly. More proof they are slamming the door shut on anyone who dares to use the Bank of Japan's free money to take over Japanese firms. More American and European firms are swallowed up by privateers. And Charles Swab has decided to buy back stocks so the big boss can have a billion cash so he can spend it on buying art work, I suppose.
John Devaney, who invests in subprime- mortgage bonds, restricted redemptions to protect some of his Horizon Strategy hedge funds from being forced to sell assets.It's ``a defensive move because we had an unusually high number of redemption requests,'' Michael Gregory, a spokesman for Devaney's United Capital Markets Holdings Inc., said in an interview yesterday. One of the investors who wanted to withdraw accounted for about 25 percent of the funds' money. United Capital, based in Key Biscayne, Florida, had about $619 million as of March, including the money-losing Horizon ABS Fund LP.
Devaney ``prides himself as a risk-taker, someone who sticks himself out there,'' said David Castillo, who trades asset-backed, commercial-mortgage and packaged debt securities at Further Lane Securities in San Francisco.
All the hedge funds are singing the same song. They are all following the same path to perdition. They are all going to hell in a handbasket. The first warning sign is, they suddenly won't allow investors to pull their funds out of the sinking ship. The next move is, investors go to court. The hope is, during the few weeks this is going on, a miracle will happen, the clouds of gloom will split open and a Jesus of financial miracle will descend and multiply the fishes and breads in the hedge fund's accounts.
In about three days we will read about Horizon's sun setting. The proud risk-takers will tank and the old story continues: you can't trust 'trusts' and risky investments are exactly that. Raters like Moody's will have to be investigated and reformed since they gave false AAA rates on contaminated fund bundles. It looks more and more that I was right when I first voiced suspicion about the craft of bundling really nasty loans to very bad credit customers with good loans to people with a sober credit history. This activity is very similar to bad credit people buying good credit ratings by piggy-backing onto a neutral credit card with a person who has good credit so they can gain enough points to go even deeper into debt.
The entire housing industry reeks with fraud and deceptions. Everyone wanted to keep the good times rolling, the good times created entirely by Greenspan's 1% interest rates back in 2003-2004. But those easy money days ended by the middle of 2005 and the downhill slope created a climate of desperation. Real Estate companies started a new scheme of having the home seller hand, under the table, enough money to the home buyer to pay for the down payment.
The entire reason banks wanted down payments was, they needed proof the buyer is fiscally sober enough to be able to save money. Most upper-class co-ops and condominiums in Manhattan require 50% or even all cash when people buy in order to prevent 'flipping' and investment schemers. This under the table scheme was so rampant by this last year, news papers were discussing 'strategies' home sellers could use as if this wasn't what it really is: fraud. Namely, the real estate agents, the home sellers and the home buyers wre all scheming to rip off the bankers.
Like all financial frauds, if this happens too much and for too long, the whole thing collapses and the only banks left standing will be the ones run by sober, suspicious, narrow-eyed people.
U.S. private equity giant The Carlyle Group is in discussions with Virgin Media, a British cable company, over a potential bid worth around 20 billion dollars, The New York Times reported on Monday.
Carlyle is awash with the funny money being generated by the US/Japan banking and trade mess. World leaders run this fund which is a major privateer organization run basically by the Skull and Bonesmen, the Bush clan. The schemes of these people makes the rulers of America very, very rich. They view the US as their private hunting preserve and themselves as royalty. Bush's popularity is lower than Nixon's when he was impeached but Bush doesn't worry. The recent rash of terror attacks in England made the unelected Prime Minister put into office without any input from the people, very popular.
This is why the media wonders why Bush is totally unfazed by his extreme unpopularity. He is holding his fire until it is time to unleash his buddies on us again. Right before the next election.
Manor Care Inc., the operator of nursing homes and assisted-living centers, agreed on Monday to be acquired by the Carlyle Group in an all cash transaction valued at approximately 6.3 billion dollars.
And the Bushes believe in clearing the earth of lesser humans, those who are weak. These people were good buddies of the Nazis, literally. They are also aware of ecological degradation and they itch to fix it. We can draw the obvious conclusion from all this.
Shares of Charles Schwab Corp. posted their biggest gain in a year after the largest discount brokerage said it will spend $3.5 billion on a record stock buyback and special dividend.The brokerage will distribute $1.2 billion, or $1 a share, on Aug. 24 to investors who own the stock July 24, the San Francisco-based company said in a statement. Schwab also will repurchase as many as 84 million shares, a 7 percent stake, through a modified ``Dutch auction.''
*snip*
The company said it will also buy back shares from Chief Executive Officer Charles Schwab to keep his stake at 18 percent. The company said the repurchases from the CEO and the public together are worth $2.3 billion.
So, Schwab needs another billion in cash. I suppose he will be a force in the art auction world. The news said last week that Sotheby's stocks should soar on the flood of new funds flowing into the art auction world. On top of this, the flood of funny money that is flowing out of Asia and the oil countries who have money flooding into them from the USA, is being used by all the privateers to buy out each other and any thing else that isn't nailed down, these funds used to flow into real estate loans for bad credit risks home purchasing schemes. But this is now shut down so the flood of red ink is hysterically seeking some safe harbor and buying up Charles Schwab's organizations is one of the many schemes they have latched onto.
Forex: Dollar Moves Narrowly At Lower Y122 Level In Tokyo Morning DealsTOKYO (Kyodo)--The U.S. dollar moved narrowly at the lower 122 yen level Tuesday morning in Tokyo, with selling triggered by overnight fall of U.S. Treasury yields offset by buying based on the interest rate gap between the United States and Japan.
****************************************
ANALYSIS: Bull-Dog Wins Ruling Thanks To U.S. Fund's Flawed StrategyTOKYO (Nikkei)--Chances are rising that Bull-Dog Sauce Co. (2804) will issue equity warrants to thwart a takeover bid by U.S. investment fund Steel Partners after the Tokyo District Court last week adjudged the company's anti-takeover plan lawful and rejected the fund's request for an injunction to stop the scheme.
*****************************************
Cerberus Likely To Sell 40% Stake In Imperial Hotel To Japan FirmNEW YORK (Nikkei)--U.S. investment fund Cerberus Capital Management LP has decided to sell all of its roughly 40% stake in Imperial Hotel Ltd., hoping to select a buyer by year-end, sources familiar with the matter said.
Fortress Japan has successfully fended off the privateers and hell hounds. They were open to take overs thanks to the super-cheap yen so they changed the rules enough to cut off that business and nip any attempts to turn Japan's sword into Japan's guts. Not one yen of this flood of liquidity will flow into Japan's closed business world. The Japanese get away with this because the people who are making money hand over fist in America are happy with the present set up. Our government should step in and do something but won't because our financial affairs are now run totally by Goldman Sachs.
Every time a position opens within the Treasury or the State Department, Goldman Sachs has an executive step in. They do this not to be public servants but to protect and enlarge the present system which is running our nation in the red on every possible front. This activity is the most pernacious and vicious of any of the crimes undermining our national intrests. It is not in our interests to have trillions and trillions of debts loaded onto our nation. Nor is it in our interests to be responsible for controlling all countries on earth so they become part of a system that is ruining our finances.
Time to go to the Japanese to see how they are dealing with all this. Please note how the Bank of Japan official insults us and sneers at us.
Japanese housewives are helping to moderate currency swings by betting against professional investors, Bank of Japan board member Kiyohiko Nishimura said.``The arrival of Japanese households as major investors seems to have affected foreign-exchange markets,'' Nishimura, 54, said in a speech at a meeting at the Brookings Institute in Washington yesterday. ``The gnomes of Zurich were accused in their day of destabilizing markets. The housewives of Tokyo are apparently acting to stabilize them.''
Nishimura was the first policy maker to officially comment on an increase in foreign-exchange margin trading in Japan, which helped push implied volatility on one-month yen options to 5.85 percent on June 21, the lowest since the Bank of Japan began compiling data in August 1992.
The housewives of Japan are stabilizing currency markets? What the hell? Did the audience of investors rise up and slap him? Japan loves the 'stability' these 'housewives' are creating. For they are betting against the yen! Since the interest rates earned on any accounts in Japan are way below the real rate of inflation which is totally hidden from view via various schemes, anyone able to save money in Japan is forced to buy into foreign currencies just to stay alive.
Normally, when this alarming event happens to any nation, even third world ones, the International Monetary Fund and the World Bank forces the government to stop printing money and to raise interest rates. That is, all countries except for one: the USA. We can do as we please. The yen should be around 89 to the dollar, not 122. This is a huge differential. And the interest rate differential is huge, too. Note that one-month yen options are at 5.58% which is about the same rate our Federal Reserve rate is at. It is not at 0.5%.
The Japanese have succeeded in defending the status quo and this is why our stock market is soaring again. So long as this present system limps onwards, all will be well for Goldman Sachs and Charlie Schwab. But it is not going to continue forever. It is feeding the Chinese dragon who is now uncoiling and beginning to shake the New World Order. The longer Japan sucks America dry, the more America goes into debt, the stronger China will become. This alarming development is under estimated by the Japanese who are like all humans, they get a status quo they like, they will cling to it long after it is obviously a bad choice and a dangerous course.
The yen traded at 122.34 per dollar at 12:03 p.m. in Tokyo, down 2.8 percent in 2007. By comparison, it has dropped 12.5 percent against New Zealand's dollar and 10.4 percent versus Australia's this year. New Zealand's cost of borrowing is 8 percent and Australia's 6.25 percent.
Interest rates around the world are rising and as they do this, the 'housewives' of Japan tap into it to earn interest. The Japanese fiscal black hole is warping all other financial systems. And the dual action of the US refusing to stop running deeper and deeper into the red means the #1 and #2 economies of the world are in a death spiral with each other. Neither can change even slightly now, they are locked into a system that cannot be undone without bringing the entire world's economies screaming to a halt.
This dynamic, the world's biggest economies both pretending they have no inflation and both weakening their currencies simulataneously, is extremely explosive and extremely destabilizing. If the world's liquidity was really growing in a good way, the currencies of the two biggest economies would be the strongest on earth, not the weakest! The mirror image of Japan and the US should trouble everyone. The US has the lowest FOREX reserves of any major industrial nation. Japan used to have the highest reserves but China beat them out this last year.
Japan has the world's lowest interest rates while the US rates relentlessly rise, soon to rival much smaller economies. The US is totally open to 'free trade' while Japan is totally closed. The US is seeing everything being sold to private equity funds while Japan sees no action at all in this regard. Like any dynamic system in nature, when two extremes like this interact, bad things happen. Lightning bolts suddenly explode. Two black holes merge and an entire galaxy shakes violently in the explosion, millions of stars lighting up thanks to the gravity waves undulating outwards.
The central bank published a draft of Nishimura's speech on its Web site today. Nishimura said the pace of interest-rate increases can't be prescheduled.
Note how Japan's bankers refuse to have an emergency meeting even as their own people begin to sell off their yen. The exchange rate in Japan is as fake as the one run by Russia when they needed dollars in the last days of the communist rule. When the ruble was buying only one penny on the street, the official rate was one ruble= one dollar. The police had to arrest the mob of people selling rubles in back alleys so they could keep up that fictional rate.
Indeed, this led to the collapse of the Russian government. Unrealistic financial affairs never run forever. Always, the cows come home, the shit hits the fan and what goes up must come down. This is why we have history. It is a long tale of failed attempts at keeping up various status quos. It is a tale of human futility.
Meanwhile, enjoy the astonishing stock market for one more year. And if you are a squirrel, remember to hid a lot of acorns for the long winter.
Culture of Life News Main Page
If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; and may posterity forget that ye were our countrymen.
Samuel Adams
Posted by: TL | July 03, 2007 at 11:04 AM
OK. All packed up & ready to go - traveling until next week.
Happy Fourth of July, Elaine!
Posted by: JSmith | July 03, 2007 at 02:50 PM