The Article spreads over 7300 characters against only 3000 permitted here. Here it is a few paragraphs:
Paulson’s Poison and Antidote
Slaying Tax Payers, Saving Goldman
God saved America once in the Congress, convincingly defeating the motion of $700 Billion Bail out engineered by Paulson, aided by Bernanke and promoted by President Bush. However, the defeat means death of Goldman. So the Paulson is at it again, forcing the naïve President to follow his infamous Bush, Bush, Push Push policy to get the bill passed at any cost, this time through Senate. It is easy to manage 100 Senators in the House of Senate than 435 Congressmen in the House of Representatives.
He and Bernanke are showing the Senators the Rocky Mountain of impending economic collapse, with hundreds of carcasses around, each bearing one or the other bank’s name or brokers. These are the banks and brokers who floated the overseas subsidiaries in Bermuda, Cayman Islands, BVI, and host of such “off shore centers” to sell the exotic derivatives leveraged 6 to 7 times, even more- in some cases up to 50 times, into the balance sheets of off shore entities but off the balance sheets of their parents on shore, that is, on American soil. These derivatives were guaranteed later by their parents on shore for a fee – normally 1% to 2% of such transactions.
How we got here?
While the incomes were shown by their parents on their balance sheets, resulting into 4 to 5 times the normal profits associated with their normal range of business, boosting stock prices into upper stratosphere. When the troubles arose, and those derivatives started becoming “cancerous”, they transferred the respective assets and liabilities en masse from 2006 onwards, accelerating in 2007 and speeding up to extreme in 2008. These exotic derivatives turned into Toxic Waste with the result that the crisis started unfolding with the speed of hurricane Category 4, upgraded in September to Category 6 when massive force simply uprooted the banks, investment banks and brokers.
Nothing wrong with the regulatory mechanism…
Lot of blames has been heaped on the regulators for not monitoring or ignoring the worrying signs or warning signals. These derivatives did not exist in the books of the parents at all. They were existing in the books of their off shore subsidiaries which would not have been known to the regulators – they are not God after all. The parents did not disclose their onerous liability nor did they mention the extent of their guarantees to overseas subsidiaries to avoid taxes on the American soil.
When those derivatives turned sour or bad or toxic as they now call it, they transferred wholesale all assets and liabilities to the on shore parents as though they were their original creators. They therefore thrust upon the American citizens on shore, the off shore liabilities to which they were least concerned. How could local and domestic Americans be responsible for the business conducted by some one overseas in off shore centers? A bank like HSBC transferred the Assets and Liabilities of their overseas subsidiaries to the parents’ books by $45 Billions in a flash.
The question arises, if parents were neither involved nor part of original creation of off shore derivatives, and those off shore entities, popularly known as SIV (Structured Investment Vehicles), later busted with billions of dollars of losses, why should their American Parents be asked to shoulder their liabilities, when those subsidiaries were limited liability corporate entities and could have been allowed to die natural death? These American parents, in order to salvage their own reputations, allowed the transfer of Assets and Liabilities of their off shore subsidiaries.
Kalidas, Hong Kong
2-10-2008
2)
| for Atheist, If I remember well, you are from Bangalore. You did describe in narrative details, how it has deterioated. I am glad to know that my reply did help you. Get me a coffee when visit Banagalore. Any business thrives on good product, good service, attention to the customer and above all solving the customer`s problems (called after sales service). A good appearance, friendly behaviour and smiling face (not laughing) welcomes the customer. Further, if you have a small business, the door has to be see through or open shop so that even working class people can walk through. If they find the shop behind the door, they feel the goods must be expensive. Neatness and basic cleanliness is the most important part of the retail business. Never eat or allow employee to eat in the shop for taking lunch or dinner. Nor should one allow eating of tobacco or paan. Biggies may not do well, because they tried to build the business just because they had the access to large amount of public funds. They do not train the staff as well as the Western corporations. There is no uniform, and if there is one, it is shabby, The employees are also having badly cut moustache or beards. The people should be clean shaven as far as possible. If there is female employee, often I find, they come in traditional style using liberal dose of coconut oil (which smells bad to many visitors). This is especially true in Hong Kong. In Hong Kong, the retail owners pay for hair styles, clothes, make up and also force their employees to wear identification tag all the time. Of course, one has to modify the approach having regard to local culture, but basic things should not be compromised. Some small expenses on such basics bring in more and wealthy customers. Kalidas, Hong Kong 7-10-2008 | ||
3)
| Financial upheavel is taking place across the globe. India can not be excepted, but the overall effect is relatively muted. Due to heavy falls for 7 days abroads, people will find it difficult to meet the margin calls due to absence of money caused by credit crisis where even one bank does not lend to other. Under these highly unstable circumstances, it is difficult to anticipate end to crisis. Please remember, trillions of dollars have disappeared. the recovery phase for entire world is years away. Kalidas, Hng Kong 10-10-2008 |
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| No one has gold any more. They have already shorted in the past between the price of $260 to 320 and they are regretting it. No more gold will be sold, in fact, the world financial system will in future be based on gold standard after current fiazco, Kalidas, Hong Kong` 10-10-2008 NOTE: I have posted on my blogsite a latest artiole 'Defrosting the Liquidity Freeze' that deals with latest problem. Visit my blogsite http: // anilselarka.wordpress. com (remove extra space) | ||
5)
In testing times, the investment field is reserved only for bravo.
- Never be afraid of uncertain times. Deal with it when it comes
- You are in IT business, where your capital is your own brain which is indestructible. So why worry?
- If you are afraid of losing job or face pay cut, start applying in other stronger companies. Just by applying you are not losing or changing job. You will get real feel of the job market.
- your inveetment approach is correct, 50:40:10 in stock:cash: gold
- Howeever, when you find good stocks have come down a lot and really worthy, forget the ratios and go for the guns. Pick up that stock.
- then you have to have patience, you did whatever you can. Leave it to your fate. Fates does not disappoint you when you have done your part.
Kalidas, Hong Kong
10-10-2008
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