Tuesday, May 31, 2016

"The Federal Reserve Has Deferred Reality"
"Overall we’ve come off this extraordinary period of liquidity and this extraordinary period of low interest rates… I think we’re unlikely to see a repeat of that going forward, and I think we’re going to see more supply in what had been pretty tight markets .. In the most simplistic terminology, I would ask you the question, if something is free, is it valued? Is it appropriately risked? .. We have distorted markets. Maybe we have bubbles .. The problem is I think the Fed should have raised interest rates two years ago, and therefore today would be able to make a much more rational decision as to what to do. The problem is that they’ve so deferred reality for so long that I think they have a serious credibility problem if they don’t raise rates."
- Sam Zell


Anonymous said...


Montesquieu opined already in the 18th century that, “There is no greater tyranny than that which is perpetrated under the shield of the law and in the name of justice.”

The economist Jeffrey Sachs, recently penned an article entitled, The age of impunity. Sachs explains that, “Impunity means that the rich and powerful escape from punishment even when their malfeasance is in full view. Impunity is epidemic in America. The rich and powerful get away with their heists in broad daylight.”

Dubious practices, fraud and embezzlement are common during financial bubbles, which are usually created by central banks’ loose monetary policies and by a poor supervision of the financial sector.

Currently, there is a wide gap between GAAP earnings and “adjusted” earnings, which are usually reported to investors. In the first quarter of 2016, according to FactSet, the companies in the DJIA that "adjusted" their earnings inflated them on average by 28.9% over their earnings under GAAP.... According to Wolf Richter, “no one wants to see it. Instead, everyone wants to believe the sweet fairy tale spun by Wall Street and Corporate America.” Richter calls this phenomenon, “Consensual Hallucination.”

The Swiss psychotherapist Carl Jung opined that, “The wickedness of others becomes our own wickedness because it kindles something evil in our own hearts.”

The flood of money that central banks are creating pollutes the Western capitalistic system and free markets, as well as democracy. The consequences are anemic economic growth, deep social discontent, a culture of cheating, and moral degeneration. At the same time, “the bureaucracy is expanding to meet the needs of an expanding bureaucracy” (Oscar Wilde). Hardly a recipe for sustainable economic growth and rising standards of living.


Anonymous said...

Goldman Sachs Financed Hillary Clinton’s Son-in-Law to Make Bullish Greek Bets After It Structured Unseemly Greek Debt Deals that Hobbled that Country

The vampire squid has now popped up in the middle of a potential new scandal involving the Clintons, while uproar over its payment of $675,000 to Hillary Clinton personally for three speeches is still simmering. Clinton, a presidential candidate, has thus far refused to release the transcripts of those speeches, despite numerous editorials calling on her to do so.

On May 10, the New York Times gently dropped a bombshell on the hedge fund investing world of New York’s one-percenters. Hillary and Bill Clinton’s son-in-law, Marc Mezvinsky, who married their only child, Chelsea, in an opulent 2010 wedding, was shuttering the Eaglevale Hellenic Opportunity Fund after it had lost 90 percent of its value. That is a staggering loss for a hedge fund, which is, as its name implies, supposed to have hedges in place to prevent that kind of loss.
The fund with the steep losses is part of a larger hedge fund firm run by Mezvinsky and two former colleagues at Goldman Sachs, Bennett Grau and Mark Mallon. The idea that a hedge fund should wait until it had only 10 percent of its clients’ assets remaining before shutting down is causing angst in billionaire circles, as are many other details surrounding this hedge fund.

According to a 2015 article in the Wall Street Journal, the same fund had already lost 48 percent in 2014 – raising the question as to why it wasn’t shuttered then, when clients could have gotten a sizeable amount of their principal returned.

Grau’s former tenure at Goldman Sachs spans 30 years, from 1981 to 2011 – a period during which he worked with Goldman’s now Chairman and CEO, Lloyd Blankfein, who started his career in the same trading area as Grau, the J. Aron & Co. subsidiary that Goldman bought in 1981. Both Blankfein and Grau were considered experts in foreign exchange and currency trading, with Grau heading up the J. Aron Foreign Exchange Trading Group beginning in 1977.

According to the account in the New York Times, the Eaglevale Hellenic Opportunity Fund imploded as a result of bullish bets on Greek bank stocks and Greek government debt. That’s raising even more eyebrows in investment circles since it was Goldman Sachs who secretly sold a complex and convoluted derivative deal to Greece in 2001 that hid the true state of its debt, then reworked the deal multiple times until Greece ended up owing Goldman a stunning 5.1 billion euros, almost twice Greece’s original obligation, thus making future bullish bets on Greece highly doubtful. Along the way, Goldman Sachs learned more about Greek debt than just about any player on the planet.

According to a Bloomberg News report, it was Blankfein’s division of Goldman Sachs that structured the derivatives deal with Greece. Our research shows Grau worked in that division at the time.
The Securities and Exchange Commission actually lists two Eaglevale Hellenic funds, one onshore and one offshore. The address of the offshore fund is 89 Nexus Way, Camana Bay, Grand Cayman – a secrecy jurisdiction address frequently associated with Goldman Sachs’ offerings.
We raise the plundering by the physical commodity empires of the Wall Street mega banks because Greece has an estimated $200 billion in mineral reserves, with concentrations of nickel, bauxite and gold, according to the Institute for Geology and Mineral Exploration. As the Greek debt crisis continues, the privatization of these resources will continue apace with Wall Street banks no doubt positioning themselves for the spoils.