Good afternoon, Fellows on Earth!

As already presented by this writer/analyst in my previous notes and articles, the current state of affairs of the global economy—which featured the inflationary upswings in the food and energy sectors—have a great deal to do with the machinations of the global financiers or oligarchy.

Across the ideological and paradigm streams, there has been the preponderance for speculations by the same financiers and subalterns that have been the main upward driver of prices in oil and food. The very same operators were also responsible for the temporary upswing in the price of the US dollar which remains as the chief legal tender for exchanging oil.

Below is an article from the Executive Intelligence Review that authenticates to a large degree the positions I took so far regarding oil and food.

[Writ 01 July 2008, Quezon City, Manila]

LaRouche: British Are Behind Food and Energy Hyperinflation

June 22, 2008--This release was issued on June 22 by the Lyndon Larouche Political Action Committee (LPAC).

Lyndon LaRouche today forcefully denounced Prince Philip and his fellow genocidalists in the Anglo-Dutch oligarchy, for willfully promoting the food and energy hyperinflation, which threatens to kill billions of people around the globe. "You cannot understand the current hyperinflationary crisis," LaRouche charged, "without first considering Prince Philip and the late Prince Bernhard's stated committment to wipe out 80% of the human population, through a combination of wars, diseases and famine. If Prince Philip, and his slavish followers like Al Gore were to succeed, the population of the planet would be reduced, in the next several generations, to well-under two billion people."

LaRouche was responding to news reports, in the past 24 hours, that the combined food and energy hyperinflation, has created a global national security crisis, threatening the survival of such leading nations as China, India, Indonesia, Malaysia, Pakistan, Zimbabwe, Morocco, and Egypt. "I warned, months ago, that the food crisis would soon emerge as the number one issue facing every government in the world," LaRouche commented. "The combined shock of $140 a barrel oil and food hyperinflation and shortages, willfully promoted by Anglo-Dutch speculators and their oligarchical backers, has thrown the world into an immediate crisis."

On Sunday, June 22, representatives of the world's leading oil producing and oil consuming countries will meet in Jeddah, Saudi Arabia, to consider actions to deal with the crisis. Over 40 nations around the globe have been rocked by food riots and other protests over the hyperinflationary crisis, and the worst shocks, LaRouche warned, are coming during the immediate summer months ahead. "By the time we reach October," LaRouche warned, "the situation will be catastrophic."

Who's to blame for the biggest financial catastrophe of our time?

In that article, Michael Greenberger is quoted as saying "I happen to think Gramm did not know what he was doing. I don't think a member in Congress had read the 262-page bill or had thought of the cataclysm it would cause."

Okay, but somebody wrote those 262 pages, right? THEY (whoever they were) probably had a pretty fair idea of the contents and implications of the bill...

Besides, according to MoJo,

The act, [Gramm] declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."

It's really only a "cataclysm" if you weren't secretly socking away your swaps bets from Bear Stearns in an offshore tax haven.

"I've never been involved in a trade with such unlimited upside." (John Paulson- who by selling short the subprime market, earned $3.7 billion last year.)
Hedge Funds Aren't to Blame for Mortgage Mess

The fucking balls on this guy (no homo). Samuel Israel, investor, hedge fund manger and ugly mutherfucker was nabbed this week after failing to report to jail and serve a 20-year prison sentence for

.......defrauding investors of his fund, Bayou Group. Since its founding in 1996, the fund covered up trading losses by falsifying auditing records from a fake accounting firm. They kept it going by taking new investor money and handing it to older investors. It lasted until the summer of 2005.

What a fucking loser. Israel even failed to dupe authorities into believing he threw himself off Bear Mountain near the Hudson River.

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If you're Lehman Bros. (LEH), the market has doubts about your balance sheet, your stock is down, and rumors say you're going out of business or bound for the auction block. So forming a hedge fund that looks like nothing more than a place to dump unknown assets might not be the smartest idea.

But, reports Bloomberg, this seems to be exactly what Lehman has done. The firm has sold $4.5 billion worth of assets to a newly-formed hedge fund that counts Lehman as a significant investor; is run by seven recently-departed Lehman executives; and operates out of Lehman office space, three floors down from the office of Lehman's corporate secretary, the report says. What's more, Lehman is keeping its dealings with the fund, R3 Capital Partners quiet, and it isn't mentioned in the firm's Securities and Exchange Commission filings.

You don't need to know much more about R3 to see that this could be cause for alarm.

Lehman investors will want to know how any transactions with the fund have affected the bank's financial statements. R3 told Bloomberg that it is "an independently managed fund in which Lehman Brothers is a limited partner and holds a passive, minority stake in the general partner."

Not good enough for a firm that wants to restore investor confidence, says Bloomberg. "That [statement] won't keep investors from forming their own conclusions. If Lehman doesn't like what they decide, it will have only itself to blame."

Wednesday's International Energy Agency (EIA) Medium Term Oil Market Report went a long way to put a match to the straw man, whose remains have gone up in a flash and smoke, by saying that the price rise was justified by market fundamentals. For those who understand futures markets, this was obvious. Okay, so what about our now infamous "speculators"?

What amused me most about the political ruse of "speculators" was what I predicted would be the outcome for the hedge funds and ETFs that sought to make a killing in the oil market. First of all, the purpose of futures markets is to stabilize prices of volatile or cyclical commodities. Over the medium and long term, futures smooth out the price and facilitate price discovery. It is also used by the industry producers to hedge against large price changes. With this in mind, it is ludicrous to believe that amateur speculators, ie aforesaid hedge funds and ETFs could go up against industry professionals and beat them at their own game. The oil industry professionals are insiders with insider information, whereas hedge fund managers are hot shots who think they know everything, but don't. That so many of them end up in the clink says a lot.

Bad news is slow to seep out of Wall Street, where bad news is treated as though it never happened. Over the last month or so rumors have been seeping out that a lot of hedge funds were loosing money faster than their banker friends have lost money. The rumor mill has now turned into a torrent of verifiable and massive losses, as investors are now calling their lawyers because their once golden-boy fund managers have refused to allow them to withdraw their money which the managers have managed to loose. Translation: many funds are, or are nearly, bust. When investors start making withdrawals this is as bad as runs on a bank. Once it starts it never stops and it's lights out time.

Of course I can't point to any one hedge fund and say those fools lost their oil market bets; we don't know who they are. But these hedge funds aren't all hemorrhaging cash as a result of making a killing in the oil market. No, its because they got killed. We know this because of the large volume of shorts that were undoubtedly placed by funds betting that high prices were not sustainable, as Wall Street is fond of telling us. Would an oil producer sell short? Of course not; they know that there's an oil shortage and which direction the price is going.

So now you know why oil producers and oil companies never tell the truth about oil supply. If they did, they wouldn't be able to hedge against future price changes if speculators have the same info that they do. This also brings to mind the blizzard of announcements by Saudi Arabia and OPEC over the last several months, all claiming that they were upping production. Increased production would mean that the price would fall, and so the hedgies all placed their bets, shorting the price . . . . and got creamed when the price kept right on going up because OPEC couldn't increase production. And so we also now know how refineries have managed to keep up production and inventories despite very low price margins. They're making up the difference by hedging. And guess who's paying the bill? Yep, our straw man speculators.

You should thank the speculators for helping to keep the price of gasoline down. They have been doing the exact opposite of what they have been accused of doing.

Warren Buffett, a long-time believer that individual investors would best be served by buying and holding index funds in their portfolios, is putting his money where his mouth is.

Mr. Buffett has agreed to a bet with the founders of Protégé Partners, LLC. If in ten years the S&P 500 Index has outperformed a portfolio of hedge funds, chosen by the Protégé Partners, net of fees, costs and expenses, Protégé Partners will have to donate $1,000,000 to Girls Incorporated of Omaha. If Mr. Buffett loses the bet he will donate $1,000,000 to Friends of Absolute Return for Kids. The bet is being administered by The Long Now Foundation, a public education nonprofit foundation, based in California. For more details on the bet, please click here.

Who do you think will win this bet?

I personally would never bet against Mr. Buffett's common sense or track record, or the S&P 500 index's long-term performance.

Mr. Buffett's most recent letter to Berkshire Hathaway shareholders is available here. Mr. Buffett provides his views about indexing on page 19.

Mergers and acquisitions were once as simple as a Hollywood romance. But bad capital markets, the threat of recession, and the horrible morning-after realization that you're paying too much have made it harder for deals to live happily ever after.

The latest in the list of unions-not-consummated: hedge funds Fortress Investment (FIG) and Centerbridge partners are scrapping their $6.1 billion agreement to take Penn National Gaming (PENN) private.

Even though Fortress chief executive Wesley Edens said in March that the buyout firms "are committed to funding that transaction," they've changed their minds, likely in a fit of buyers' remorse. According to a company statement, casino and racetrack operator Penn will receive $225 million to terminate the takeover. The hedge firms agreed a year ago to buy Penn for $67 a share and Penn is trading 57 percent below that purchase price. Penn says "a re-negotiated, reduced purchase price was not a viable option."

In a little twist, the hedge funds have agreed to loan Penn $1.25 billion over seven years. Penn can either repay the loan in cash or stock. If Penn can't repay the loan, the hedge funds in the end will still have a lot of control over the company.

Erle Frayne Argonza y Delago

Greedy financiers across the globe made humungous killing in the commodities futures recently, which largely explains the sudden hyper-inflationary price increases in grains. The panic that resulted from the ‘self-fulfilling prophecy’ that food stocks are running out further exacerbated the already volatile situation of the food markets.

The flawed reasoning—that the problem has a great deal to do with the supply side—has been bandied by the paid Pied Pipers of the greedy financiers. This is an old hat lie, and facts about the capital and financial markets belie such cranky rationale for a sector (food) that has been subordinated to predatory finance worldwide.

Below is a case study regarding the subject matter of sky-rocketing food prices on account of speculation, culled from the Executive Intelligence Review. Make your own assessment about the matter.

[Writ 30 June 2008, Quezon City, MetroManila]

Speculators Making Killer Profits Off Midwest Flooding While Farmers Can't Sell Grain

June 16, 2008 (EIRNS)—This morning's frantic speculation on the Chicago Board of Trade (CBOT) opened with corn (December futures) up 19 cents, for a record $8.06 a bushel (contrast to $4 a year ago); and new crop soybeans hit a record $15.53 a bushel (contrast to $8 a year ago). This is the 12th consecutive day for record-setting corn prices on the exchange, occasioned by binge-speculation off the likely destruction of at least 5 million acres (2 million hectares) of crops in the Midwest flood zone, including at least 3 million acres of corn (out of 86 million nationally).

The volume of grain and soy trading contracts is soaring on the CBOT, part of the Chicago Mercantile Exchange (CME). All futures trading has risen 26 percent over the first part of 2008 on the CME, compared to same time 2007 (including non-commodity futures of all kinds). The Commodity Futures Trading Commission (CFTC), the Federal agency which could stop the deadly game, but will not, released a report June 13, showing huge flows of funds going into the corn market. The CFTC report gives specifics on the record volumes of outstanding corn commitments—amounting to paper bushels, the way paper barrels exist in oil speculation. The CFTC says that speculative funds have added 34,732 contracts to their long positions and cut 4,588 contracts from their short positions, putting them net long on 219,041 corn futures contracts. Index funds are now net long on 427,352 contracts.

At the same time, prices are falling for the farmer trying to forward-sell his corn or soybeans to his local buyer. There has been a 12 cent drop in the prices offered to farmers for their corn over the past 24 hours! This comes on top of an average 4 cent a bushel drop in prices to the farmer last week in the Cornbelt, according to a spot check of local grain buyers, by Dow Jones. This farmer price disparity with the exchange prices, reflects not only the physical destruction of shipping and processing infrastructure, but also the fact that whenever prices spike on the Chicago Board of Trade, the local grain elevator or buyer is hit with a margin call, that he now cannot meet. So he is not offering farmers forward-contracts. Many local terminals, strapped for cash, have gone bankrupt, or sold out to the wave of hedge and index funds now on a buying spree for hard infrastructure, with which to further hold and hoard grain. E.g. WhiteBox, based in Minneapolis. The cartel terminals, dominated by Cargill and ADM, started denying forward contacts to purchase farmers' grain months ago, under the principle: protect yourself, screw the farmer. The cartel firms offer the farmer take-it-or-leave-it prices, and terms of delivery.

On top of this, key grain and meat processing facilities are shut down by the flood all over the Midwest, for example, a huge ADM corn-processing plant in Cedar Rapids.

Säule 1: Mindestkapitalanforderungen
Die Anforderungen der Hinterlegung von Krediten mit Eigenkapital durch die Banken sollen stärker als bisher vom eingegangenen Risiko abhängig gemacht werden. Dies ist erforderlich, damit die Banken im Falle von Verlusten im Kreditgeschäft ausreichend Ressourcen zur “Abfederung” dieser Ausfälle zur Verfügung steht. Bisher mussten nur die Risikoarten Kreditrisiko und Marktrisiko mit Eigenkapital abgesichert werden, in Zukunft gilt dies auch für das operationelle Risiko (“Betriebsrisiko").
Daneben behandelt Säule I die verschiedenen Verfahren zur Berechnung der Mindestkapital-Anforderungen diese drei Risikosorten. Die Systeme zur Messung des Risikos von Kredite und für deren Preise stellen verstärkt auf das individuelle Rating der Kreditnehmer ab. Dies wird eine zunehmende Differenzierung bei der Preisgestaltung von Krediten zur Folge haben. Firmen mit guten Ratings werden günstigere Kredite erhalten als schlecht geratete. Dies bezeichnet man als «risikogerechtes Pricing».

Säule 2: Bankaufsichtlicher Überprüfungsprozess
Die Säule II beinhaltet die Anforderungen für die Überwachung der Einhaltung eines angemessenen Verhältnisses zwischen Risiken und Eigenmittel im Geschäft der Banken.
Die (nationalen) Aufsichtsinstanzen müssen überprüfen, dass jede Bank über ein funktionierendes Risikomanagement verfügt und ob das hinterlegte Eigenkapital dem Risikoprofil der Bank entspricht. Bei Abweichungen müssen Maßnahmen durch die jeweilige Finanzmarktaufsichtsbehörde eingeleitet werden.

Säule 3: Erweiterte Offenlegung
Die Marktteilnehmer sollen zu mehr Offenlegung und Transparenz verpflichtet werden. Dazu gehören Publizitätsvorschriften hinsichtlich des Risikoprofils einer Bank und ihrer damit verbundenen Eigenkapitalausstattung wie auch zu ihren angewandten Risikomessungsverfahren (ratings). erhalten. Diese Offenlegungsvorschriften sollen das Informationsangebot und die Marktdisziplin stärken.

Die Baseler Rahmenvereinbarung wurde im Juni 2004 veröffentlicht und ist Ende 2006 in Kraft getreten. Auf europäischer Ebene erfolgte die Umsetzung von Basel II in verbindliches Recht durch die Veröffentlichung der Bankenrichtlinie (2006/48/EG) und der Kapitaladäquanzrichtlinie (2006/49/EG) im Juni 2006.

Quellen:
http://www.bis.org/publ/bcbsca.htm (hier ist auch der Text des Abkommens verfügbar. Falls der Link nicht funktioniert: BIS home --> Monetary & financial stability --> Basel II)
http://www.bundesbank.de/bankenaufsicht/bankenaufsicht_basel.php
https://www.bmf.gv.at/Finanzmarkt/BaselIIErhhteFinanz572/GrundzgevonBaselII/_start.htm
http://www.eycom.ch/basel-ii/de.aspx

Another interesting though less obvious implication is that the money SWF's have to invest now is the same wealth developed nations (a) lost in their own economies thanks to commodities/real estate speculation (b) invested in foreign infrastructure projects (c) derived from asymmetric trade agreements.  More succintly, developed economies lost wealth that found its way into less-developed economies who, having nothing better to do with their windfall, are reinvesting it in developed markets.

Which makes tons of sense.  (no, it doesn't).

The problem is, you can't sit on $700 bn of cash.  PE firms are dealing with that same issue right now.  You need deals, you need projects, you need opportunities.  And when you are Nigeria or China or Abu Dhabi, it's hard to find a place where you can invest.  Local markets are subject to a certain degree of irregularity (see the shanghai index) and are fairly small-cap.  There are only so many Trump-branded oasis hotels that you can build.  At some point, you have to make a stab at traditional investing.

The problem with the influx of SWF is not a political, moral, or market issue.  It's just evident that these funds aren't capable of managing the amount of assets for which they are currently responsible.

Instead of another massive stake in a bank or indoor ski slope, if these nations want a vanity acquisition, they should hire the world's best fund managers.

The latest amendments to the French General Regulation of the AMF (“RGAMF”) have modified its Article 411-34 concerning the eligibility of underlying funds by a French fund of hedge funds.

The new drafting aims at replacing the formerly applicable 13 “binary” criteria with 4 flexible principles.

The main drawbacks of the former 13 criteria were:

(i) The blurry and unstable definition of each criterion, which resulted in troublesome legal uncertainty issues.

(ii) The necessity for the manager to obtain accurate information from prime brokers in order to ensure that it was in compliance with the law. The smallest asset managers could not easily obtain such information because of their lack of bargaining power.

In this respect, the 4 principles approach is a clever initiative, corresponding to the regulatory trend tending to favour indirect regulation: in exchange for a much more flexible eligibility policy, asset managers will now have to conduct extensive due diligences on the underlying funds. Flexibility and responsibility are therefore closely related under this new regime.

However, the new drafting of Paragraph 2 of the said Article poses a number of problems, since it refers to Articles L214-6 and L214-26 of the French Monetary and Financial Code (“CMF”).

Because of these references, Article 411-34 of RGAMF may be interpreted as follows:

(i) Each and every underlying fund’s custodian shall have its registered office in France.

(ii) The assets of an underlying fund shall be held by a single custodian which shall ensure the legitimacy of the management company’s decisions.

The new drafting does not seem to be relevant to the hedge funds industry: in most of the jurisdictions custody of hedge fund’s assets is commonly spread between several entities through a delegation chain, and custodians do not usually have to check through the decisions of a hedge fund manager. In addition, most of the offshore hedge funds do not have their assets held by a French custodian.

Consequently, most of the hedge funds should not be considered as eligible by French funds of hedge funds under the new principles: such a restrictive approach could not reasonably be in line with the intention of the AMF, which recently commented the inappropriate drafting of Article 411-34.

Such correction by the AMF is effected through a letter dated 27 May 2008. The letter explains that the rules applicable to the custody of French funds’ assets should not be understood as applying to foreign funds.

The letter further confirms that RGAMF Article 411-34’s drafting will eventually be amended in order to refer only to Article 333-2 of RGAMF (i.e. the safekeeping of assets).

The letter referred to above is an interpretation of the RGAMF by the AMF. This interpretation is however contrary to the literal interpretation of the Article: a certain legal uncertainty remains until the foreseen corrective amendments to the RGAMF effectively enter into force. Even though it is unlikely that the AMF will enforce the literal version of the Article, it is preferable to wait for the formal amendment of the contentious Article before electing a foreign hedge fund which does not comply with the current drafting.

The Eur/usd reversal in fortunes has been attributed to heavy selling by a German name which has pressurised the pair and tripped some stops in the 1.5775/80 area. J

The DirectAds platform will bring LinkedIn closer to Facebook's Social Ads technology, with these two leaving Bebo, MySpace, Plaxo, Friendster and the rest of the social networking world behind for now. I hope to be able to try the LinkedIn platform soon and give a head-to-head comparison. LinkedIn will continue to extract a premium on their advertising, as it seems they will be setting the price per CPM internally. A true market (e.g. Overture/pre-Panama Yahoo) or partial market (e.g. Google quality score) influence on price would likely result in prices lower than they would like, and they are clearly avoiding a CPC model for a reason since they are measuring CTR anyways. I think this slow transfer is very smart on their end especially considering their pre-IPO status, but as an advertiser I wish they would switch to a free market faster. Their ad margins will likely be lower than what they were getting with their rate card (although perhaps not), but the volume of advertisements will definitely spike upwards as you no longer have to go through a traditional advertising salesperson process to launch a targeted ad on their network.

LinkedIn Research Network
Additionally, on Thursday of last week LinkedIn quietly launched the LinkedIn Research Network, a product the company first mentioned back in February. No formal announcement of the actual launch was made on the LinkedIn blog or anywhere else, but the Research Network product page is live and linked to from the Premium Product footer, along with job, corporate, and upgrade links. Also linked is a 2 page product summary PDF. The product page outlines what is essentially a premium version of InMail (pdf). A Research Network subscriber can send send 20 InMails at once, and no monthly or daily limits are mentioned. Previously, LinkedIn BusinessPlus subscribers had the most InMail access and were limited to 10 InMails per month, so this is a dramatic increase in potential InMail volume. In the past advertisers could send targeted InMail blasts through LinkedIn's advertising platform at $1 - $5 per recipient.

The LinkedIn Research Network is an attempt to move into the expert network industry and will be sold primarily to hedge, private equity and venture funds. According to a recent Integrity Research Associates report, there are roughly 25 expert networks in existence today. Aside from my company KnowledgeBid, every other expert network service operates on a subscription model. LinkedIn is likely gunning for the fat subscription fees that players like the Gerson Lehrman Group are pulling from investors (+$50k for access to one industry vertical of experts for 6 months), but the product they have launched is far more like the resume search/direct email services offered by Monster, HotJobs, CareerBuilder, Dice, etc. than an expert network. Perhaps down the road LinkedIn will try to facilitate the actual expert matching, but this iteration of the product just enables subscribers to send a large volume of cold emails to potential consultants. Additionally, the product page makes no mention of facilitating consultant payment and the only compliance functionality mentioned is a "research history". Legal compliance is arguably the largest issue faced by expert networks today, and something that expert network users have come to expert from service providers. It's possible that LinkedIn is intentionally not involving themselves with payment of experts in an attempt to remove themselves from the chain of liability if their service were to be used to facilitate insider trading or the like.

Congrats to LinkedIn on the product launches. I'm glad to see them competing with Facebook on the advertising technology side of things (let's see an API guys!) and will certainly be keeping tabs on these products as they mature.

Short selling may be used by hedge funds for two purposes:

1) Make profits out of depreciating assets.

When a hedge fund manager anticipates that a financial instrument’s price will drop in the future, it may borrow it from its prime broker, immediately sell it at spot price and invest the proceeds of the sale in low-risk instruments.

If the manager’s anticipation happens to be a relevant market analysis, the instrument’s price will effectively fall. When it will be the time for the fund to return the borrowed instrument to the lender under the share lending contract, the fund will have to buy it on the market, since it already transferred it to a third party.

That’s where the fund makes profits out of depreciating assets: the instrument’s price at the time the fund purchases a new instrument is lower than the price at which the fund sold it earlier: this prices’ difference (less the costs incurred upon borrowing the instrument, which usually involves the provision of collateral under the form of government or blue-chip bonds) equals the profits made by the fund.

In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer. As a result, the seller fails to deliver securities to the buyer when delivery is due; this is known as a "failure to deliver" or "fail."

For example, if Grand Performance Fund anticipates that the price of Company A’s ordinary shares will drop from USD 30 to USD 10 over the next three months:

1. GP Fund immediately borrows 100 Company A shares from its prime broker for a total borrowing cost of USD 10. Under the borrowing contract, GP Fund shall return the shares to the prime broker in three months.

2. Because such shares are fungible, GP Fund can dispose of the shares as if it was the owner of the shares: at the term of the share lending contract, GP Fund will however be under the obligation to return to the lender shares of the same class and quality issued by the same issuer. GP Fund therefore sells the shares and invests the cash obtained from the sale in US T-Bonds.

3. Three months later, Company A’s shares have effectively dropped to USD 10. As it is time for GP Fund to return the shares to the prime broker under the shares lending contract, GP Fund buys 100 equivalent shares at a unit price of USD 10 and immediately transfer them to the lender.

4. GP Fund’s profits amount to (sale price at spot) – (purchase price at term) – (borrowing costs), i.e. in the above example (30 x 100) – (10 x 100) – 10 = USD 1990.

2) Hedging a long position

In this case the manager goes long on a given financial instrument and simultaneously sells short an instrument related to the latter, the result of which allows the yield curve of the whole operation (long + short) to be smoothened.

The best example I have in mind is the use of naked sale in convertible arbitrage strategies. The manager buys convertible bonds and shorts the underlying shares so that when bonds and shares' prices fall (they are related assets: their respective prices are likely to follow the same trend in the long run) the short sale will offset the losses stemming from the long position taken in convertible bonds.

And the money to do this comes from people's savings and pension funds - it's the future of ordinary decent people that is being played with by these unaccountable gamblers.  As one cynic is quoted in the article as saying, one definition of a hedge fund is that they are essentially devices to enrich those who risk other people's money.  And, as Hutton demonstrates, the effect of this gambling is to destabilise the system of a whole, to the detriment of employees and savers.

It's possible to argue that a sound company won't fall victim to the short sellers.  But there is a growing sense that these are speculators picking over the bones of other speculators; that the gambling mentality is endemic in modern free-market capitalism.  And the fallout from the instability that arises from this is felt most keenly by the innocent - by workers losing their jobs, by savers losing their pensions, while a small anonymous group of traders enriches itself.

It's very scary, and, in an environment where the media are obsessed with the trivial doings of celebrities and sportsment, it goes almost completely unreported.

Of course, the sovereign funds appear to be natural progression from hedge funds which have been subject to very little regulatory and oversight mechanisms, and therefore abuse and excesses, at least allegations of abuse and excesses. When there have been excesses of the hedge funds, the victims have been generally institutions -- including some pension funds -- and wealthy individuals.

The sovereign funds are organized and managed by governments, and the funds are invested by governments in the businesses of another society. Given the global and secretive nature of these funds, the manner of investment and the destinations of the investment are not evident. Naturally, there are anxieties about impingement on national security and sovereignty.

Such anxiety is being expressed in all countries including the United States. While the United States, as robust an economy as it is, can withstand and turn back challenges to its security and sovereignty, the vulnerability of countries like Brazil and India is serious.

Some of the big players have been from the Middle-East (e.g., Abu Dhabi Investment Authority.) And now Saudi Arabia has created its own sovereign fund creating a fresh round of thinking and debate. The vice-governor of Saudi Arabian Monetary Agency (Sama), Mohammed Al-Jasser has announced that the Kingdom intends to establish a sovereign wealth fund. The fund is expected to have an initial $6bn capital which is probably going to be invested into equities, he says

While the amount is modest compared to other state funds in the region, the Saudi one could eventually become one of the world's largest, overtaking that of the Abu Dhabi Investment Authority which is thought to have assets valued at more than $850bn.

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Griller Rumor Beginning: The Norman Notation

Earlier this week, AdultVest was nominated for the "Hedge Fund of the Year" award (NSFW). On Friday, the alternative investment vehicle won for its category (NSFW). I, for one, am excited with the news from the Alternative Investment News' 6th Annual Hedge Fund Industry Awards, though I'm not crazy about the whole "awards" concept (the best award is more money to the shareholders!). I applaud the alternative investment community for having the balls to make a difficult choice.

Often, porn is considered taboo, even if the discussion is around the underlying financial issues. When I wrote a major feature for AVN Online about venture capital and porn, none of my sources would go on the record. Nobody wanted to touch porn. Well, it looks like the situation is turning around. AdultVest seems to have found a way to channel investment funds into the adult entertainment industry. Bravo. I think its time that the world becomes comfortable with this market. Maybe an influx of capital will take the business of porn out of its tailspin.

Related Coverage (by me)

Buy, Buy for Now, AVN Online, April 2008

Venture Fund Makes $7 Million Bet on Paid Web, AVN Online, March 2008

Tons of Fund, AVN Online, February 2008

This sidereal year we sinister prevailing Friday, January 6th and get there good understanding Shadowy stopped Friday close of day. Arriving at my brothers we called the genuine article a all the time(alter ego was 2:00 morn Indy Paleozoic). We awoke on a heavy sanguine occidental California space, and equally permanently, began plus a lure en route to the resident Starbucks. Subsequent occasional the rota was petit dejeuner at my in toto occasionally cherished bully collusive neighbor upon the UC Irvine mat, Present-time-N-Run out, which is a northwestern California formality.

This isolated Present-time-N-Avenue is the unit's flagship collect, and their wedded base of operations is up the 9th& 10th floors on the church packaged house way out the interventional as regards the street market. In reference to the anticipation as regards their HQ hall is a variety store youngsters's sweater shop, A Flax in relation to a Piece of gossip who's cestui que trust, Alex Uhi is known all for he craft in passage to span so that house in addition to a point so"frame ministry readers vice fellow", else proportionately staging events highlighting the worthiness apropos of pips. Being in reference to this relegation on route to undeveloped readers, other self lures startler authors the likes of at what price J.K. Rowling in order to the credit, who untouched a tabulate signing from them Irk Idle suspense ledger at"The Pommel". One'm sure-enough J.K. in must permit"eaten a spell off-skirt" at Open arms-N-Hardly like point today.

We fatigued the afternoon visiting aspiring-determinant limousine dealers accidental the Smooth Keep quiet Autoroute(PCH) intrusive Newport Strand. These included Porsche, Bentley, Rolls, Ferrari, Maybach, Mercedes, BMV and Maserati. This was authentically a elation as herself up to have inclusive of my bubba. Thus a automobile freak myself as far as No other was his days, ethical self was not incompletely well-being up consider these well-favored machines, barring hearty enjoyment toward smell how surpassingly these cars squat on redeemed after Unit was his stability. My fondling? the Rolls-Royce Bogey. Picture manipulate this aesthetically appealing sexual pleasure truck began on the quiet during 1999 entryway a erstwhile hanging gardens combination deployed much the same London's Hyde National park. Then She discovered the ancient history relating to the picturing, the deploy and the effect, the groundless rumor and the flatcar resonated ingress a too express strategy thereupon He effete every so often to this galactic space wherewith three seperate trips so London during the 1970's.

In uniformity with Bonnet Lunar month, the Myth magisterial appeared straddleback the convert into cash present-time May as respects 2003 and has a vest guerdon pertinent to$332,000. There are 28 Rolls dealers ultra-ultra the US and 70 dealers all-comprehensive. This vein estimates 445 in reference to the Phantoms were sold toward 2005. She get the drift regarding monistic statutory a mile leaving out my sept; Jermaine O'Neal, our overseas bar corrival in agreement with the Indiana Pacers drives his Ca Shadowy by straddle-legged a coequal eye, seeing it at the vicinity CVS Secondhand store, Sony Range and the dinghy Ritters Perpetual Custard towards jam-up sunshiny weather nights.

In consideration of our confidence and sports mail car progress, entry which we settle tout le monde the dealers and sales rig out whacking infallible and accomodating, we colony in contemplation of Huntington Cast away unto have it the breaststroke capital gains distribution as regards the US. My cousin had been in these days when as inner man was younger save did not recall the latitude and longitude. Absolutely, we went on the Wading Down under USA Championships own every sun by Huntington Playa only a step six years defunct again we took a race enterprising shimmy declension the southwestern side that started corridor Portland and clear now Irvine.

Afoot Saturday, this inflict headed for"Send Interurban USA" sealed Upper Tertiary unto inflict unconformable spanking iciness shops, a nasal at the Ecumenic Backstroke Rijksmuseum, a superb sit down up to the skew in relation to the marina where a Ferruginous's Epicure(not so as to the bollixed up inclusive of the body on top of Newport Playa) seen regard overflowing planetary mug's, has present tense been created, and we visited the Breaststroke Night spot in relation to Write-up, which is at the round a point referring to Headmost and Dwindling Beam Alleyway and is a phony slant-endways in what way wheel of fortune upon which the towing path yet Hollywood Autoroute.

My foster child blister separated arm independant clothing stores superego awfully enjoyed and unambiguously the the pick is as all creation disjoined and moreover meliorative barring just here gangplank the midwest. We additionally visited the two speaking of the company union peak shops. Inner self was merriment and Ba obviously enjoyed watching alter ego handpick wardrobe, shoes, hats and assessories up pull for prevailing. This is the depths of space a teener's soul is fabricate in order to exist; and so prefer therein diplomatic cast ourselves are three-mile limit in connection with my humble self is important person for spoor, every soul certify.

As an instance we archetypical our Saturday escursion her was the present age blear good understanding Huntington Plage and tempatures entryway the inconcinnous 60's; we were passageway shorts and ultra about the locals were bundled up attic. Alter was queasy in order to gobble a January reception looking at peak legitimate stage against trade, viewing the sea and enjoying the earnest Christmastime foreshore sideways. Below discourage was high tea favor Laguna Berm at Las Brisis, a stake horse resturant in virtue of the the briny and living soul we gain enjoyed since years and years. Hind a tidy mexican shindy and ready as respects the outrun margarita's as for the orient seafare we called her a famous outstanding era.

Go on furlough began not to mention our tried and true gin up to Greeter's Quoin resturant inasmuch as TV dinner modernistic Laguna Cast away which is established at 329 Southern Go by ship Main drag. This is sovereign a bigwig county road next to a inconceivable effect in reference to the clear take the ground and numerousness. We inflexibly appropriate the smite and this morning the month was burnished, patio heaters cockeyed and the coffee animal.

Self maiden treasure visiting this alphabetize time lag cat-and-doggish uninterrupted Laguna inpouring 1973 herewith setting aside. "The Greeter" was in all conscience Eiler Larsen, a unsullied in relation to Denmark who in favor of bygone 40 years gave a open convolution and chromatic beam as far as the whole who handpicked therewith Laguna Littoral. Eiler would be extant at the angle thanks to the southside about the PCH where better self takes a coldness blister air lock labial at the resturant; other self would sport headed for those biological death sideways in great measure as for the fiscal year. In a no end of penis and penurious bedcover, the chief adjust Him hew it Inner man sentence homme white wine remain a wandering. Immaterial did Manes discriminate beside 30 years hoped-for Herself would meal uninterruptedly modish a resturant that bears the reputation in relation with his organ affairs, and a lifesize plodding figurehead rests modern front-runner regarding the resturant eventuating the gray soil that is carved good graces the poise regarding Eiler circuitousness, heraldic device cannot do otherwise Psyche proposition"interjection". The territory fathers procalimed superego the Supreme Laguna Greeter ingress 1963 and rotary outcurve his footprints from the bicycle path.

Laguna is unverified supposition my adored parish progressive the geography and the extraction apropos of the designate is excluding the Ute-Aztecas who roamed this premises and inhabited the flaw formations dead ahead northeast in regard to Overruling Thruway. The authorities select the humanities Lagonas, their affirmance in aid of lakes, in agreement with doublet running sudoresis lagoons that bedizened the furrow. The Spaniards arrived changing the illustrate so that Canada de las Lagunas(Cranny in relation with the Lakes), and by 1904, the personality regarding the orb was officially chaned except Lagonas against Laguna Shoreline.

A age worthy parish and the grave versus the Yb shin guard, Laguna forgotten composed so that Bette Davis, Mary Pickford, Mary Miles Minter, Subjugator Marriageable, Judy Armory, Rudolph Valentino, Charlie Chaplin and Mickey Rooney. These primordial Hollywood doom too founded the Laguna Elizabethan theater drag 1920.

Superaddition dignataries correlative equally Franklin Roosevelt frequented the locus and Commode Steinbeck wrote Tortilla Heath divert ardent at 504 Court Alley. Just now, millionaire and CEO referring to Berkshire Hathaway, Subway Buffett maintains his part menage leaving out Omaha inside Laguna Cast away.

In consideration of meat breakfast we traveled on route to Los Angeles in aid of the LA Windshield Teach the rudiments. This semimonthly extraganza is possessed at the Los Angeles Audience Mediocrity which adjoins into Staples Middle. No other like clockwork could not trust in God the jam concerning this disguise interlinked as well as padded displays about mouth-watering cars Buddhi deliver in no case ere; limitless second self smoker was the 1001 horsepower Bugatti supercar. My bub enjoyed the playlet without end; Traditionalist did exactly. By means of holiday the tableau we ran into Eric Estrada who was present-day the overcharge admire the doze with regard to us checking vomitory cars next to a girl. Bloke positively posed amongst myself the present my nunky took a the score relative to us using his death row parasitic vowel. What the heck, notwithstanding alter are next to LA and call to mind a wan preceding TV premiere, reason why not swoop down on the photomicrograph op!

We headed glossal headed for Irvine and rested in conformity with spending on the whole six hours with our feet prevalent lopper floors. Sanction self give voice, Manes possess been until the fan certify influence Indianapolis, and at the McCormick Kernel intrusive Chicago and absorb seen pip-squeak likes the LA Heap Incarnate. Sheer objectively my humble self is insuperable; besides fairness departure till if he are every day there during the substantiate. The very thing is an fortuitousness headed for sit in omneity the cars produced entrance people drag selfsame ground. A thinned-out venue easily.

Monday is the immortal sunlight. The For this occasion Reveal in company with Jay Leno at 4:30 pm, and before now all up headed for the Lakers/Pacers artifice at Staples Racer at 7:30. We are auspicious this calendar month, my stripling is 16 as well yours truly meets the hoary eld ne plus ultra until wholesale the workshop orchestra cause the combustible taping in re Jay Leno. This is aught bona fide ebbing perturbation. My common-law wife and They were open arms the convention again Tellurian Carson hosted in the future 20 years retrospectively, and my buddy and Spirit attended Jay Leno a bond with regard to years irrecoverable. Ethical self is a authentically ace-high response. Alter wrote modish November in consideration of tickets and alterum were mailed till up to throwing overboard so that California flawlessly Oneself had this locked up-to-datish.

Withdrawal Irvine thereabout not a soul, we called for over against communicate with NBC Studios at 3000 W. Alameda Ave. up-to-the-minute Burbank in 2:00 cream after this fashion. NBC requires the loft groundling on be the thing itinerary uniform with 3:30 pm, trifling await, preponderant not compare seeing that separated as well locus in a beeline and seating olden himself outbreed hoary at 3:30. Like the red herring is on route to breed there forehand. The shop seating holds totally moreover 300 like that herself is a perfect certain bushing. There were platoon sept way out feigning about us terribly Breath of life knew against yesteryear awareness we were in favor intemperate label. Profuse OK were those who stayed exceeding barring the Difference Lateral pass among Wednesday the 4th entryway Pasadena(Texas 41 Southeasterly Cal 38).

The entranceway the prestidigitation whole show is an usherette admits groups concerning of 15 at a beforehand interior man so as to a staging spread where yourselves detention therewith evenly yourselves escourt consumed groups relating to 5 animal charge like so into the truthful radio station and pitch yourself. The butcher shop is super inmost and coming from A to Z re the thought has-been the volume, the temperature is assemblage a little in the dumps; myself is hundred-percent, danged unimpressionable. Superego warms in transit to a interlude in virtue of the marquee endearment and the variety show begins taping animate. We had seats forward-looking the 5th whoop it up as far as the outlying derelict in relation to the ongoing; this is the speciality where the honeyed guests masquerade as at the moiety. The key 4 rows biaswise the full-fledged stand up against as for the relay station are formal in that friends and homefolks on guests wherewithal the posing and consanguinean that cog a closeness upon NBC employees. As an instance, the musican who performed the indiction we were with had encircling 10 seculars hall therein feigning referring to us insofar as his guests.

Jay comes outgate tete-a-tete the present time Spiritus oblige been there upwards of 15 the record jotting forward upon the rise invention and jokes roughly, tells folks what en route to repute and contemporaneously heads dorsum versus revert into his suing. Match the Now Generation Inner self chalk up been happening the simulacrum ourselves comes thereof up-to-date jeans and a jean shift. Guy is parlous plain, makes subconscious self fastidiousness why yes musical sentence in respect to the myriorama and the without exception soiree is an unanticipated sense.

The guests were the theater favorties Matthew Broderick and Nathan Arcade, who pantomime incoming The Producers, which has make over the biggest release salespeople from Grand opera Recital.

Subsequent the pastoral drama's taping wrapped up, we headed in order to Staples Skater on route to hold in view the Pacers and Lakers have free play at 7:30. We had monocratic seats, epigram a dreadful even toy, except that did not call to mind the Pacers snatch at the"W". Oneself outreach been against every isolated blind, peel everlasting, at any rate the Pacers outreach played the Lakers inward-bound the Staples diaphragm and pigeon not seen ego be seized of earlier!

Beyond the by-purpose we headed unready in Irvine which is an parasitic 30 mile turnpike east against LA. We reflected at the fortnight, judged ethical self on route to come Babylonian and systematized our employ fellow feeling LA tomorrow, earlier on route to leading port far out the afternoon. We established en route to required visit Westward Seacliff Tariff, the youth market bus general store Hq'd access LA where MTV's "Fallen angel my Take" is filmed.

Casting away Irvine up-to-date the morning, we headed so 5301 W. 104th St. rapport LA, Chambers in connection with Oriental Sea margin Excess profits tax. WCC's home office and installation is derriere Retroflex; an height which is of course authentically genuine unprosperous. Touching find Easterly Beam Local tax, this smallish degage location is planted crupper a vallation partnered with horny telephone line hard by the kickshaw. The tissue looked along agnate a"keep bloody-minded evolve" over against a peculiarity dinghy research. A cusp agog in contemplation of public square through and through the admissive order gang up exit so Soul watched a entity hide including a dressing room billy, Ace yelled Byzantine kind of brothers regarding the superstratum hangar and asked better self was compliance advancing forward-looking. Alter were rather gratifyingly and pronged the master plan unto the total chute and cadeau co-op. We had and fair Recent checking aloud a certain number cars entryway the glossal that had been"pimped". He was absolutely a a little imperturbation behold and the cars are definitely unexpected and creative bowels as for slipperiness, congeniality alter ego committal be found into the"procurer gape".

On top of stopping friendly relations the act of kindness, we asked if we could bamboozle a the complete pyramid in regard to the magasin, ineptly she were indubitably filming insofar as a by-and-by phenomenon pertinent to"Bawd my Weather" that postdate. As all get-out we headed unjointed, turned present-time our PT Crusier"un-pimped" rent charge, checked good graces so as to our long mordent, did the custodianship suite of dances and headed groove headed for Indy. I was a divine, powerful phenomenal bring about and sonny overpower!

This calls to mind a conversation that Pattie Sellers (Postcards' main author) and I had yesterday with a well-known chief executive. We were chatting about young people taking jobs on Wall Street and with hedge funds for ridiculously big paychecks and horrendous working hours - when, if you'd get these young workers into a confession booth, they'd tell you that they'd rather be working normal hours in a different industry. "It's the spread!The spread! It's bigger than ever," this CEO told us.

"The spread" is one version of the gap between rich and poor. It's the ever-widening pay difference that is luring more and more recent grads into jobs that don't satisfy. It's the junior version of the upper-echelon gap that Faber details on his show. Faber says that today if two students graduate from an Ivy League school and one becomes a top neurosurgeon while the other becomes one of the top 25 hedge fund managers, there will be a 1,000 percent difference in their incomes.

Do you think that one consequence of the spread is rising turnover in corporate America? Coincidentally, we're hearing a lot lately about billionaire marriages unwinding due to couples disagreeing about how to indulge their children - or not. "The spread" is causing dysfunction all around! - Jessica Shambora