Wall Street WARZONE
“The Economist” Deals Four Aces: Europe Suing Banks on Derivative Scams … Private-Equity’s Big Debt Problems … Bernanke & Greenspan Still in Denial … Spin, Science & Climate Change
by Paul B Farrell, JD, PhD
| Discuss | | 4/21/2010

The Economist deals four-aces: I read it right after seeing Polanski’s new film, Ghostwriter, which, along with the Hurt Locker and Green Zone, dramatizes some of the big issues we already know about Iraq War political shenanigans. Loosely based on Tony Blair’s secret cooperation with the CIA during the war, we can see why after all these years Washington pressed the Swiss to arrest Polanski. Two pop phrases come to mind: Revenge is best served cold. And there’s no fury worse than politicans scorned. Here are The Economist’s four aces for investors searching for signs of the new bubble/bust cycle:

Alan Greenspan and Ben Bernanke still do not believe monetary policy bears any blame for the crisis … The desire to rescue a damaged reputation is a powerful motivator. That is one conclusion to draw from a new 48-page paper written for the Brookings Institution by Alan Greenspan, the 83-year-old former chairman of America’s Federal Reserve. A man once hailed as the world’s outstanding central banker is now routinely blamed for the asset bubble and subsequent collapse. This is Mr Greenspan’s attempt to set the record straight. The crisis, he argues, stemmed from a “classic euphoric bubble” … Greenspan says it is impossible to anticipate crises … central banks were innocent and impotent bystanders in a global macroeconomic shift. … This explanation is broadly similar to the idea of a “global saving glut” which Ben Bernanke, the Fed’s current chairman, has long espoused. …  There is something odd about central bankers denying any responsibility at all for long-term rates … Monetary policy may be a blunt tool to deal with asset bubbles. But that does not mean it is irrelevant … (More)

Hedge Funds & Private Equity: 10 “Billionaire-Maker” Strategies That Are Sabotaging Main Street America
by Paul B Farrell, JD, PhD
| Discuss | | 4/19/2010

Hedge funds and private equity firms are called the “Billionaire-Makers Dream Machine.” And it “makes” billionaires because Corporate America hates issuing new securities because they hate dealing with the public and regulators. They hate answering to their own investors and the public. Yes, they just hate the regulatory and media spotlight. So they prefer the mysterious parallel universe of unregulated hedge funds and private equity financing arranged outside the regulated banking system and with leveraged credit derivatives traded off the exchanges, funny money now totally $26 trillion. And they love the big payoffs in equity positions. In today’s era of cheap money, private equity firms soak up so much capital little is left on the table for normal channels. And that’s just fine with these highly secretive 13,000 money managers who control roughly $4 trillion and want to keep it that way. (More)