"Speaking at MIT, legendary hedge fund manager George Soros just dropped a huge bombshell: Up to two-thirds of the world’s 10,000 hedge funds — massive investment pools with $1.9 trillion in assets — will FAIL in the weeks ahead.
If he’s right — and if anybody should know, it’s Soros — up to 66% of those $1.9 trillion will soon be dumped onto the market and deal a near-fatal blow to stock investors worldwide." (Mike Larson)
CAMBRIDGE, Massachusetts (Reuters) - The global financial crisis will reduce the hedge-fund industry to as little as a third of its current size, billionaire investor George Soros said on Tuesday.
"The hedge-fund industry is going to move through a shakeout," Soros, one of the world's first hedge-fund managers and still among the best known, said on Tuesday in a speech at the Massachusetts Institute of Technology.
"In my estimation (the industry) will be reduced in size by anywhere between half and two thirds," he said. He did not specify if he was talking about the number of funds or the amount of money invested in them.
Many of the ultra-wealthy investors who fueled a doubling in hedge-fund industry assets to about $1.9 trillion (1.1 trillion pounds) across roughly 10,000 of the loosely regulated funds worldwide in the last three years have been pulling their money out, fearful of hedge-fund failures.
To stabilize the economy, regulators should oversee credit markets, which will make some aspects of the financial services business less profitable, said Soros, one of the first voices to proclaim the severity of the current financial meltdown.
"You must regulate credit as well as money and that does require more regulation," he added. "Undoubtedly, the financial business will not be as profitable as it has been in the past 25 years."
In recent years, finance companies accounted for as much as 40 percent of U.S. corporate profitability, said Soros.
"That was an excess and that we will not come back to," he said. "Regulation will certainly make some businesses unprofitable and certain businesses that rely on excessive leverage ... will prove to be unworkable."
'NEW MISSION' FOR IMF
Soros, 78, said the International Monetary Fund needs to move to protect emerging markets or else today's global financial system will not last.
"The IMF has a new mission. It has to protect the periphery against the storm at the center," Soros said, referring to the U.S. and developed Western economies that are at the center of the global credit crunch.
"Unless actually the United States now leads an international effort to stabilize the system which includes the peripheral countries, I think the system will not continue."
A staunch Democratic Party supporter, Soros said he did not expect such a move out of the current White House.
"I don't expect this president to do it but I expect the next president to do it because otherwise the system will not continue, there will be a different system that will emerge and the United States will not have the influence that it has today," Soros said.
Soros, chairman of Soros Fund Management, supported U.S. presidential hopeful Barack Obama during the Democratic primaries, and his views on public policy are more like those of the Illinois senator than his rival for the Oval Office, Republican Sen. John McCain of Arizona.
(Reporting by Scott Malone; Editing by Jason Szep and Carol Bishopric)
***
Nov 12 (Reuters) - Hedge fund managers who earned more than $1 billion last year, including George Soros and Philip Falcone, are being summoned to Capitol Hill on Thursday to testify under oath about potential risks their firms pose to the broader economy, the Financial Times said.
The hearing before the House oversight committee will be headed by Democrat Henry Waxman, the paper said.
Soros and Falcone will appear alongside John Paulson of Paulson & Co, James Simons of Renaissance Technologies Corp and Kenneth Griffin of Citadel Investment Group, the paper said.
The five hedge fund managers were chosen because they were the top earners, according to a rough calculation from Alpha magazine, the FT said, citing people familiar with the matter.
The fund managers could not be immediately reached for comment by Reuters.
Hedge fund executives expect the hearing will focus on questions including whether hedge funds have become so large that they threaten the stability of the financial system, either because of the impact of their trading or because of the impact of the failure of even one big hedge fund, the FT said.
A subsidiary question in this regard is whether hedge fund compensation practices encourage reckless risk taking, according to the paper.
Alpha publishes a list of the most highly compensated managers and executives ever year, the paper said adding that many dispute the accuracy of the figures.
Another issue expected to be discussed will be short selling, the paper said.
Hedge fund managers and consultants told the FT the hearings may be a prelude to stiffer regulations.
The paper said the committee said the managers had co-operated with a long list of requests for documents.
Documents requested included e-mails detailing the level of risk associated with each hedge fund, the value of their positions in mortgage-backed securities, the likelihood of the fund's collapse and the compensation and tax treatment of pay received by top managers, according to the paper.
The committee made clear it had not yet reached a decision on whether it would release all the data it had been given publicly, the paper said. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga)
****
Who's Behind the Economic Collapse?
October 28, 2008
By Cliff Kincaid
Aim.org
Joe Biden made headlines by talking about a "generated crisis" for a President Obama. But is the current financial meltdown another "generated crisis?" Considering the problems in the economy, including too much federal debt, too much spending and easy credit, which have been with us for years, ....
(Excerpt only)
"Socialist or not, Obama is clearly the firm's favorite in the presidential race.
Lynn Sweet of the Chicago Tribune recently discovered that, on May 3, 2007, Obama had attended an event at the Museum of Modern Art in Manhattan "that was not on his public schedule and is only now surfacing-a private dinner for Goldman Sachs traders with a discussion on issues moderated for the Wall Street firm by NBC's Tom Brokaw"-the moderator of the second presidential debate.
Her column notes other Obama campaign connections to Goldman Sachs and mentions that Bloomberg had reported that Obama addressed the Goldman's annual partners meeting 2006 in Chicago.
It is not known, of course, what kind of illegal financial activities may have contributed to the current crisis. But based on what has been publicly said by the President and the SEC, the culprits could possibly include operators of the controversial, mysterious and secretive financial vehicles known as hedge funds.
A hedge fund operator such as George Soros, who was convicted of insider trading in France, is known to make money from the collapse of national economies and currencies. Labeled "The Man who broke the Bank of England" because of his financial activities against the British currency, he is said to be on a witness list of hedge fund operators that will be called to testify before Congress next month-probably after the election.
One wonders if the Democrats controlling Congress will want to investigate or even aggressively question the multi-billionaire. It is significant, as I noted in a January column, that Soros pours millions of dollars into the Democratic Party, its front groups and candidates. But his agenda goes far beyond making himself rich. He provides funding for causes ranging from marijuana legalization to rights for immigrants, criminals, and prostitutes.
The same column I wrote noted that the Wall Street Journal in January had reported that hedge fund operator John Paulson received a visit from Soros, who is also a public supporter of and contributor to the Obama campaign, after Paulson had made about $4 billion betting on a housing market collapse. Soros wanted to know how he had done it. But Soros wouldn't talk to the Journal about his meeting with Paulson. Why?
Soros gets away with a "no-comment" because he pours money into journalism organizations, including the Center for Investigative Reporting, the Fund for Investigative Journalism, and Investigative Reporters & Editors, thereby guaranteeing that they won't investigate how and where he gets his money. Isn't this convenient?
A recent example of this conflict of interest came in Bill Moyers' October 10 interview of Soros on the Public Broadcasting Service. Moyers lavished Soros with praise, saying that he is "one of the world's best known and successful investors, making billions in times of boom or bust." Moyers also mentioned Soros's new book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.
Moyers said that, in the interest of "full disclosure," he should reveal that that he, Moyers, had served on the board of Soros's Open Society Institute. Moyers laughingly insisted that was a non-political position on his part.
Not once did Moyers question Soros about his reported discussions with John Paulson. Not once did he question whether Soros's financial activities had facilitated or precipitated the current financial crisis that he writes about in his book.
Soros insists that one contributing factor to the crisis was the lack of financial regulation. But he takes advantage of the lack of those regulations. Indeed, as I reported back in 2005, one Soros company was a member of the Managed Funds Association, which describes itself as "the global voice for the hedge fund industry" and was actively fighting an SEC proposal to impose more regulation on hedge-fund managers.
The ranking of top hedge fund earners for 2007 shows John Paulson of Paulson & Co. at $3.7 billion and George Soros of Soros Fund Management at $2.9 billion.
Is there anybody in the media willing to question Soros about how he made that money? And whether it came at the expense of the American people?"
http://www.rightsidenews.com/200810282369/editorial/who-s-behind-the-economic-collapse.html
****
Senator Schumer Leaks Negative Financial Information
Canada Free Press
Sunday, October 26, 2008
Lance Fairchok gives the first part of this compelling argument in an article called The Crime of the Century: The Emergency Economic Stabilization Act of 2008
For months, Senate Democrats have been leaking negative financial information—exploiting market sensitivities for political gain—choreographed to burst precisely when it would do the most damage. Senator Chuck Schumer ignited this by leaking a letter regarding the lending practices of troubled Indy Mac. Indy Mac failed when the Schumer letter caused a “liquidity crisis,” where depositors withdrew over a billion dollars. Over three thousand people, half its employees, lost their jobs in the resulting collapse. As a member of the Senate banking committee, Schumer knew the impact on the market. He used confidential regulatory information and set the stage for the “crisis” the Democrats prosper from today. Power is everything, and those who suffer for Democrat ambition matter not at all. Schumer knew exactly what he was doing.
Susan Schmidt with the Wall Street Journal explains that Senator Schumer released these letters publically.
Sen. Schumer released publicly letters he sent to bank regulators and to the Federal Home Loan Bank of San Francisco. “I am concerned that Indy Mac’s financial deterioration poses significant risks to both taxpayers and borrowers,” the senator wrote, warning that “the bank could face a failure if prescriptive measures are not taken quickly.” Link
Some have speculated that Senator Schumer leaked the Indy Mac information as a way to reduce stock prices for his investor friends. Although this is possible, his motivation may have been more political in nature. A conspiracy to hasten the economic crash and to churn the stock market is certainly in the realm of possibility. In the past, economic downturns have tended to favor the Democratic Party.
What makes this more interesting is Senator Schumer’s staunch support of Fannie Mae and Freddie Mac as seen in the Fox News Special Report on the Banking Crisis. It should be noted that Schumer is the only Senate Democrat who sits on both the banking and finance committees. Because of the committee position and the fact he is the number 3 member of the Senate majority leadership he is privy to a great deal of information and knowledge of what the information can do.
What Did the Disclosure Accomplish?
So why does Senator Schumer, who so adamantly supported these questionable loan practices, now leak a letter regarding the lending practices of Indy Mac just months before the election? Lance Fairchok says there are four reasons:
1. Distract the voter from the reality that the Democrat-controlled congress is so bumbling and corrupt that its approval ratings are in the single digits.
2. Save failing Democratic-supported mortgage companies Freddie Mac and Fannie Mae and avert, for a time, their disastrous effect on the economy and the Democratic Party image.
3. Confuse the electorate into believing that the Republicans are to blame for the financial meltdown, while in reality it was they who have been calling for oversight.
4. Create the impression that Obama is a reformer, which he most certainly is not. Only Senator Dodd (D-CT) and John Kerry (D-MA) have received more money in campaign contributions from Freddie and Fannie than Barack Obama.
Does it make sense for a person that has publically supported Fannie and Freddie to release a letter about the imminent failure of Indy Mac? Since Senator Schumer sits on the banking and finance committees, surely he would have known this disclosure would cause wide spread panic and very likely hasten the collapse of Indy Mac. Could there be something else at foot? It is very likely that the Senator knew about the troubles at Fannie and Freddie, so it stands to reason that this was an effort to create the type of economic chaos that would favor Obama.
The Role of the ABX Index in the Economic Crash
An Ed Lasky article called Hedge Funds, Politics, and the Market Crash tells about Hedge Funds role in the economic crash. Again there are links to Schumer and a powerful far left billionaire.
the heart of the mortgage mess is uncertainty regarding the value of subprime mortgages. The ABX Index is used to determine the value of these securities: it is a benchmark of the market for all the home loans issued to borrowers with weak credit. A collapse of this index leads to these home loans being marked down in value. … The Wall Street Journal has noted that there is criticism “that the ABX is manipulated by hedge funds”. So when the ABX subprime mortgage index crashed, so did our economy.
What hedge fund managers profited by this crash? One of those that made huge profits was the legendary hedge fund manager, George Soros, who has been a political powerbroker of unrivaled influence within the Democratic Party. Soros made $100’s of millions if not billions off the economic crash. Soros’s hedge fund is based overseas and therefore escapes much scrutiny and regulation.
Hedge fund managers only pay 15% tax on their income where we pay up to 35% on income tax. Senator Schumer was among the Senate Democrats who recently led the fight against taxing hedge funds at a higher rate. Why would he protect these managers? Maybe because in the first half of 2007, Senator’s Schumer’s Campaign Committee raised nearly $2 million from executives and employees of private equity and hedge funds.
Economic Terrorism?
The last piece in this puzzle is articulated by Neal Cavuto in HotAir’s “Economic terrorism”: Huckabee wonders if someone’s trying to drive the market down. Huckabee tells of a very respectable trader who saw massive trading in the last hour of trading for the first 12 days of October. He thinks this may be economic terrorism, and he suggests that the government to look into the issue.
This questionable activity could just computer programs kicking out trades, but on the other hand could be something very suspect. It is widely understood that economy problems would break the election in Obama’s favor. So it’s entirely possible that someone with deep pockets could churn the stock market. Could a liberal billionaire, like a George Soros, manipulate the market in an effort to impact the election? How much money would it take to make the markets so volatile? Did this volatility continue after Neal Cavuto’s interview with Mike Huckabee?
Reaping the Benefits!
So we have Senator Schumer publically disclosing Indy Mac financial troubles, which leads to a run on the bank. Then the media picks up the Indy Mac story followed by the exposure of the Fannie and Freddy troubles. George Soros, the far left hedge fund manager, profits handsomely from the crash. Someone churns the stock market in the last hour of trading for 12 days. Could this churn have been from a Soros type billionaire for more profits or to help Obama’s chances in the election?
After the financial crash became public, the Democrats, with the help of the main stream media, successfully assigned the blame to the Republicans and to Bush’s economic policies. This, despite the fact, that three of the primary causes of the crash were the Community Reinvestment Act, the lack of oversight of Freddie and Fannie and possible Hedge Fund manipulation. Certainly the first two if not the third of these failings can be fairly laid at the doorstep of the Democrats. Yet in the wake of the financial crisis, Obama surged in the polls from an essentially even race to more than a 5 point lead.
Clearly, the reasons for the Fannie and Freddie failures should be investigated. But in addition, Federal authorities should also investigate the issues presented in this paper. If true any of these events strike at the heart of our election process. Are they coincidences, or are they part of an orchestrated effort similar to those espoused by Saul Alinsky? A conspiracy or conspiracy theory, you decide.
****
Obama to Inherit “New Global Order” from Bush
Canada Free Press
By Cliff Kincaid
Wednesday, November 12, 2008
The bankruptcy of Iceland, now receiving a $2.1 billion two-year loan from the International Monetary Fund (IMF) “to support an economic recovery program,” has been depicted as something that could never happen to America. Is the U.S. too big to fail? Or is the U.S. going through the same process, albeit on a slower basis?
Will we wake up to discover that America is now a bit player in a “New World Order” dominated by China, rich Arab nations, and international institutions?
The politicians from both major U.S. political parties are attempting, with the help of the media, to mask what is happening by passing what they call a financial “rescue” and economic “stimulus” packages. The word “stimulus” is sort of like “rescue.” This is actually a process of piling up more debt and spending on top of more debt and spending. This puts us more at the mercy of those who decide to lend us money.
On November 15, the crisis goes global, as the Bush White House hosts an “international summit” designed, in the words of some of those participating, to create new “international financial architecture.” This means increasing the power and financial resources of international agencies like the IMF, possibly by implementing global taxes on the U.S. and other nations.
Anticipating the event, British Prime Minister Gordon Brown says the current turmoil in the world economy offers a chance to build a “new global order” based on cooperation and opportunity. Brown summarized his approach as “internationalist, interventionist and progressive,” says a release from his office.
And all of this is happening under a “conservative” U.S. President by the name of George W. Bush.
Many of those attending the Washington, D.C. event will be associated with the Socialist International, which issued a statement calling for the new international financial architecture to include a World Financial Organization. A World Tax Organization can be expected to follow. It has been on the U.N. drawing board for years.
The first meeting of the Socialist International Commission on Global Financial Issues was held in Vienna, Austria, on November 3, and suggested “tackling the issue of insufficient financial resources in multilateral institutions and regional development banks by seeking new sources of funding and lending facilities, as well as more fundamental reforms in the global economic governance.” This is bureaucratic doublespeak for finding new foreign aid money, possibly through a global tax, and cutting the U.S. down to size economically.
One of the key members of this Socialist International commission is Columbia University Professor Joseph Stiglitz, a “revolutionary” economist who was named by Miguel D’Escoto, the new Marxist President of the U.N. General Assembly, to run a U.N. task force on international financial matters. Stiglitz, a key player in the emerging “New Global Order,” wrote a Sunday Washington Post article urging more foreign aid spending, a new global warming treaty reducing U.S. use of energy, and an expensive carbon tax on Americans.
On October 13, Stiglitz was among a group of economists meeting with Democratic politicians on Capitol Hill to devise their new economic “stimulus” plan. Obama says he wants this “stimulus” as soon as possible.
In a release from the World Economic Forum, Suzanne Nora Johnson, Senior Director of Goldman Sachs, USA, and a Trustee of the Carnegie Institution of Washington, declared that the Washington summit “gives us great opportunities to find solutions and new ways of looking at the world.” Johnson says that, while there has been “protectionist reaction” in the U.S. to sovereign wealth fund investments, as a result of the liquidity crisis there would now be greater openness to such deals. Sovereign Wealth Funds are government financial entities based in China and several Arab/Muslim states.
In this context, the Center for Security Policy and other groups recently held a news conference to draw attention to how the Treasury Department is planning to implement aspects of Islamic banking in the U.S. In a release, the Coalition Against Shariah declared that, “It is especially alarming that the Treasury Department is now in a position to impose its submission to Shariah on the various financial institutions which it has bought in recent weeks or otherwise controls. With the nationalization of Fannie Mae and Freddie Mac, its purchase of―at last count―17 banks and the enormous leverage associated with its $700 billion slush-fund, Treasury can be an irresistible force should it actively promote Shariah-Compliant Finance.”
The release notes with alarm that Assistant Treasury Secretary Neel Kashkari, the official charged with administering the bailout “slush fund,” delivered the welcoming remarks at a November 6 Treasury event titled “Islamic Finance 101” It seemed designed to attract more Arab/Muslim dollars into the U.S. financial system.
It is apparently the Treasury’s view that America’s only hope in this financial crisis is to print more money through the Federal Reserve and attract more foreign money, especially from China and the Arab states. Perhaps the U.S. will even have to go to the IMF for financial help. Nothing can be ruled out at this point because no one seems to know how bad it will get.
But none of this will come without a steep cost. And we can see already that....
the cost will include not only our wealth, savings and retirement accounts, but the sovereignty of the United States.
http://canadafreepress.com/index.php/article/6239
***Obama sends man linked with terror group and George Soros to deal with Egypt/Syria
By Warner Todd Huston
www.renewamerica.us
November 11, 2008
News services in Israel are on fire with talk that Barack Obama has just sent a supporter of the terror group Hamas as his envoy to Syria and Egypt to relay news of his policies to come. Last September Israel's suspicions were heated up about "former" Obama advisor Robert Malley being sent to Syria with a George Soros funded group. It was then claimed by Egyptian sources that Malley was still working as an advance man for Obama which angered Israelis because six months earlier Malley announced that he had held "regular meetings" with Hamas. At that time, Malley's comment caused the Obama camp to hurriedly distance the candidate from any connection with Malley. But, with the election over, it seems that Obama's claims that Malley didn't really work for him are not quite true. It also seems that we already have the very first example of Obama sticking his finger in the eye of our allies in Israel. Naturally, the U.S. press is not reporting this news. In September of this year, Robert Malley caused consternation among people that stand against the terror group Hamas when he went to Syria to work for a group called the International Crisis Group — a George Soros funded NGO also chaired by other doyens the far left. Some thought that he was secretly there as an Obama advance man, but there is no real proof that he was there in that capacity at that time so the story died down.
As mentioned, back in May Malley reported that he held "regular meetings" with the Palestinian terror group Hamas causing Israelis quite a lot of heartburn. To appease Israel's supporters in the U.S. at that time, the Obama camp threw Malley under the bus. (Bold mine)
- Ben LaBolt, a spokesman for Mr Obama, responded swiftly: "Rob Malley has, like hundreds of other experts, provided informal advice to the campaign in the past. He has no formal role in the campaign and he will not play any role in the future."
- Report: Obama lied about firing anti-Israel advisor
Robert Malley, a top Middle East advisor that US President-elect Barack Obama promised months ago would play no role in his administration due to ties to Hamas, has reportedly been sent out on the next administration's first diplomatic mission.
Will we soon see a William Ayers touring the White House as a guest instead of a murderous bomber? Will uncle Rev. Wright suddenly be back on the Christmas party invite list so he can see for himself where the AIDS epidemic to kill all blacks was planned?
Maybe the harsh words that the Israeli newser had for Obama are not so far off base?
© Warner Todd Huston http://www.renewamerica.us/columns/huston/081111
****
I say, the USA is suffering from a bad case of "Sorosis" !!
STS
NOTE: I do not agree with each and every statement in each of the above articles, and particularly not the last one as it is obvious that, with the appointment of Emanuel (and many others) to Obama's cabinet, this new regime will be as pro-Israel as the previous one. The article does, however, demonstrate the duplicity, manipulation and dishonesty of Soros and Obama.
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