Investing

What Depression? Private Equity Firms Have TOO MUCH Money

1 July 2010. Private equity funds tie up investors’ money for 10 years. But they must invest all the money within the first 3 - 5 years of funds’ life. For giant buyout funds raised in 2006 and 2007, at the bubble's height, time is short. They must invest the money soon or return it to clients — presumably with some of the management fees they've already collected. Some firms are asking clients for more time to find companies to buy. Many more are rushing to invest the cash as quickly as possible, whatever the prices, which are rising despite general stagnation.

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Goldman Sachs, Fabrice Tourre and the SEC: Obama's Double Game, Pandora's Box – or BOTH?

20 April 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com.There remain at this point many more UN-answered questions than certainties about WHAT the SEC's – and Obama's – "Goldman gambit" means. It could be the beginning of a far-reaching change in the whole way Obama and the rest of official Washington deal with the key issue of Wall Street and TBTF organizations in general. But we remain dubious as long as the President retains Larry Summers and Tim Geithner as his key economic policymakers. If, on the other hand, we see them replaced by the likes of Brooksley Born or Joe Stiglitz or Paul Krugman, and there is a substantive revision in the nature of the "financial reform" being proposed, then we may start to believe there really IS going to be a change. But until then, we are not yet convinced that even the seemingly dramatic events with Goldman and the SEC are anything more than, to paraphrase Shakespeare, 'a tale full of sound and fury, signifying not too much.'

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GE Capital, Jack Welch and Jeff Immelt: A Tissue of Lies & Subterfuge?

08 April 2010, By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  A source from within GE - one of the most allegedly respected companies in the world - supports the view put across in Roger Lowenstein's "The End of Wall Street" that, despite its reputation, GE's earnings were deliberately manipulated by guru Jack Welch, and his successor Jeffrey Immelt, in a fashion disturbingly reminiscent of the infamous Lehman Bros "Repo 105". And he claims this is / was true not simply on the corporate / GE Capital side, but on the equipment side as well, where "the company pushes product forward or holds it back, depending on which quarter they want to take the profit."

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China: Rio Tinto Convictions Imply Belief in Continued Growth

30 March 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  Given the crisis in the Eurozone and, doctored BLS statistics aside, the on-going problems of the US, China's short-term economic profile remains key to the immediate future of the world political economy. And if the Rio Tinto case is any indication -- which it may or may not be -- then one would have to figure the Chinese leadership, at least, is confident about the country's ability to continue its remarkable growth, even within a global context of weakness at best and steep recession at worst. They could, of course, be arrogantly wrong in this assessment. But the fact they would even take such a stance -- given all the complications it will clearly bring with one of their most important private-sector partners -- is definitely a fact worth pondering.

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China: Krugman, New York Times Editorial, Beltway Gang ALL Wrong re Currency Devaluation

18 March 2010  By David Caploe PhD, Chief Political Economist, EconomyWatch.com The problems with the US and, because the global political economy is American-centered, the world economies have little to do with China in general, and certainly NOTHING to do with the value of China’s currency. Those problems have to do with the lies that America’s political / corporate / media / academic elites have been telling the American people and the rest of the world – and, for all we know, themselves – since at least the Reagan regime, exponentially multiplied, of course, during the age of Cheney / Bush. And if the US is going to somehow manage to find a way out of the mess it’s in, it should stop blaming China, and admit, as Shakespeare put it, 'the fault lies not in our stars, but in ourselves.'      

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Lehman & Repo 105 = Goldman & Greece: The Global Finance System Has Irreversibly Failed

15 March 2010. David Caploe PhD, Chief Political Economist, EconomyWatch.com. The Valukas Report on the bankruptcy of Lehman Bros is a nine-volume, 2200-page behemoth, so it may take a while til every juicy morsel can be digested. While certain facets have already become clear, there is one so glaringly obvious to us we couldn't believe it hasn't been discussed: the dynamic described as Repo 105 in Lehman is the EXACT same trick Goldman Sachs used several years before to help Greece do exactly what Lehman did, ie, hide the true picture of its leverage situation by arranging shady deals that recorded debt as sales. We conclude that not even this is going to make a difference to either Wall Street or Washington, so we cordially "welcome" everyone to the Lost Decades.

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Goldman Derivatives’ Ugly Double Role in Greek Tragedy

27 February 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com. The emerging drama in Greece begins to outline how the use of derivatives -- in this case, credit default swaps, or CDSs -- can exacerbate an already screwed-up situation, and, in the case of the US housing market, create a problem where none previously existed. If for no other reason, not just  Europeans, but Americans, Asian and others from all over the world, should pay careful attention to this latest dimension of the unfolding Greek tragedy.

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Goldman Made Greece Eurozone Crisis Worse - For Big Profit

16 February 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com Goldman Sachs and other Wall Street companies, using tactics akin to the ones that undermined the US housing market, have worsened the financial crisis shaking Greece, and undermining the euro, by enabling European governments to hide their mounting debts. The chief instruments of this consistent misrepresentation were DERIVATIVES, the potential losses from which have led to the lending freeze by TBTF banks and insurance companies, whose actions, in turn, have created the worst economic crisis in the US and Europe since the Great Depression.

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Warren Buffett & Goldman Sachs: The Scandal We Might Never Know

11 February 2010.  What did Warren Buffett know about the negative position of Goldman Sachs towards the housing market - and when - such that he had great confidence giving a $5 billion loan to GS at a time when the whole financial world seemed headed towards Doomsday? Maybe someday we'll know if there's yet another Goldman scandal to be uncovered - this time involving the last man anyone would ever expect: Warren Buffett. Or maybe we won't.

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