I really feel that it is about time that Wall Street and the Federal Reserve pack up finance and go and get a real job, in the real economy. They are clueless as regards finance, and have actually been the driving force in the destruction of Americas real economy, and therefore
YOUR REAL JOBS.
Does anybody want to give them a job? Here is their Resumé.
1950-1966
We got into a real rip roaring boom, times were good the Dow rose from about the 180 mark to 1000, good boom times. Unfortunately big problems laid directly ahead. But at least we had some morals back in those days.
1966-1982
This was a tough period, the market wanted to react after such a big boom. We got into the money printing game in the late 60,s to finance the Vietnam war. The problem was that we were running a big trade deficit with France who started to demand real Gold for the boatloads of Dollars we were sending them each month. In 1971 Nixon dumped the convertibility of the Dollar into Gold so we all became Keynesians overnight. Now the printing could go into overdrive, we kept printing but the problem was that Gold went crazy against the Dollar and inflation was north of 15%, but at least we avoided the stock market crashing. It did crash in real money terms but all the sheep need to see are some nominal gains or even sideways action it always keeps them happy. They never understand the true meaning of purchasing power losses, as the value of the Dollar shrinks. In the late 70,s things had got so bad with inflation that Paul “hitman” Volcker was called in, interest rates went to 20% and we wiped out the industrial heartland of America with that move, but at least we got inflation under control, and that pesky Gold came back into line. It was finally time to party hard again.
1982 – 2000
We partied hard, up, up and away, we got into that nasty October 1987 crash, but we had easy Al Greenspan at the helm, a real party animal is our Al, this guy never takes the punch bowl away, he always keeps it full. We got out of that crash by dropping interest rates and printing hard. We also set up a market intervention department so that we could keep all profits and avoid the losses.
The problem was that bubbles started appearing everywhere Al became like one of those Greek plate spinners, trying to keep all the plates spinning without crashing to the floor. He was good at it, he would talk about this and that and nobody would ever understand him, it was always about the party for Al. The biggest bubble was in real estate in the late 80,s, eventually it popped and we had the Savings and Loans crisis the boyz made out well with this scam, huge profits in the boom, and the dumb taxpayer picked up our tab in the bust, it was also “alleged” that plenty of the repossessed property also went AWOL off the Governments books at the HUD, just beautiful. Then in 1995 we started the tech boom, this was a gem the mother of all booms, we got dumb money to cough up billions of dollars for what were basically websites, these turkey businesses had no income and no assets but were valued at crazy money. Sweet times, but this bubble popped, it had too.
2000- To Present day
After the Tech hangover we were all looking to easy Al to get the next party organized, this guy never disappoints we love Al, we were going back to our old friend real estate once again, crazy Al dropped interest rates to 1% and we gave away mortgages to anybody who was warm and breathing, and we were not actually checking out that criteria very carefully, if you know what I mean. Speculators, condo flippers, fraudsters you were all more than welcome to the party. Dumb money really believed that their “investment” would go up by 20% every year!!!!!. Problem was going into 2007 this party was well and truly over, and it had a real nasty hangover. Al got out, and now we have Ben he is a good lad, but nobody partied like Al. I guess the public is finally wising up to all our scams, so it is time for me to get out and get a real job. Also been a shock to see Northern Rock die from the credit overdose as well as Countrywide and now Bear Stearns, these boyz partied real hard but I never thought it would kill them. Sure the Fed is trying to get another crazy party started someplace, along with their Government lapdogs, we have all these schemes, and interventions but in essence it is the same old scam devalue the dollar and dump all the losses on the dumb taxpayer. I finally want to go straight, my conscience is bugging me, we have pulled so many scams and tricks, hurt so many decent people, its difficult to sleep at night. So I am looking for anything really, is anything left out there?
The history of Wall Street in a nutshell
They have destroyed the purchasing power of the Dollar through excess money printing.
This has led to massive and sustained inflation far higher than the farcical and lying statistics show.
This has then led to a massive off shoring and outsourcing of real business and real jobs to less inflated lands.
As the real economy moved largely offshore, Wall Street and the Government have defaulted to lies and manipulated statistics, together with blatant and repeated free market intervention to try and keep the illusion of prosperity going for a little while longer.
Just look at Henry Paulson last summer he stated that “The economy is now by far and away the strongest that I have seen, in all my years on Wall Street” Which is why the Fed which is not FEDERAL and certainly not a RESERVE, is administering daily infusions of cash for Wall Street to survive in this strong economy. Any old junk is accepted at face value as collateral. It must be great to be able to run a business whereby massive bonuses are generated at all times, and all losses are socialized, impossible to actually fail, and carry any consequences of failure.
The Fed is now organizing a very cosy, but sordid little takeover deal for JP Morgan, one of its own shareholders!! (No conflict of interest there then) which completely stitches up Bear Stearns shareholders, and it is all guaranteed by the Government, so completely risk free to JP Morgan.
Maybe I am wrong and we need to take the “experts” tips? like Henry Paulsons old firm Goldman Sachs who caused quite a flurry in the Gold market at the end of 2007 by stating that the hot trade for 2008 when Gold was trading at about $800 an ounce was to SHORT Gold !!!!! that beauty would have worked well with a bit of leverage, made your trading account look like Bear Stearns share price over the last few days.
Or take the advice of CNBC,s top market man the one and only Jim Cramer, who stated at the beginning of last week and I quote directly
“No,No,No Don’t move your money from Bear, that is being silly, don’t be silly, Bear Stearns is fine, Bear Stearns is not in trouble”.
A customer once asked me what is the City Of London really like. I replied that behind the flash glass facades and the fancy suits it is really like a casino on the outskirts of town, run by the mob, frequented by all the local hustlers and fraudsters, full of flea bitten prostitutes, where all the tables are bent and the cards marked. Wall Street is the other lower class establishment.
Wall Street in reality is the only place whereby a man can glide into town in his new Rolls Royce, to take financial advice from somebody who each night goes home on the subway. Nowhere on this planet does the old Latin saying CAVEAT EMPTOR = BUYER BEWARE apply more than on Wall Street.
Wall Street Resumé
Who did this ? Forex Loss by Me ? Not at All.
Here is latest news on Losses not yet booked by many listed companies and / or by many banks. Now, the losses have already been booked. It is worth to see that who is going to take the loss, the Innocent or the Culprit.
Forex Derivatives Contracts :
Companies that had entered into complex foreign exchange derivatives contracts with their banks and that had taken a hit are awaiting judgments on the cases they had filed against the banks in the high courts. Interest now centres around the suit filed by Sundaram Brake Linings Ltd (one of the affected companies), a ruling on which, the Madras High Court, according to sources in the know, is expected to deliver shortly.
At least three companies – Hexaware Technologies Ltd, Sundaram Multi Pap Ltd and Sundaram Brake Linings Ltd – have filed cases in the high courts, disowning the contracts and seeking the courts' direction not to pay the margin money that the banks had demanded of them. In the notes for the quarterly results ended December 31, 2007, Sundaram Brake Linings contended that the currencies involved and the volume of transactions clearly established that they were beyond the underlying exposure. In the case of Sundaram Multi Pap Ltd - the Company's counsel said that his client never went to the Bank for this. Further the Company was not having any banking dealing with this particular bank earlier to this transaction. The said bank opened a new branch next to its premises and Bank's senior staff visited the premises of the Company and offered above and did not disclose the full facts. Bank's contention is totally wrong and unlawful that when profit was coming, the Company was keeping silence and and it started giving losses, the company started blaming Bank.
Any hedging strategy should have been offered by the banks only to minimise the risk of underlying exports, it had further argued.
The company also said that it had been advised that such contracts were void from the beginning, apart from being in violation of prescribed regulations. The company said it had rejected a demand of Rs 1.76 crore received from one of the banks; had made no provision in the accounts besides returning the monies received from the banks under such transactions. A corporate consultant advising companies on hedging foreign exchange exposure explained the situation thus. When the rupee was consistently appreciating against the dollar in early 2007, with the prospect of a further appreciation in the future banks sold contracts that conferred on these companies the right to sell future dollar receivables (exports) at a hefty premium to the prevailing spot rate. Such a right would have required the companies to pay a fee to the banks. But the latter structured compensating contracts in currencies such as Swiss franc, Japanese yen and the euro against the dollar.
But the difference this time was that the companies were the risk takers (on adverse currency movements) and the banks were the ones that enjoyed protection. To compound matters, the fee that the company was entitled to receive from the bank was relatively small and hence had to take on an exposure that was at least a few times larger than the original cover for export receivables that they had obtained from banks.
It is not clear, the consultant added, if companies really understood the risks or even if they did were lulled into a false sense of security by the banks' assurance that the possibility was remote. But as it happened, the US sub-prime crisis put paid to any hopes that the adverse currency movements would not materialise and corporates betting against that eventuality ended up on the losing side.
Posted S K Kothari