DebateGate
General Category => 3DHS => Topic started by: Christians4LessGvt on January 17, 2008, 12:24:07 PM
-
Soros Bets on U.S. Economic Collapse
By Cliff Kincaid | January 16, 2008
Senators Hillary Clinton and Barack Obama favor government support for people losing their homes because they can?t repay their subprime mortgages. But what about the financial wheeler-dealers in the hedge fund industry who may stand to make billions of dollars from this terrible debacle? Foremost among them is billionaire hedge fund operator George Soros, who has committed his life and immense financial resources to bringing the Democrats to power in the White House.
Ties to the controversial and mysterious hedge fund industry could become a major problem for the Democratic Party. Hedge fund money ?appears to be tilting toward the Democrats of late,? the New York Times reported last year.
The connection is personal. Chelsea Clinton took a job in 2006 with Avenue Capital Group, a hedge fund whose founder, Marc Lasry, has contributed tens of thousands of dollars to the national Democratic Party and many of its candidates. Federal Election Commission records show $5,000 from Lasry to HILLPAC, Hillary?s political action committee, thousands more to Hillary?s senate campaign, and thousands more to Hillary?s presidential campaign.
Democratic presidential candidate John Edwards took some criticism when it became known that he had gone to work for a hedge fund. As noted by the Washington Post, ?The hedge fund that employed John Edwards markedly expanded its subprime lending business while he worked there, becoming a major player in the high-risk mortgage sector Edwards has pilloried in his presidential campaign.? Edwards claimed he didn?t know anything about the firm?s involvement in subprime lending.
It is interesting to note that the co-author of the Post article, John Solomon, has left the paper to become editor of the rival and conservative Washington Times. Solomon had come under savage attack by left-wingers for doing stories about corruption in the Democratic Party. They probably realized that Solomon was on to something when he uncovered Edwards? relationship with a hedge fund company. But Edwards is not alone.
For those reporters interested in getting to the bottom of this growing controversy, there are many tantalizing leads to pursue.
The Wall Street Journal on Tuesday ran a fascinating front-page story about John A. Paulson, a Wall Street trader who has made billions of dollars betting that the housing market would collapse. The Journal says that Paulson personally made between $3 and $4 billion, ?the largest one-year payday in Wall Street history.? The story suggests he has been somewhat secretive about his activities but is now opening up about his ?historic coup? in comments to Journal reporter Gregory Zuckerman.
While there is nothing improper or illegal in how Paulson made his money, there are no details about where he got some of his funds or exactly how he placed his financial bets. The paper notes that ?European investors? gave him about $150 million and that he is so savvy that George Soros ?invited Paulson to lunch, asking for details of how he laid his bets, with [financial] instruments that didn?t exist a few years ago.? The article said that ?Soros is famous for another big score, a 1992 bet against the British pound that earned $1bn for his Quantum hedge fund.? Soros ?declined to comment? about his meeting with Paulson, the Journal said.
Declined to comment? Since Soros is a major supporter of the secretive Democracy Alliance, a group backed by rich liberals who fund a network of liberal-left groups dedicated to electing Democrats to the White House and Congress, could the discussion have also been political in nature?
The American people should be quickly educated by our media on how very rich people like Paulson and Soros make ?bets? on the rise or fall of national currencies and economies. Paulson is now telling investors ?it?s still not too late? to bet on more economic problems. These are capitalists who seem to have a vested interest in the further decline of the U.S. economy.
We may not know much about Paulson, but we know a lot about Soros. He is a financial manipulator, convicted of illegal insider trading in France for playing financial games with a bank there.
We also know that he spent over $20 million trying to defeat George Bush for president in 2004 and has contributed to such groups as the Democratic National Committee, MoveOn.org, and candidates such as Hillary Clinton and Barack Obama. Soros, in short, is a major financial backer of the Democratic Party and will be in a position to collect on these debts if Hillary or Obama wins in November. Their election may depend on further substantial erosion in the national economy. Is it possible that the financial activities of Soros could make it more likely that the economy will go into a complete tailspin?
Any economic problems will, of course, be blamed by the Democrats and the liberal media on President Bush and the Republicans. The Republicans may not be smart enough to recognize that hedge fund managers and their links to the Democratic Party could become a potent campaign issue. Perhaps they will regard the issue as too ?populist? for their taste.
If the Democrats succeed in exploiting the economic problems, they will not only keep control of Congress in this fall?s elections but will put Clinton or Obama in the White House. Their ?mandate,? however, will go beyond new government programs for the economy into the social realm. And that?s where Soros has a keen interest.
The issue of Obama?s drug use has surfaced in the campaign, but Soros has put millions into the drug legalization movement. Some other money from his fortune, estimated at $7 billion, has been put into causes such as abortion rights, gay rights, voting rights for felons, euthanasia, and rights for immigrants and prostitutes.
Now that Obama and Clinton have patched things up on the race issue, can we count on the media to turn their attention to George Soros and other hedge fund managers who stand to profit from an economic recession or even depression?
With millions of people either losing their homes or a substantial part of their value, the media should not be content with a no-comment from these crafty behind-the-scenes money men.
--------------------------------------------------------------------------------
Cliff Kincaid is the Editor of the AIM Report and can be reached at cliff.kincaid@aim.org
http://www.aim.org/aim-column/soros-bets-on-us-economic-collapse/ (http://www.aim.org/aim-column/soros-bets-on-us-economic-collapse/)
-
Big news here. Soros, a currency trader and investor, supports the Democrats. Holy shit! Stop the presses!
Presumably, other currency traders and investors support the Republicans.
Here's a shocker for you: currency traders bet to win. Republicans, Democrats, if they're currency traders, they're betting to win.
If the article is correct, George Soros has placed a bet that will win big if the U.S. economy will collapse. BFD, what was he supposed to do, bet the opposite way and lose money?
A quote from one of my all-time favourite authors, John Buchan, author of The Thirty-Nine Steps (and a former Governor-General of Canada:) "Capital has no conscience and no fatherland." (from The Thirty-Nine Steps)
If George Soros thought the U.S. economy was poised to shoot through the roof, he'd bet on the U.S. economy shooting through the roof. If someone as astute as George Soros really thinks the U.S. economy is about to collapse (and there's nothing in the article to indicate he does) then I'd be more concerned with the moronic leadership which brought the country to this point than I would be over George Soros' failure to make more "patriotic" assessments of the economy.
-
I read the article and I don't see where Soros actually bets against the US economy.
But, Soros is a currency trading mastermind. If he said the dollar was going to tank (worse than it is right now) then you can take that to the bank. The article mentions Black Wednesday in 1992, but it fails to mention the fortune he made off the Asian Tiger collapse in 1997, and again on the Chinese Yuan.
I don't know why you all hate the guy so much, he's someone who has made hundreds of millions off of the free market. He "pulled himself up by his own bootstraps" and was a stringent anti-communist. You'd think that he'd be some kind of role model for free marketeers. He loathed the neo-cons, but who can blame him? He'll probably make a fortune off of their inane economic policies now.
-
I'm surprised you admire him so much.
Makes his money off the backs of the working man and all.
-
The working man was already fucked by the Republocrats. Soros didn't do it to them, in fact he argued and campaigned for policies which would lighten the workingman's load. His money is made off the schmucks who have already stolen it from the workingman - - he buys their stolen money cheap and he sells it high; or he sells it to them when it's high and delivers it to them when it's cheap. In either case, the workers were fucked long before then, and not by Soros.
-
I'm surprised you admire him so much.
Makes his money off the backs of the working man and all.
I don't admire him.
He is a currency trading genius. That is just a fact. On the other hand, he royally screwed a lot of decent people in Britain, Italy, Malaysia, etc.
I was simply stating facts. He seems like a role model for fans of the free market. One of the things he demonstrated on Black Wednesday was how he could game the Bank of England's pegging of their rates to the Deutsch Mark in such a constricted band. He was a real communist fighter, literally puring money into fighting communism in Eastern Europe. And he did come from a humble background and made all his money himself.
Those are just the facts. But no, I don't admire how he does it. I do find it funny that he pisses off the right-wingers so much. If he were funding a right wing PAC they'd worship the ground he walks on.
-
Let's say you have a million dollars. You also have a choice. Your decision will not have any effect on the exchange rate, because you have relativelyi little money.
If you invest it in dollars, in two years it will be worth ?750,000.
If you invest it in Euros, it will be worth ?1,200,000.
Is your patriotism worth ?450,000? That is the question.
-
If he were funding a right wing PAC they'd worship the ground he walks on.
And yet he funds a left wing slew of PACS and you don't worship the ground he walks on.
How can that be?
-
If the article is correct, George Soros has placed a bet that will win big if the U.S. economy will collapse. BFD, what was he supposed to do, bet the opposite way and lose money?
[][][][][][][][][][][[][][][][][][][][][]
George S is not just betting on the outcome of the game , he is feeding one of the teams.
So he bets that the US economy will tank and then does what he can to ensure that Democrats win.
Is he working to ensure his bet?
-
<<George S is not just betting on the outcome of the game , he is feeding one of the teams.
<<So he bets that the US economy will tank and then does what he can to ensure that Democrats win.
<<Is he working to ensure his bet?>>
If I recall correctly, the last Democratic President left the country with a huge surplus in the Treasury which the current Republican administration has magically turned into half a trillion bucks worth of deficit. As a Canadian dollar holder who visits NYC fairly frequently and recalls very well what it used to cost us for every U.S. dollar purchased during the Clinton years, I can honestly say that the disastrous effect of this Republican administration on the U.S. dollar is about the only thing I have to thank the President for, and I certainly thank him for that effusively. Your post makes me wonder if you and I have been living on the same planet for the past dozen years.
-
If I recall correctly, the last Democratic President left the country with a huge surplus in the Treasury
You don't recall correctly.
-
<<You don't recall correctly.>>
Ah, unfortunately, you seem to be correct:
http://www.usatoday.com/money/2006-08-02-deficit-usat_x.htm
Apparently the government was keeping two sets of books, it appears. How do they get away with this shit? There is virtually no accountability in Washington today. Everything is smoke and mirrors.
So how does the state of the Treasury at this point in time compare with what was there when Clinton left?
-
If he were funding a right wing PAC they'd worship the ground he walks on.
And yet he funds a left wing slew of PACS and you don't worship the ground he walks on.
How can that be?
No, he funds a skew of Democratic PACs and that makes all the difference.
-
So how does the state of the Treasury at this point in time compare with what was there when Clinton left?
If you go with the set of books that had Clinton with a projected surplus, then we have another projected surplus - larger than at the end of Clinton's administration - by 2010.
If you go with the other set of books, we're on schedule to crash and burn financially by about 2030.
-
So its OK if you are a democrat.
different rules, different schools.
-
In the business world, there is one rule for everyone: generally accepted accounting principles. Of course there is some latitude for deciding what is or is not in accordance with GAAP, but nobody except a criminal actually keeps two sets of books. How does the government get away with this shit? And apparently it goes on under Republican and Democratic administrations.
-
In the business world, there is one rule for everyone: generally accepted accounting principles. Of course there is some latitude for deciding what is or is not in accordance with GAAP, but nobody except a criminal actually keeps two sets of books. How does the government get away with this shit? And apparently it goes on under Republican and Democratic administrations.
Well, long term debt (like the "borrowing" of Social Security funds, which has been going for 40 years) is reported differently under generally accepted accounting principle. It's not really considered debt until it's due, so it's not reported. The "second set" of numbers you're talking about take into account this future debt.
-
Long term debt is reported on every balance sheet I've ever read, and I've probably read hundreds of them. If the maturity date of the debt is unknown, GAAP require a reasonable estimate of maturity with an explanatory note showing how the estimate was arrived at. Even contingent liabilities (which may or may not ever materialize) require a note to the balance sheet.
-
Long term debt is reported on every balance sheet I've ever read, and I've probably read hundreds of them.
From the version of GAAP used for government reporting (emphasis mine):
Since general long-term obligations represent debt that will be met by expending resources other than those considered current and available as of current balance sheet year-end, they should not be reported in governmental funds.
http://ofm.wa.gov/policy/80.20.htm (http://ofm.wa.gov/policy/80.20.htm)
Private companies should save up to settle their long term debt, or make regular payments to satisfy it; governments, however, rely on the ability to raise taxes to settle debt, and the reporting requirements are therefore different.
-
<<Since general long-term obligations represent debt that will be met by expending resources other than those considered current and available as of current balance sheet year-end, they should not be reported in governmental funds.>>
I don't even know what that means, "reported in governmental funds."
Liabilities are reported as liabilities in a component of a year-end or month-end financial statment called a balance sheet. Long-term debt or liability is a separate category of liability. The balance sheet lists all assets, liabilities and equity.
The phrase "reported in government funds" is meaningless gobbledegook. It's on the balance sheet or it's not on the balance sheet. It's a liability or it's not a liability. If it's not reported as long-term debt or liability on a year-end balance sheet, then somebody is fucking you right up the ass.
<<Private companies should save up to settle their long term debt, or make regular payments to satisfy it; governments, however, rely on the ability to raise taxes to settle debt, and the reporting requirements are therefore different.>>
Private companies require future revenues to settle long-term debt. Government requires future tax revenues to settle long-term obligations. Neither the collection of future business revenues nor the collection of future tax revenues is certain; the only certainty is that the debt is there and will fall due some time in the future. The reason you have been given for government not reporting such a liability is pure bullshit.
-
I don't even know what that means, "reported in governmental funds."
If you would have gone to the link and read, you would have been enlightened.
Therefore, unlike a private business which is accounted for as a single entity, a governmental unit is accounted for through separate funds, each of which is a fiscal and accounting entity with a self-balancing set of accounts.
-
You know there is very little difference in concept between the concept you just outlined of governmental accounting and the accounts kept by large corporations with wholly-owned subsidiaries, partnerships and joint ventures. Each of the sub-entities can keep its own set of books and the parent corp shows a consolidated balance sheet, statement of retained earnings and statement of profit and loss for the end of each accounting period. In both the individual books of the sub-units (subsidiaries or government departments) as well as on the consolidated books of the parent company or federal government, the GAAP will still be expected to operate. Specifically, if there are long-term liabilities in either the consolidated balance sheet or the subsidiary/gov't department balance sheet, you should be able to find the long-term liabilities whether or not they have a fixed maturity date.
The web-site is conning you and you just swallow it all down like mother's milk. First of all, as I just explained, a private business is accounted for as a single entity but its single-entity balance sheet is effectively a summary of operations of its subsidiaries, partnerships, joint ventures, etc. A good financial statment will be well enough organized so that you will know how and in what amounts the subsidiary operations contributed to the figures on the consolidated balance sheet. If all that ISN'T clear from the private company's financial statements (as, for example, it was not clear on Enron's statements) then they are fucking with you.
Furthermore, since all the tax-paying citizens of the U.S.A. contribute their taxes to a single recipient, Uncle Sam, then Uncle Sam should not be hiding his fiscal managment (more likely mis-management) of the national assets through multiple accountings from his many departments without a consolidated financial statement indexed to the subsidiary financial statements so that the average taxpayer can read the story of his or her tax dollars in action. That this does not happen in real life is NOT because "it isn't done that way" or "it can't be done that way," it is because you are being fucked and you (not YOU personally, but the dumb-schmuck American taxpayer) is being bilked mercilessly by the crooks that they elect to represent themselves. There is absolutely no good reason why any government should have to keep two sets of books. Previously, keeping two sets of books was the exclusive practice of criminals and tax evaders.
-
The web-site is conning you and you just swallow it all down like mother's milk.
The website is a copy of the rules as approved by the Governmental Accounting Standards Board (the governmental version of the Financial Accounting Standards Board, which approves the rules that private businesses are run under in the US). And, according to the International Public Sector Accounting Standards Board of the International Federation of Accountants, the governmental accounting standards of the US are consistent with their standards - as are Canada's (so, I'm guessing your government standards are very similar to ours).
http://www.ifac.org/PublicSector/Downloads/IPSAS_Adoption_Governments.pdf (http://www.ifac.org/PublicSector/Downloads/IPSAS_Adoption_Governments.pdf)
Previously, keeping two sets of books was the exclusive practice of criminals and tax evaders.
You've heard the saying "The government arrests criminals because it doesn't like the competition"?
-
I'm accepting your contention that the Governmental Accounting Standards Board (a) sets the standards for government accounting and (b) permits long-term liabilities maturing at no fixed date to be kept off the books. For the sake of this argument, I'm not even disputing that. But if that's the case, it is just plain wrong. It would not be tolerated for a minute in private industry. (Well, actually, it WAS tolerated for a lot MORE than a minute in the case of Enron and others, my real point being it SHOULDN'T have been tolerated.)
The reason you gave for this apparent deviation is that revenues can be raised to meet the liability when it falls due - - is just crazy. Anyone evaluating a purchase of U.S. Treasury bonds would not like to be "surprised" when a new tax suddenly has to be raised to meet a maturing liability that should have been reflected in the country's books when the bonds first went up for sale. Anyone extending credit to a borrower should know in real time what all the borrower's liabilities are, short-term, long-term, fixed maturity, no fixed maturity and even contingent. The lender will figure out for himself how the liabilities can be met or if they can be met, and certainly new taxes would be one way of meeting them, but that's all stuff he should be told on the books.
-
The reason you gave for this apparent deviation is that revenues can be raised to meet the liability when it falls due - - is just crazy.
Funny, isn't that the exact reason you gave for why the Social Security system in the US won't fail? That whatever money is needed can just be raised via an increase in taxes?
And that is exactly the reason why the US government keeps "two books" as you put it - because of the Social Security "trust fund" which is held as long term bonds.
In practice, that is exactly what is done. Most people don't realize this when they vote "yes" on their local bond measures - what they're voting "yes" on is a tax increase in 30 years to cover the shortfall when the bond becomes due. Unless, of course, their county is heavily conservative ("real" conservative) like mine is; when a bond measure is voted in, they raise the taxes immediately a small amount to cover the repayment costs and actually save the money before it's due. The money to repay the bonds is recouped early and interest earned on the money saved this way is applied towards the bond, saving taxpayers money in the long run. Of course, there are editorials all the time in the local paper about how this county "doesn't use credit wisely" - the Democrats down in the cities are appalled that the county will "pay as it goes" for nearly all of it's costs, and rarely borrows any money to pay costs, and if it does borrow any it pays back as quick as possible. Most years this county not only has a surplus on it's books, it has a real surplus in the form of no debts (or only short term debt) and cash in the bank.
-
Soros is not betting on a US economic collapse, of course, this article is just sensationalism. He is betting that the US, fighting a war on credit with no taxes to pay for it, is a riskier bet than the EU or Japan or perhaps China, which aren't.
-
Ami, you mixed up two issues - - I said, and I believe, that there's probably enough wealth in America to support whatever taxes it takes to maintain Social Security. Just like a book-keeper who "borrows" $2,000 cash from his employer's till believes he'll be able to pay it back after the big game on Sunday afternoon, before anyone knows it's gone. But belief in the ability to meet an obligation doesn't justify the book-keeper's embezzlement and belief that taxes will always be sufficient to meet an indefinitely-maturing obligation doesn't justify keeping it off the books.
As an aside, the books aren't ONLY for creditors. They're also an indication to the equity investors (or in the case of government, the tax-payers) of how well current management is handling the biz.
There's no conceivable reason for keeping two sets of books - - think about it. There's only ONE U.S. government, isn't there? The tax-payers don't pay their taxes to two different U.S. governments, do they? This whole idea, not showing long-term liabilities on the books just so a surplus can be recorded, and keeping two sets of books is just atrocious. Not a single reason you've advanced so far for it can hold water. It's amazing that people are so easily bamboozled. (Although when I think of how easily they were conned into the Iraq War, I guess maybe it's not so amazing after all.)
<< . . . the Social Security "trust fund" which is held as long term bonds.>>
I don't get it. The U.S. Treasury took money for future Social Security obligations and invested in long-term bonds of other governments or businesses? Or it bought back its own long-term bonds from their holders? Here in Ontario, and I'm sure everywhere else, there are very strict legal limits on what investments trustees are allowed to make, and I'm pretty sure a trustee would not be legally permitted to invest trust funds in his own obligations. What kinda long-term bonds are the trustees of the Social Security system holding anyway? If they're holding long-term bonds of other governments and institutions, then there shouldn't be a problem, if they placed their investments wisely. Which only time will tell. If they're holding their own bonds (and I really don't see how that's possible) they have a recipe for a disaster.
-
There's no conceivable reason for keeping two sets of books - - think about it. There's only ONE U.S. government, isn't there? The tax-payers don't pay their taxes to two different U.S. governments, do they?
And yet, it's apparently consistent with the way Canada maintains it's own governmental books, since both countries are listed as being consistent with the international group of accountants.
I don't get it. The U.S. Treasury took money for future Social Security obligations and invested in long-term bonds of other governments or businesses?
No. This has been explained before. SS takes in money, and uses part of it to pay the current outflow of SS money. The rest is then "invested" in long term US treasury bonds. So, they hand that money over to the treasury, which gives them a note saying they'll repay it in 30 years with periodic interest payments (coupons). The actual money is then put in the general fund and spent by Congress, with no provision made for repaying it (other than the periodic coupon payments, which are on the budget, because they're due yearly). This is why conservatives say that the SS "trust fund" is filled with IOUs. The trust fund is, essentially, bond payments that will need to be collected later from future taxes. No provision is being made to actually save any of it1.
1 Well, actually, that's not true. When the Republicans came into power in '94 a "savings account" was setup that is intended to be used to repay those bonds. This savings account is filled with voluntary donations by citizens and a yearly chunk contributed by the government. However, the mandatory contribution by the federal government is tiny (I think it's on the order of 30 million or so a year) and the voluntary contributions are insignificant. The intentions are good, but followup sucks.
-
<<The trust fund is, essentially, bond payments that will need to be collected later from future taxes.>>
They took in cash in a trust fund, lent it, essentially to themselves, to be spent it in other ways than what it was intended for, and took back their own IOUs (bonds) to hold in in trust for future SS recipients in lieu of the cash that had first come into the trust fund?
If I had done something like that, I'd be in a fucking jail right now. But I can see that they will probably be able to bail themselves out by raising the taxes as required. It's as if the embezzling book-keeper has a million-dollar trust fund or a wealthy and supportive family that will always be able to cover his defalcations.
Incidentally, the government will not have to resort to taxes to make the bond payments. Since the bond obligates the bond issuer (the USG) to pay the bond-holder (the USG,) when it falls due the holder can forgive the entire debt. Actually, the bond-holder can write off the indebtedness as soon as it purchases its own obligation. Of course there will still be that pesky obligation to the SS beneficiaries - - gov't can either issue new bonds to replace the ones it wrote off, further postponing the day of raising taxes, or it can raise all of the money by (my preference) a tax on wealth. Supplemented by more taxes on income, graduated to make the rich pay. By that time probably most of the wealth will be off-shored anyway.
-
They took in cash in a trust fund, lent it, essentially to themselves, to be spent it in other ways than what it was intended for, and took back their own IOUs (bonds) to hold in in trust for future SS recipients in lieu of the cash that had first come into the trust fund?
Exactly.
Of course, the Democrats will tell you that the "trust fund" is perfectly safe, invested in safe government bonds.
-
Meshiggineh velt. When the debt falls due, they're just gonna hafta raise taxes, like it or not. At some point the rich who really control the country will have no option other than to impose some kind of fascist rule. They'll find support from the middle class who will be the major targets of the first tax increases, and they'll want to do it before any serious effort is made to tax their accumulated wealth.