Hedgefunds winning

[TDMVPDPOY]

So the Greeks want the hedgefunds to write down further 50% of debt, is this debt interest or debt capital owed they are seeking?? cause if its the later the funds will LOL at these clowns...

the hedgefunds hold all the power now whether they accept or not, in the end they are still winning against the greeks, imf, ecb, banks...since they all bought insurance on those bonds and any default will see them collecting a large paycheck and taking the greeks to court to gather up all public assets to be controlled by the hedgefunds...

cant wait to to see the collapse of the financial sector and countries that is fkn insolvent...

lol the idiots who allowed the hedgfunds to buy insurance on secured debt...private sector/AIG too big to fail, wont be able to escape this time

[boutons_deux]

Vampire Hedge Funds Are Sucking Greece Dry

Who are the real villains on Wall Street? When it comes to institutionalized greed and corruption, nothing tops the too-big-to-fail banks like JP Morgan Chase, Bank of America and Goldman Sachs. But these financial giants form only one part of the financial oligarchy. Lurking in the shadows are aggressive hedge funds that are just as lethal to our economic well being. If Goldman Sachs is a vampire squid, as Matt Taibbi so aptly named it, then hedge funds are like schools of piranhas or sharks, eager to strip the financial carcass to the bone.

The sharks at this very moment are circling Greece, waiting to devour that nation’s resources. To understand this attack we need to enter into the rotting innards of our financial system.

But aren’t the Greeks lazy?

Let’s starts with a closer look at why Greece has accumulated so much debt. The answer is not because they sit around sipping retsina rather than working. Instead it has everything to do with the attempt of Europe to improve the lot of the Greek people so they would embrace democracy. Let’s not forget that from 1967 to 1974 Greece was ruled by a military junta that inflicted enormous pain on its people. Helping the Greek people escape poverty was critically important. Greece’s entry into the European Union and the access to capital it provided, allowed the Greek people to rebuild the foundations of prosperity and democracy.

Of course, our vampire squid banks also played a critical role in exacerbating the debt problem. When Greece hit the debt limits set by the EU, large U.S. banks profited mightily by structuring loans to Greece to skirt those rules.

But the biggest blow came from the 2008 financial crash, which was wholly caused by Wall Street’s reckless gambling spree. When the world economy nearly collapsed into another Great Depression, the weaker economies in the EU took the biggest hit. Ireland, Portugal and Greece suffered enormous job loss and massive declines in tax revenues. These countries became the victims of the vast housing bubble that was pumped up by Wall Street's fantasy financial schemes. Yes, they had accumulated too much debt, but the problem would have been manageable were it not for the Wall Street-created crash.

Enter the piranha hedge funds

Hedge funds are lightly regulated, privately managed investment funds created and designed for the super-rich, who expect to get much higher rates of return than the rest of us. While you and I are lucky to see a 2 percent increase in our 401ks, hedge funds hope to see gains far in excess of 10 percent. Pension funds and endowments have also followed the super-rich into these funds to gain access to these outsized returns. There are 8,000 or so hedge funds that now manage a total of nearly $2 trillion.

But making these super-profits doesn’t come easy. Hedge funds don’t just get lucky on a few stocks or bonds. They look for an edge, and more than a few go over the edge by engaging in criminal activity like insider trading. Others hope to get to the Promised Land by being tough SOBs who don’t think twice about impoverishing people. Those SOB hedge funds are circling Greece right now, doing all they can to get their hands on the money the European Union wants to lend Greece to reduce its long-term debt problems.

Here’s the play: Greece does not have enough money to pay off the loans that are coming due in the next year. So the EU and the International Monetary Fund have assembled a bailout package to help Greece make those payments. In exchange, the Greek people are being asked to suffer through enormous cuts in government spending – which means cuts in jobs, incomes, healthcare, pensions and public education. Everyday citizens are making enormous sacrifices.

But the European Union also insists that the bond holders of Greek debt take a hit. After all, under the supposed rules of capitalism, if you make a bad loan, you suffer the losses. So the EU wants to recall the old bonds and replace them with new ones at lower interest rates more suited to Greece’s financial condition. Imagine that! Financial elites are being asked to sacrifice a bit to pay for the problems they helped to create.

Well guess what? The elites don’t like it. You see, hedge funds have been buying up Greek bonds at steep discounts. They want to milk the deal for as much as possible. So they are refusing to accept what the EU is offering. The hedge funds want to capture as much of the bailout money as possible. They could care less if the Greek people suffer. (Think Bain.)

But wait -- why are the hedge funds refusing the offer when the alternative is having Greece default on the very bonds the hedge funds now own? If they continue to hold out, won’t the hedge funds risk ending up with nothing at all?

Here’s where we dive into rotten core of “modern finance.” These hedge funds think they have covered their bets by taking out financial insurance on their bonds, which would pay them the full value of the bonds (not just the discounted price) if Greece defaults. (These insurance policies are called credit default swaps, and are issued usually by big banks that profit on the insurance premiums.)

So the hedge funds that are playing hardball think they have their bets covered. If Greece doesn’t give them a better deal on their bonds, the hedge funds will welcome a default in order to collect fully on their financial insurance policies.

The nuclear option

There’s only one little problem: The entire financial system might collapse, including our own, if Greece defaults. That’s because no one is sure if all the financial insurance can actually be paid off. It could be like AIG all over again, when that giant insurance company couldn’t pay off its financial insurance policies. If one big bank fails to deliver it could set off a chain reaction of financial defaults around the globe.

As Marshall Auerbach, my financial guru, points out, it’s very much like exercising the nuclear option.

Credit default swaps [financial insurance policies] are to "hedging" credit exposure what nuclear weapons are to "hedging" a nation's defense requirements. Yes, you pay less money than equipping a huge army, but if you use the nukes, everything blows up. Much the same applies with credit default swaps.

In the old days, bankers basically didn't bet against their clients. If the borrower was successful, the banker was successful as the loan made money. If you thought the credit risk was bad, you didn't hedge it by buying a credit default swap; you simply refused to extend the loan (or demanded a lot of collateral against which the loan was secured). Nowadays, no credit analysis is done and "hedging" is done through these toxic instruments which have no social value and create a hugely destabilizing financial system.

To put it more bluntly, the sharks are using financial nuclear blackmail to milk billions out of the Greek people. They can get away with it because the EU and America are enormously fearful that a Greek default will vaporize the global financial system – yet again.

Hopefully one day Occupy Wall Street will grow into a movement larger enough to end this financial terrorism. Until then, we can expect the Greek people to transfer much of their remaining wealth to these amoral and destructive hedge funds.

http://www.alternet.org/module/printversion/153795

[TDMVPDPOY]

http://www.heraldsun.com.au/business/imf-needs-500b-for-world-economy/story-fn7j19iv-1226248013461


they wanan raise 500b this year, and another 1trillion future years...why do we have to sit and allow these clowns do whatever they want with phoney money printed on paper where the dominal value is worth shit all continue to pour into shit house countries that dont produce anything or expect to meet its debt obligations but continue to fund their expensive prosperity lifestyles at the expense of the world economy?

401K funds are similar to hedgefunds, but there are types of hedgefunds that dont operate like 401k funds, if you want an example ask Romney...LMAO

anyway during the GFC hedgefunds were all cashed up and the govts wanted them to bail out the economies of scale to create jobs etc get the economy rolling, but no they sat still cause the money most in these hedgefunds are like 401k funds, private or self controlled and they take on more riskier investments...

default or not, hedgefunds are coming out winning no matter what the outcome is

[boutons_deux]

The key criminal act here is Goldman Sacks showing Greece how to defraud bond markets buy hiding debt, so Greece could pay a lower rate for more debt.

Anybody going after GS for fraud?

[boutons_deux]

Hedge Funds May Sue Greece if It Tries to Force Loss

LONDON — Hedge funds have been known to use hardball tactics to make money. Now they have come up with a new one: suing Greece in a human rights court to make good on its bond payments.

The novel approach would have the funds arguing in the European Court of Human Rights that Greece had violated bondholder rights, though that could be a multiyear project with no guarantee of a payoff. And it would not be likely to produce sympathy for these funds, which many blame for the lack of progress so far in the negotiations over restructuring Greece’s debts.

The tactic has emerged in conversations with lawyers and hedge funds as it became clear that Greece was considering passing legislation to force all private bondholders to take losses, while exempting the European Central Bank, which is the largest institutional holder of Greek bonds with 50 billion euros or so.

Legal experts suggest that the investors may have a case because if Greece changes the terms of its bonds so that investors receive less than they are owed, that could be viewed as a property rights violation — and in Europe, property rights are human rights.

The bond restructuring is a critical element for Greece to receive its latest bailout from the international community. As part of that 130 billion euro ($165.5 billion) rescue, Greece is looking to cut its debt by 100 billion euros through 2014 by forcing its bankers to accept a 50 percent loss on new bonds that they receive in a debt exchange.

According to one senior government official involved in the negotiations, Greece will present an offer to creditors this week that includes an interest rate or coupon on new bonds received in exchange for the old bonds that is less than the 4 percent private creditors have been pushing for — and they will be forced to accept it whether they like it or not.

“This is crunch time for us. The time for niceties has expired,” said the person, who was not authorized to talk publicly. “These guys will have to accept everything.”

But beyond all the byzantine wrangling, a crucial question is how this would benefit Greece. Even with the deal, Greece’s debt would be no less than 120 percent of G.D.P. in 2020 — which seems to be slight progress given the austerity and pain its citizens must endure during this period.

“The real issue is not who participates in the deal,” said Jeromin Zettelmeyer, the deputy chief economist at the European Bank for Reconstruction and Development and an authority on sovereign debt. “The question is whether there is enough debt relief for Greece, and there may not be, because the fiscal and growth situation in Greece is quite dire.”

http://www.nytimes.com/2012/01/19/business/global/hedge-funds-may-sue-greece-if-it-tries-to-force-loss.html?_r=1&hp