Tag Archives | Stock Market

7 Ways The Hedge Fund Industry Is Built On Fraud, Lying, And Stealing

matthew-tannin-in-handcuffs-accompanied-by-federal-agent-getting-placed-into-black-carCould the entire hedge fund industry rest upon tens of thousands of instances of lying, cheating, and stealing? Well, at least they’re immensely generous (with their political donations). Via Guernica:

1. Insider Trading. If the Feds could tape every hedge fund we’d get an earful of how hedge funds use “expert networks” to transfer bits of illegal information that provide hedge fund managers with knowledge of events that are sure to move markets and make them a bundle.

2. Ponzi Schemes. Madoff isn’t the only one. Hedge funds and Ponzi schemes are made for each other since the funds are designed to evade so many disclosure regulations. It’s virtually a sure thing that every new year will reveal another Ponzi scheme through which a hedge fund steals money from investors and then uses new investor money to pay returns to the old investors.

3. Tax Evasion. No surprise here. Wherever you find billionaire financiers, you’ll find schemes to move money around the globe to dodge taxes.

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The U.S. Congress Does ‘Abnormally’ Well in the Stock Market

Monopoly ManThis should be more troubling, but it feels like business as usual in Washington. Dan Foomkin writes on the Huffington Post:

Members of the House of Representatives considerably outperform the stock market in their personal investments, according to a new academic study.

Four university researchers examined 16,000 common stock transactions made by approximately 300 House representatives from 1985 to 2001, and found what they call “significant positive abnormal returns,” with portfolios based on congressional trades beating the market by about 6 percent annually.

What’s their secret? The report speculates, but does not conclude, it could have something to do with the ability members of Congress have to trade on non-public information or to vote their own pocketbooks — or both.

A study of senators by the same team of researchers five years ago found members of the higher chamber even better at beating the market — outperforming it by about 10 percent, an amount the academics said was “both economically large and statistically significant.”

Read More: Huffington Post

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The Case Against Goldman Sachs

mainIn his usual clear, profane manner, Matt Taibbi lays out why Goldman Sachs’s executives must face criminal charges as soon as possible. Via Rolling Stone:

America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn’t leave much doubt: Goldman Sachs should stand trial.

To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn’t exist) was almost completely unconnected to the systematic corruption that led to the crisis.

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The Next Market Bubbles: Food and Farm Land?

Balloon Pop

Photo: Andrew Magill (CC)

Robert Schiller writes for Al Jazeera:

There have been three colossal stock-market bubbles in the last century: the 1920s, the 1960s, and the 1990s. In contrast, there has been only one such bubble in the United States’ housing market in the last hundred years, that of the 2000s.

We have had a huge rebound from the bottom of the world’s stock markets in 2009. The S&P 500 is up 87 per cent in real terms since March 9 of that year.

But, while the history of stock-market prediction is littered with too much failure to try to decide whether the bounceback will continue much longer, it does not look like a bubble, but more like the end of a depression scare.

The rise in equity prices has not come with a contagious “new era” story, but rather a “sigh of relief” story. Likewise, home prices have been booming over the past year or two in several places, notably China, Brazil, and Canada, and prices could still be driven up in many other places.

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Author Offers Shares Of Himself On Stock Exchange

Photo Dennis Doyle

Photo Dennis Doyle

Alison Flood writing in the Guardian:

Publicity might be the lifeblood of the book trade these days but author Cathal Morrow is going public in more ways than one with plans to float himself on the London Stock Exchange. Having previously wangled sponsorship from a private equity company to fund a year without lying – he’s writing up his exploits as the book Yes We Kant – Morrow is hopeful that patrons looking for a more unusual investment will back this latest project, Me Me Me Plc.

“Rather than one company owning part of the intellectual property of a project, a lot of people will own a smaller part of me,” he says. Morrow is offering a total of 30,000 shares in himself at £10 a piece (he’s retaining 30%, “the vital organs and so forth”). Because he’s not legally allowed to sell shares in himself, what investors are actually buying is a signed photo of the author, with the shares given for free.

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Finance Capitalism is Causing Starvation

We all know Soviet-style communism causes starvation.  Looks like American-style capitalism does the same thing in a different way.  Johann Hari in the Independent, from this past July:

It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people — mostly children — couldn’t afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it “a silent mass murder”, entirely due to “man-made actions.”

Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis as if they had been struck by a tsunami.

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2010 Fortune 500: Wal-Mart’s Number One

Fortune 500 has come out with the top ranking stocks of 2010. Wal-Mart’s taken over the top stop, pushing Exxon to number two. Did the lack of employment encourage consumers to shop at Wal-Mart where they “roll back prices”? Read the Top 1000:

Rank      Company                      Revenues               Profits
1               Wal-Mart Stores        378,799.0               12,731.0
2               Exxon Mobil              372,824.0               40,610.0
3               Chevron                      210,783.0               18,688.0
4               General Motors         182,347.0               -38,732.0
5               ConocoPhillips          178,558.0               11,891.0
6               General Electric        176,656.0               11,891.0
7               Ford Motor                 172,468.0               -2,723.0
8               Citigroup                     159,229.0               3,617.0
9               Bank of America       119,190.0               14,982.0
10               AT&T                        118,928.0               11,951.0

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Culture of Bigotry Hindered Australia’s Ability to Integrate With Its Asian Neighbours

Singapore ExchangeASX_logoThe recent reaction by the Australian politicians toward the proposed merger between the Singapore Stock exchange (SGX) and the Australia Stock Exchange (ASX) is a typical example of a bigotry culture in this country.

The very minute the news of SGX’s intention to merge with ASX was leaked to the public arena, our politicians begin to jump up and down against the idea without even trying to find out in detail the rationale of the proposed merger, and the possible benefits to Australia. Their responses are so pathetically predictable in a habitually hysterical manner.

Response from the Australian “Elites” in the absence of any detail information about the Merger

Despite the fact that the Treasury Department has yet to receive any submissions from either the SGX or the ASX of the proposed deal (The Australian, 26 Oct 2010, 1:34PM), the Green Senator Bob Brown begin to “links Singapore Human Rights to the Australia Stock Exchange merger proposal” (The Australian, 26 Oct 2010, 12:34PM), The Coalition Shadow Treasury Joe Hockey questioned “whether ASX merger is in Australia’s interest” (The Australian, 26 Oct 2010, 9:28AM).… Read the rest

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Most U.S. Stock Trades Are Made by Computers, Not People: Is “High Frequency Trading” Manipulating the Stock Market?

The Crime of Our TimeI came across this topic while working on the Disinformation-published The Crime Of Our Time, written by Plunder filmmaker Danny Schechter. To me, this is one of those topics, the media should be more concerned about, (60 Minutes did report on this last night), but I wonder if the fear of massive manipulation destroying confidence in the entire system is causing many to look the other way. 60 Minutes reports:
It may surprise you to learn that most of the stock trades in the U.S. are no longer being made by human beings, but by robot computers capable of buying and selling thousands of different securities in the time it takes you to blink an eye. These supercomputers — which actually decide which stocks to buy and sell — are operating on highly secret instructions programmed into them by math wizards who may or may not know anything about the value of the companies that are being traded. It's known as "high frequency trading," a phenomenon that's swept over much of Wall Street in the past few years and played a supporting role in the mini market crash last spring that saw the Dow Jones Industrial Average plunge 600 points in 15 minutes. Most people outside of the industry know very little, if anything, about it. But the Securities and Exchange Commission and members of Congress have begun asking some tough questions about its usefulness, potential dangers, and suspicions that some people may be using computers to manipulate the market.
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