Rumor Mill News Reading Room Archive

ANGEL-INVESTORS, MONEYCHANGER-BEASTS, AND THE NOUVEAU FED-MIC

Posted By: TheMythSmith
Date: Thursday, 10-Apr-2008 20:45:57

ANGEL-INVESTORS, MONEYCHANGER-BEASTS, AND THE NOUVEAU FED-MIC Rumor Mill News April 10, 2008 If the nouveau-fed is to be transparent and accountable, what is the nature of the auditing and reporting process that informs the public? An informed reader draws out the distinction between the Angels and Beasts of big-scale finance: The difference between Hedge Fund modes of operating and that of Venture Capitalists: The large VC business model is all about leveraging equity to achieve asset growth. Only when asset growth is achieved are profits realized. Equity is generally liquid assets: things you can grab with your arms, count, save, and invest. Debt and all forms of IOU’s are the opposite of Equity. Gain for VCs then is all about growing assets that can also be liquid. VCs often buy out companies having a lot of Debt on the books, but they leverage the existing equity, spread out (amortize) the debt, and invest in the value makers of the company. The net result is that debt is decreased while value is increased, which increases equity and adds more value. Its all about finding creative ways to ENHANCE VALUE and stop the Debt cycle. For experienced managers, many such opportunities exist for turning around poorly run businesses. The VC model aims to create Value by growing assets and decreasing debt. VC’s will only move into a deal if they are fairly certain of a solid return in value. VC’s do not mind generally waiting a few years before that value is realized, as long as the value is fairly certain, and the potential gain large enough. VCs have no problem investing a couple billion and waiting 3-5 years if they are fairly certain of a 15% return. No rocket science is involved, no secret handshakes needed. Just large chunks of equity available for investing, disciplined management, and patience in knowing what they are waiting for. Venture Capital firms make their living by achieving debt elimination through increasing Value. Real VC firms steer away from leveraging equity-backed IOUs for asset growth. IOUs undercut the VC firm’s flexibility and ability to maneuver around sudden obstacles. The firms who use IOUs effectively are those that can pay off the IOUs fast, grab the profit fast, then turn around and do it again. Some firms have done this on a minute by minute basis, reinvesting profits immediately in another IOU-backed deal. All the due diligence has to be done for each of these deals, but they can literally bet on an option that a target will go up in value in the next 30 minutes, and then turn around and bet that it will go down in the following 30 minutes, making many thousands on each transaction. This is what Hedge Funds do, relativisitic traders, betting both for and against asset growth. They are only concerned about profiting off the TRANSACTION, with no real longterm concern whether a particular asset might actually be growing its business. Hedge Funds can still make money even in a down market. Hedge Funds are old fashioned MONEYCHANGERS with technology on hormones, making thousands of trades daily to squeeze pennies out of each unit of each transaction. Some of their technology has become so sophisticated that they can use complicated algorithms to account for hundreds of financial variables to predict which way the value of a certain fund or business might be perceived on a minute by minute basis, and execute trades accordingly. Because of the immense volume needed, the investments are in reality IOUs and are paid back immediately when each transaction concludes. This the nature of derivatives markets. But if the cumulative IOUs required in these derivitave transactions are in the hundreds of trillions needed to squeeze out the billions in profits then you have a potential problem that could instantaneously capsize the group ship. Hedge Funds manipulate and rely upon debt-creation to make a living. These modern moneychanger Hedge Funds RISK OUR group stability in order to squeeze out their need for constant flowing trickles of profit. Hedge Funds contribute nothing to the underlying Value or Growth of the companies or funds they may be accidentally investing in during the next hour at the recommendation of their artificial intelligence derivatives supercomputers. Hedge Funds can only wait minutes or hours to realize profits, otherwise they will miss the next opportunity to moneychange. In contrast, the VC funds RISK THEIR assets in order to stabilize Value and realize actual longterm Growth of the company they are investing in. VCs are willing to wait years to realize profitability. VC’s generally have little practical use for IOUs unless it is to replace bad IOUs with stable IOUs. IOU’s impair VCs freedom to spend their other assets and their ability to act promptly. Which model sounds like the one that has gotten us into the debt trouble we are in? Which model should we rely upon to make us Great again? Robert Wenger's blog recently spotlighted Carlyle Group's Plan to Takeover the Banking System. Here are excerpts with some highlighting added: So what's Treasury Secretary Henry Paulson's call for changes in regulation of the financial markets all about? A clue may have been revealed today by Randal Quarles, former Under Secretary of the Treasury who led the Treasury Department's effort in the coordination of the President's Working Group on Financial Markets and is a current Managing Director at Carlyle Group. Quarles spoke at a luncheon meeting of the Washington DC-based National Economists Club. His topic: "Restructuring Financial Regulation". Quarles told the luncheon group that he chose the topic in January. Hmmm. Didn't Treasury Paulson just make the proposal to restructure the financial regulatory agencies last week? How did Quarles pick this topic back in January? Short-answer, Quarles is a major insider and his comments should be monitored to get a sense for what insiders are thinking. In his talk, Quarles said that estimates go into the hundreds of billions in terms of capital that will be required by the financial industry because of losses sustained as a result of the current crisis. He said there will be more financial institutions that will go under in coming months. He said that public markets will not supply the necessary funds because they don't have the capabilities to study in detail the risks and potential rewards of the complex financials of financial institutions. He said private equity firms have the capabilities to do so and to supply the necessary funds. (N.B. Carlyle Group is a private equity firm). snip ...this private equity acquisition of financial institutions will go on as the general public is scared off from investing in the financial institutions by scare headlines, or as Quarles would put it, "Public markets just don't have the capabilities to judge the risks and rewards of the various financial institutions." As quoted in Wenger's blog, is Randal Quarles speaking in the context of Hedge Fund MONEYCHANGERS or Venture Capital ANGELS? Taking "two steps back" for a global perspective, it is apparent that the Vatican guides the practice of Religion, the City of London manages Finance, and the District of Columbia administers the Military, aka the MIC. In terms of "restoring balance in the force", the concept of a Gifting Industrial Complex (GIC) is found in a number of RMN posts. Warfare has been the most costly of human endeavors, funded on the enormous scale seen in the last hundred years via the debt-based economy, implemented with fiat currency. If indeed a critical mass of humanity has evolved beyond believing that an "external enemy" is real and therefore must be subdued at all costs, then fractional-reserve banking might no longer be "allowed" to finance the MIC takeover agenda. Yet, whether "natural" or technologically induced, disasters call for a rapid, massive, strategic response capability, something that resembles the MIC. Our reader has also commented on the question of MIC-to-GIC transition and funding: One important point: Fear enables Entrainment and Acquiescence to Shackles. Freedom from Fear enables Education and Growth. Extreme-MIC perpetuates the Fear cycle. GIC-MIC perpetuates Freedom and Creativity. MIC has more to gain by guaranteeing GIC-MIC partnership than it does from continued extreme-MIC suppression of GIC impulses. Fear of MIC perpetuates extreme-MIC infrastructure. Fear perpetuates fear, and an environment where Greed controls the Mind, where [technologically guided] corporate-logos undercuts [spiritually guided] IU-Logos. Pruning the fear permits natural GIC impulses of this living being Earth to sprout new GIC-MIC outgrowths. Among the corporate outgrowths will be businesses that can be more efficient and profitable, and with employees that are more highly compensated for smaller units of work, and creative products that are ultimately more satisfying and safer for everyone and the earth. Extreme-MIC number one profit driver is Fear. Extreme-MIC cannot engender efficiency through creativity and cooperative endeavor. GIC-MIC can and does. The large Venture Capital funds are well-positioned to manage GIC-MIC accountability of a cleansed financial system. The VCs are generally not beholden to Hedge Fund practices. VCs seek Value and capital Growth of Value. VCs are the domestic equivalent to the (foreign) sovereign asset funds: Conservative and accountable. Some greed and avarice might arise to cause bad decision making at VCs. But, generally, bad actors are quickly extruded or blacklisted from such VC groups. This is what appears to have happened to GWBush at Carlyle. His bad advice, probably from friends at his ear (or perhaps on purpose to establish a shaky pirate-prone financial deal maker reputation), resulted in an uncommon bad decision and large loss for Carlyle. W lost his inside position due to that. MSM and blogs ignored that, and merely push W and HW as Carlyle billionaires. Perhaps the point is that the Hedge Fund pirates (who probably "punch the MSM button" more than VCs) found a way to discredit W in the eyes of the capital-value community AND to discredit the most respected VC firm as rife with insider deals. On the other side of accountability are the Hedge Funds and Derivatives gamblers. Many of which may have started at VC funds, but were spit out as anathema to VC philiospohy. The hedge funds represent extreme-MIC tactics and soulless Darwinian economics at work. Dealing in mega-trillions and with electronic-funds-transfers necessitates a balanced and honest cpa-structure watching the flows. This would fall within the bounds of ethics and duty that is integral to ALL well run VC firms. And strictly NOT within the interests of the double-dealing philosophy of the Hedge Funds, who bet trillions on small fluctuations to make a small margin, without ever looking up at the bigger picture of capital-growth, nurturing value, and human infrastructure. The Borg was comprised of the ultimate Hedge Fund managers, dealing in pure carbon-credits where efficient molecular electron and information transfer was valued more than Life itself (that is precisely where the flawed human-caused global warming nonsense is leading our relativistic leaders like Al Gore). The Londinium/City of London and Hedge Fund-owned MSM and internet blogs have worked effectively to characterize the asset managers (VC's, sovereign national funds, etc) as wild-eyed greedy capitalists. This will now persist as the entrained public perception of the Carlyle Group. A close look will reveal that they are fully aware and functioning as if they are under a microscope. Closer scrutiny should be given to the electronic funds transfers of the Hedge Funds, derivatives markets, and those providing financial insurance to both. "Freedom from Fear enables Education and Growth." -tms