DESTRUCTIVE BET HEDGING SCHEMES CONTINUE

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CLICK HERE LARGE PRINT EDITION:  DESTRUCTIVE BET HEDGING SCHEMES CONTINUE « Culture of Life News 2

The Fortress hedge fund is dying today.  Good riddance to an obvious scam!  I wrote about it over 2 years ago and suggested that it was run by con men.  Or rather, con gnomes.  Foolish people bought stock in it.  Fools and their money are soon parted.  And many businesses are departing.  They are going down the tubes.  The cause?  

 

Too much debt overhead!  DUH.  This, not the lack of ‘credit’, is the cause of their collapse.  As I grew up, oldsters who were adults during the Great Depression and even older people who remembered the depressions of the 19th century, warned me to save up for bad times during good times.  Instead, we evolved a culture where people run up debts in GOOD times and then default in bad times.  This makes the bad times much worse than they might be if we were more careful about our finances.

Market Place – Fortress, the Hedge Fund, Is Crumbling – NYTimes.com

Cracks are spreading throughout theFortress Investment Group, once a leading player in the worlds of hedge funds and leveraged buyouts. On Wednesday, Fortress’s shares fell 25 percent to $1.87, a new low, after the company temporarily suspended withdrawals from its largest hedge fund. Investors had asked to withdraw $3.51 billion from the money-losing fund, Drawbridge Global Macro.

But Wednesday’s slide was just the latest turn in a long, downward spiral for Fortress. The once-celebrated company has lost 89 percent of its market value over the last year as hedge funds and private equity, once lucrative businesses that helped define an era of unrivaled Wall Street wealth, have crumbled in the credit crisis.

It is a remarkable turnabout for Fortress, which less than two years ago was soaring along with the rest of Wall Street. Its debut as a public company, in February 2007, was heralded as the dawn of a new age of big hedge funds and buyout firms. Mr. Edens, a former executive at Lehman Brothers and BlackRock, and his fellow founders became instant billionaires. Their deal paved the way for even splashier initial public offerings by the likes of the Blackstone Group. 

I was totally disgusted by the sudden surge of all these con games.  These stupid hedge funds all have offices or even whole buildings in the US and London or Singapore but run their affairs offshore at those goofy pirate islands that exist as ‘nations’ but are really parts of the British Crown’s small, pesky empire.  These places have basically few or no laws and are used to evade taxes and the investigative arms of major governments.

 

These obvious outlaw sites host outlaw organizations and most hedge funds much preferred to operate outside of the law.  Now, as they go bust and all the investors who fell for their siren songs of free money straight from the source of all wealth [magic numbers creating money out of thin air], they are dragging down the entire planet’s banking systems.  Here is my old story from November 10, 2006:

 

Money Matters: A Mighty Fortress Is Our God—Hedge Fund Fun And Games

Let’s look at a case study in this: Fortress (HAHAHAHA) Investment Group, LLC. (LLC: Lots of Lucky Crooks). It is in the news today with a bold program to share the wealth with even more suckers, um, investors. All they have to do is buy a share of this organization that makes money out of thin air or by devastating companies which they cannibalize.

I decided to check out their investments and organization so I visited their web page!

ABOUT FORTRESS

Fortress Investment Group LLC is a leading global alternative asset manager with approximately $26 billion in assets under management as of September 30, 2006. Fortress is headquartered in New York and has affiliates with offices in Dallas, San Diego, Toronto, London, Rome, Frankfurt and Sydney.

What follows is endless flim-flam that basically says they have a thumb in every plum pie and a spoon in every pot and a finger on every scale. There is lots of babbling about rearranging the landscape and exploiting opportunities.

This web page continues with an explanation about how their fund is structured:

Hedge Funds — a business that manages approximately $9.4 billion of assets under management comprised of two business segments: (i) hybrid hedge funds – which make highly diversified investments globally in undervalued and distressed assets, including loans, assets and corporate securities; and (ii) liquid hedge funds – which invest globally in fixed income, currency, equity and commodity markets and related derivatives to capitalize on imbalances in the financial markets.

Publicly Traded Alternative Investment Vehicles, or ‘‘Castles’’ — approximately $3.0 billion of aggregate market capitalization in two publicly traded companies managed by Fortress. The Castles currently invest primarily in real estate and real estate debt investments.

©2003 Fortress Investment Group LLC. All Rights Reserved. Use of this website is governed by the Terms of Use. For information on your privacy, please read our Privacy Statement.

SITE UNDER CONSTRUCTION
Contact: Lilly H. Donohue, Managing Director Fortress Investment Group LLC, (212) 798-6100 ldonohue@fortressinv.com

OK, gang! ‘SITE UNDER CONSTRUCTION’????? HAHAHAHA. My god. Talk about blatant! They don’t even bother to put up a real, working web page? It is worse off than my own blog? I am more organized? More informative? Would you give $750 million dollars to a paper pushing organization that can’t even be FUCKING BOTHERED to completely build a working web page? Who is working for them? High school hackers?

If this isn’t the world’s biggest flashing red light, what is?

Anyone who read my take on Fortress back then would have made wiser investments.  Instead, the media ran stories about how great these deals were.  How wonderful the pirates of the Caribbean were, to share their unlucky wealth with mere outsiders!  All the hedge funds noticed all this loot pouring into Fortress’s hiding hole in the Caribbean and rushed in to partake in the fun.  

 

The reason they didn’t do this right off the bat is obvious: they were scared of the SEC!  But with Cox, the coxcomb running the regulation arm of the government, they had a patsy who would not only overlook violations of the law but would actively prevent any investigations of these con artists.  Since they were finally politically assured of cover both with Cox and with a very corrupt Congress, they ran off to exploit more victims.  Now, everyone is screaming bloody murder and there is only one solution: arrest them all!  

 

All the offshore hedge funds should be shut down via government fiat, the islands supporting and enabling these obvious criminals should be shut down, too.  I have been calling for this for years now.  Our navy can do this easily. The Queen of England might yap at us but she is a bitch in heat, anyway.  My ancestors severed their connections with these creeps long ago.  We have a right to shut down her irresponsible pirate coves!  And we won’t fix much of anything if these places are allowed to continue their lawless ways that destroy our financial systems and wrecks our economy.

 

Bloomberg.com: Citigroup Peddles Default-Recovery Swaps as Bankruptcies Soar

Goldman Sachs Group Inc., Citigroup Inc. andJPMorgan Chase & Co., which helped turn bets on company defaults into a $47 trillion market, are among banks offering wagers on the amount investors may recover from bonds after borrowers go bankrupt.

Credit-recovery swaps are trading on the debt of about 70 companies, including automaker General Motors Corp. and bond- insurer MBIA Inc. That’s up from 40 during the summer, according toMikhail Foux, a strategist at Citigroup in New York.

The contracts, barely traded in 2006, are now worth about $10 billion as more companies fail to repay debts, Foux said. Also known as recovery locks, the agreements are bought as insurance by sellers of credit-default swaps, such as banks, hedge funds and insurers.

So…how on god’s good earth can these BANKRUPT banks trade anything, much less, default swaps????  This is the core of what ails us: a bunch of irresponsible con artists dumped epic amounts of debt [much of it via the Japanese carry trade passing through Caribbean pirate coves] how on earth can they play this game?  They are BANKRUPT!  

 

The US government and the US Treasury and the Federal Reserve has these criminal organization on life support systems directly attached to the US taxpayers who are now the insurers, guarantors and protectors of these stupid, criminal, BANKRUPT bankers!!!!  How absurd is this?  

 

They found a new Derivatives Beast to feed!  GAH.  Will we stop them?  It is growing at tremendous speed, too.  Since these things are magical, they can swiftly grow to infinity.  These banks, hedge funds and insurers are the ones going bankrupt.  Citigroup would have been buried and dead last year if the US hadn’t capitalized it!  Goldman Sachs and JP Morgan OWN our Treasury and literally own our Federal Reserve.  Both ran up huge bets in the derivatives swap meet markets and both are grossly overextended.  This is why they have run up trillions in capitalization bail out schemes which they cooked up via Bernanke and Paulson. 

 

Who should both be arrested and charged with treason.  Dumping this mess into our laps is treason for it endangers our entire nation.  Not one of the clowns who created this mess are being punished. But then, not a single idiot in charge of defending America on 9/11 were fired, punished or arrested.  They merrily continued forwards, destroying our entire nation. 

 

Bloomberg.com: Default may beat Great Depression

Yields on speculative-grade bonds imply a U.S. default rate of 21 percent, higher than the record set during the Great Depression in 1933, according to John Lonski, chief economist at Moody’s Investors Service.

The extra yield investors demand to own U.S. high-yield bonds was 19.19 percentage points on Dec. 1, according to Moody’s. Assuming a 20 percent recovery rate, the spread implies a default rate of 20.9 percent, Lonski said yesterday in a market commentary. That compares with a rate of 11 percent in January 2001, 12.1 percent in June 1991 and 15.4 percent in 1933.

Defaults and bankruptcies are accelerating as financing options for high-yield companies dwindle amid the longest U.S. economic recession in at least 26 years. The U.S. default rate rose to 3.3 percent in October, according to Moody’s, which forecasts the rate to increase to 4.9 percent in December and 11.2 percent by November 2009…..

Hawaiian Telcom Communications Inc., a provider of local and long-distance telephone service, and Pilgrim’s Pride Corp., the largest U.S. chicken producer, sought bankruptcy protection on Dec. 1,as they struggled with too much debt taken on before the credit crisis.

 

21% of our business will be bankrupt?  Wow.  Like, that is super-bad news!  Time for stocks to soar.  A swift glance at the Bloomberg News headlines makes it crystal clear, we are at the beginning of a major international business collapse:  

• AT&T Will Cut 12,000 Jobs, Expects $600 Million Charge for Severance Costs
•  GM, Chrysler Said to Consider Pre-Arranged Bankruptcy to Get U.S. Bailout
•  Unemployment Benefits Claimed by 4.09 Million Americans, Most in 26 Years
• Credit Suisse to Eliminate 5,300 Jobs After $2.5 Billion Loss This Quarter
•  British Air, Qantas Merger May Win Greater Discounts from Boeing, Airbus

 

This financial crisis began with the banks and is now spreading across all systems.  The key thing that unites all of this mess is simple: people too deep in debt, too ‘over-extended’ are defaulting on future payments of debts contracted during a heady period of easy lending.  ALL global contractions are of this nature!  These are the deadliest of contractions for they can’t end until all the easy debt is destroyed via bankruptcies.

 

This obvious fact is being evaded by central bankers and the corrupt governments which are all rushing to not nationalize all the bad banks but capitalize them while the gnomes who created this mess by overloading the global economy with too much debt, get to continue running things their own way!  The instant a government has to capitalize a bank, it MUST be seized and the officers in charge of the bank, arrested!  Their private properties, confiscated. 

 

This is called ‘moral hazard’.  Gnomes hate morals.  They want wine, women and song.  They want to have money no matter how evil the schemes are that create this money!  To keep them under some semblance of control, we have to punish the bad gnomes!  Put them in prison.  Deny them sexual favors.  Eliminate their wealth.  But they own our governments.  They run the show and so we get stuck with financing their losses.  Which will, in turn, bankrupt our nations.  From Iceland to Zimbabwe.

 

Bloomberg.com: Stocks

The Oct. 10 derivative industry auction on bankrupt Lehman Brothers Holdings Inc.’s credit-default swaps set a value of 8.625 cents on the dollar for the New York investment bank’s debt, according to Creditfixings.com.

A credit-default derivative seller could have bought a recovery lock to ensure a 20 percent recovery rate on Lehman debt three days before the firm’s Sept. 15 bankruptcy, Foux said. The seller would thus have received 11.375 cents on the dollar from the recovery contract.

MBIA, of Armonk, New York, trades at a recovery value of about 26.5 cents on the dollar, down from 40 cents at the beginning of the year, Foux said. Detroit-based GM, the largest U.S. automaker, is valued for a recovery of about 15 cents, about half what it was on Jan. 1.

Many credit-default contracts written early this year assumed a 40 percent recovery rate in pricing deals, Foux said.

When default rates are less than 2 percent, more than half of defaulted debt recovers more than 70 percent of face value, according to the rating company.

When defaults are greater than 8 percent, more than half such debt recovers less than 40 percent, S&P estimated.

Investors use credit-default swaps to protect themselves or speculate on the value of company debt. The market grew 100-fold to more than $62 trillion between 2001 and the end of 2007.

They found a new game!  They will speculate on how quickly the businesses which they dumped debts on, will go belly-up due to too much debt dumped on them.  Sweet, isn’t it?  Of course, these goofy gnomes don’t have any CAPITAL to play this game except…they run our Treasury and central bank! So these entities gave them the loot with which they may play more games of ‘chicken’.

 

When I was a teenager, kids got this idea of playing with cars where you drive straight at each other and the one who dodges a head-on crash first, LOSES.  After a lot of carnage on Roller Coaster Road which ran along the northline of my parent’s ranch, the county eliminated the entire road itself!  For it was straight and ran across the foothills of Mt. Lemmon.  

 

The point here is, suicidal nut cases WILL drive straight at you without flinching, expecting everyone else to dodge. And gnomes are definitely in this category!  They told Congress, if they die, we will die!  Now, they are BETTING on us dying….AFTER DESTROYING US!  Arrest them all!

 

New Jersey to Goldman Sachs: Please Explain – ProPublica

Assemblyman Gary Schaer, the Democratic chairman of the Assembly Financial Institutions and Insurance Committee, wrote to Goldman’s CEO following an article co-written by ProPublica and the Star Ledger that detailed how the investment bank had been talking down New Jersey’s bonds, after it had also taking underwriting fees from the state to help sell them.

“This report is troubling and, at the very least, raises the perception of conflict of interest,” said Schaer. “To have both options promoted by the same firm on the same or similar securities – especially by a firm that has directly profited from being one of New Jersey’s leading investment bankers – is disturbing.”

This is a classic example: Goldman Sachs DOES THIS ALL THE TIME!  They love to do this!  This is how they amuse themselves in grim times.  They should be arrested for fraud.  For if they sell something and then BET IT WILL BE DESTROYED, this is fraud.  ’Hey, buy this car!  It is very safe!’ says the used car salesman, knowing full well that the car’s steering is bad and it will crash.  

 

Then, the crafty used car salesman tells the buyer, ‘I’ll bankroll this sale but ONLY IF YOU TAKE OUT THIS LIFE INSURANCE POLICY which gives me money if you die.’  Then, the unlucky sap dies and the car salesman gets rich.  See?  Isn’t that nice.

 

FHA Insurance Fund Has Fallen 39 Percent – washingtonpost.com

As of Sept. 30, that fund had an estimated $12.9 billion, a 39 percent drop from $21.2 billion a year ago, according to the audit by Integrated Financial Engineering of Rockville.

“That’s a significant drop, and it’s occurring at a time when the fund is insuring a lot more mortgages,” said Guy Cecala, publisher of Inside Mortgage Finance. “You can easily say it’s reason for concern.”
The $12.9 billion value represents 3 percent of the mortgages insured by FHA. That’s above the 2 percent ratio required by law, but below the 6.4 percent ratio at the same time last year, the analysis found.

Through 2015, the ratio is projected to fluctuate between 2.8 percent and 2.9 percent. If worst-case economic scenarios are factored in, the ratio could dip below 2 percent…..

The number of FHA-insured loans shot up 225 percent in the first nine months of this year, according to Inside Mortgage Finance, a trade publication. The volume of loans totaled $176 billion during that time, eclipsing the agency’s previous one-year high of $165 billion in 2003.

Demand for these once-neglected mortgages surged because they do not require the hefty down payments or stellar credit scores that lenders have come to demand. Also, the amount of money people can borrow on these loans jumped this year, and many homeowners have found them attractive for refinancing.

The FDIC will be sucked dry.  The FHA will also be sucked dry.  Both will be insured and capitalized by the same entity: us.  We will bankroll everything. If this is so, then we must radically take over: this is called ’socialism’.  I hope all the right wingers realize that the endgame of right wing ideology ends this way!  Give a bunch of pirates and gnomes free reign to make money any way they can, they will utterly destroy everything and force you to pay the bills.  They do this via the support of the politicians who are in their pay.

 

And we lost control of our most important business: the government.  The rich know, control of the government is terribly important!  They hate the public.  We exist only so we may be fleeced.  We have to resist them.  This is why I encouraged people to support Ron Paul, if they were right wingers, rather than cling to the mainstream GOP.  This is why I encouraged liberals to support Kucinich.  Personally, I am a liberal. 

 

And am just annoyed as hell that the Democratic Party is party to all these scams unloading all privately-created debt onto the public!  We have to let bankruptcy do its dirty work.  If too much debt is created, this is the ONLY way to deal with it.  Obviously, floating excess debt will only make things worse, not better, over time.  Germany and Japan cleared all their debts by losing WWII and then not paying anyone reparations.  This made them much stronger than their victims who didn’t ditch all their debts.  Note that the two biggest industrial powers are Germany and Japan.  Even though both are going downhill as the rest of the world plunges downhill.

 

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