Posted on 03/03/2010 2:28:54 AM PST by reaganaut1
The Justice Department has launched an investigation into whether hedge funds might have banded together to drive down the value of the euro, people familiar with the matter say.
In a letter last week, the department has asked hedge funds including SAC Capital Advisors LP, Greenlight Capital Inc., Soros Fund Management LLC and Paulson & Co. to retain trading records and emails relating to the euro, say people who have seen the letter.
The letter was dated Feb. 26, the same day a page-one article in The Wall Street Journal outlined a large bet being made in recent weeks by heavyweight hedge funds against the euro, in moves that are reminiscent of the trading action at the height of the financial crisis like bets against Lehman Brothers and other troubled firms.
The Journal article disclosed that the big euro bets were emerging amid gatherings including an "idea dinner" involving a number of hedge funds including SAC, Greenlight and Soros, where a trader argued that the euro is likely to fall to "parity," or equal to, against the dollar on an exchange basis. The euro currently trades at $1.3609.
One of the questions investigators are likely to examine is whether such information-sharing constitutes collusion, the people say. Charges relating to collusion on Wall Street have been a rarity because of the difficulty of proving that firms intentionally sought to act together and acted nefariously.
The move by the Justice Department highlights the scrutiny the financial world faces amid recent trading in securities related to the Greek financial crisis. Some critics say hedge funds, banks and others in the U.S. and Europe have exacerbated the financial difficulties in southern Europe by helping nations there mask their debts through swaps and other derivatives—and now are benefiting by [shorting] securities related to them.
(Excerpt) Read more at online.wsj.com ...
In a related thread Man who broke Bank of England Soros 'at centre of hedge funds betting against crisis-hit euro' lots of Freepers vented their hatred of Soros. I don't like him either, but in a free country he DOES have the right to speculate, just as we do. I'll quote comment #14 of Hawthorn:
"As much as I despise Soros and his domestic political agenda for the USA, it’s sheer nonsense to suggest that he and any other speculators can cause a currency as big as the Euro to “crash.” That kind of talk reflects either an ignorance of basic economics or a totally cynical brand of demagoguery. Speculators like Soros profit on currency moves when they make correct bets before the majority of other market participants, and those same speculators lose money when they make incorrect bets. Period. Full stop. End of story."
But .. but .. but that would be what they call a "c-o-n-s-p-i-r-a-c-y". Everybody knows there's no such thing as a "conspiracy"!
Next thing you know somebody's going to start doubting that the Prez is a US citizen(!) :O
PIIGS represent Portugal, Ireland, Italy, Greece and Spain.
The expression has been used since December by European investor groups. The five countries in question are fairly near bankruptcy (like California). Italy and Spain could survive with fairly good cuts on services within the Government. The other three are not as sure.
The key feature of the Greek episode is that they kept this totally quiet until last fall. Then they admitted that there was no way they’d survive without help. It’s believed now that Greece has lied for at least one decade...maybe even two decades. Imagine a marginal California that exists today...and surviving month by month...secretly...for twenty years.
The key feature to watch over the next 90 days...revolves around two things. How the Greek government handles the necessary cuts required (perhaps inviting a coup or a government thrown out) and who loans them money (15-20 billion)? The German government says nothing will occur with them. Most of the rest of Europe is not going to consider it. Several banks are stepping in for a loan deal but it involves a huge profit if it works and a huge failure if it fails.
At the bottom of this...is the Euro and the question of how it moves against the dollar over the remainder of this year. Currently .72 Euro equals a dollar roughly. At its high point of introduction....it was 1.06 Euro per dollar. A strong Euro means cheap US products bought. A weak Euro means few US products bought. You can guess the true impact on the US economy.
If this were just about winning bets on short sales then I’d agree with you. This doesn’t seem to be the case. It looks like these 4 funds worked together to illegally rig transactions.
Yes you’re right, these 4 firms can’t bring down the Euro by themselves. But they can make a huge amount of money by rigging transactions between themselves. That is totally against the law.
In other words, Soros is (at best) a professional gambler.
Ok the currency markets are huge, but I’m not so sure that the value of a national currency is based solely on its actual worth and how much governments print. A pound, or a dollar or a Euro are worth exactly as much as people will pay for them, nothing more and nothing less. No nation has sufficient foreign reserves or gold to cover all of their issues, Not even close. If everyone took it into their heads to sell the Euro, it would crash. This is another case of saying and doing something actually makes it true.
Let me guess... You are libertarian and you think these parasites are capitalists. My second guess is that these parasites can in fact rig currency markets when they work together. By rig I mean they might lose a few bets but can rig it enough to win more than they would without the collusion
You are crazy.
By an order of magnitude, like the distance across Central Park vs to Pluto, times a hundred. That is the capital distance for all these traders combined vs national currency. It would be like you trying to buy in cash, Las Veagas.
On the other hand, these guys word is a near Law of Physics. When they take positions, it’s done. They pay if they lose. That is how they have gotten to thier size.
Compare that to governments? They lyingist, most delutionins, cheating and thieft machines ever made. FDR made illegal, and seized all gold in this country. The first time since its founding. Nixon took us off the gold standard. All these governments are backed by.......promise and paper. Paper that isn’t good for whippin your arse.
Betting against governments that lie, is great way to get rich.
These monkeys getting together cannot control a currency. But as long time experienced currency traders..... If they act together at crucial entry and exit points they clean up. And it will be more firms and hedgies acting in concert with the below mentioned parasites
“asked hedge funds including SAC Capital Advisors LP, Greenlight Capital Inc., Soros Fund Management LLC and Paulson & Co.”
blah blah blah.....I have no love for the gov’t racketeers either. Next
Yes. This isn’t about whether or not a currency goes up or down. It’s about whether or not collusion among these hedge funds can affect how far, how fast and when a currency moves. For example, in Soros’ attacks on the pound and the SE Asian currencies, he managed to drive them well below their their eventual settling prices, thus making much more than if the currencies had had “normal” trades agianst them.
Very interesting info on Soros' bets against the UK Pound. I didn't know that
I'm sure Soros and his fellow gangstas wolf to do the same with the Euro
Maybe the EU demanded that the US take action against these mega-traders
I've worked in the business, and I have no idea what that means.
A. Duh.
And it will be more firms and hedgies acting in concert...
B. Well, success makes copiers. However, as more participate, profits decline. Those on the other side of these trades, in the private market, smarten up. But since we are talking governments, well, we know they have no problem handing over trillions to maintain delusions. As an example, the trillion dollar Urban Renewal programs, Head Start, .... I'd rather Soros get ten trillion dollars next week on his trades, drive paper currency to replacement costs and pull the whole socialist, lying thieving racket down world wise. I would be happy, and think of Soros positively all my remaining days.
After complex, risky trades are completed, you look back and say how smart you were, with your proprietary models, nerves of steel and how you had seen it all coming. Later on the cover of financial with your supermodel girlfriend or a bowing to you, American President.
It’s done with small stocks...it can be done with currencies. You think Soros wacked the British pound by making the same bet every day? Being a steady investor? No, timing is the key
Some people invest by putting the same amount in a stock each week or month. Traders don’t do that
My view is the Soros type mega-currency traders are pond scum. Your mileage may vary
Small stocks, particularly illiquid ones, are, in a relative sense easy to manipulate.
Currencies, not so much so.
Currencies, not so much so much.....
Except that Soros and others have manipulated currency markets and the world raised hell
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