Saturday, March 6, 2010

Vulture Funds, Hedge Funds, Private Equity Funds: The Looting Of The World.

The term "hedge funds," or "private equity funds," just refers to a group of people who pool their money and turn it over to be managed by someone for the benefit of all. Most hedge funds and private equity funds are located offshore -- outside the United States -- and the identity of the investors is kept secret, as is the amount of money they put in, how much they get out, and how the fund earned its money. You know what they say: if you've got to keep it secret, you must be doing something wrong.

In the case of hedge funds and private equity funds, what they have done is to provide a secret place for people to hide their money, to use it in often unscrupulous if not illegal methods to steal money from the people of the world. For example, take a politician who has received enormous amounts of money in bribes. They might want to hide that money, and to put it into the hands of a hedge fund manager who will keep secrets. Or take money that people make from selling drugs, or money they just want to hide from the IRS.

Hedge funds and private equity funds, offshore and secret, are estimated to have over Two Trillion Dollars of hidden secret money being managed for the ultra-rich. Sounds like the amount of money that has been stolen from the world in recent years.

One type of hedge fund is called a vulture fund. They buy up evidence of debt, or obligations. Here's how it works. Let's say somebody (like the U.S., too often) stages a phony coup, removes a leader from a country, and puts in a puppet government to run things as directed by the U.S. As soon as the puppet is in office, the financial entities move in. The World Bank, the International Monetary Fund, plus other international financial institutions move in and offer to loan money to the puppet government. The puppet government takes the money supposedly to be used to build roads or schools or water systems, but instead steals all the money and puts it in secret Swiss bank accounts. Or in hedge funds.

Puppet government flees the country. The World Bank, the IMF, all the financial institutions go to the debtor country and "foreclose." They tell the new government that if they don't do exactly as told, they will be cut off from credit, nobody will buy products from them or or sell them goods, and they will essentially be boycotted and left to rot. Most governments have no choice but to cut a deal.

The deal is always the same. First, the new government is told they must give or sell at firesale prices everything the country owns: minerals, timber, ores, everything. The resources are sold to connected corporations, also part of Wall Street. The proceeds of sale are given to the financial institution. The new government is then told to eliminate all social services they provide for their own people. No more roads, water delivery, sanitation, schools, healthcare. They usually will keep the police and military to fight off eventual rioting by the people. Raise taxes, give most of the money to the World Bank and the IMF.

That is how the financial entities, run out of Wall Street, are in the process of taking over the world, and throwing most countries into states of permanent poverty. They have been doing it in third world countries for decades, but the most recent depression has allowed them to begin moving into more developed countries, which have been thrown into economic ruin by Wall Street. They are doing it in Ireland, trying to do it in Greece and Iceland. Who knows, maybe the U.S. is next.

Vulture funds are just one type of hedge funds. This is how they work. Let's say a country owes $10 million to the World Bank, but the World Bank has decided, under pressure from debt-relief groups, that they will forgive that debt. The vulture fund goes out and buys up a part of that debt to prevent the World Bank from forgiving it. Then the vulture fund moves in and takes over the country. The owners of the fund, the investors, are secret. Because they are ashamed, or maybe afraid that if the world realized who they were, there would be consequences.

Just keep this in mind. All the rich white men in America who claim to be charitable, great philanthropists, spending time going around the world, are more often looking for ways they can steal from these poor countries, not for ways they can help. These little clinics they staff for photo ops are nothing compared to the wealth they gain, in secret, by these secret hedge, private equity, and vulture funds.

What should be done? First, somebody should seize the records and books and arrest everyone who manages these funds, bring the money into an international tribunal to be deposited and distributed later. Second, identify and disclose each person who has ever invested, the amounts, the source, taxes paid or not. Third, pass a law making it illegal for any American, directly or indirectly, to invest in any fund that is not located inside the U.S. and complying with public disclosure rules and the tax laws. Fourth, for any vulture funds, declare the fund to be illegal, forgive the debt, repay the poor countries what they have paid, and pass laws making it illegal for any American to invest in a vulture fund.

We should throw these people in prison. But a good place to start would be to seize their assets and books, go from there.

1 comment:

  1. A long time ago, I visited one of our Latin American neighbor countries.
    Everything was done with bribery, park your car where it would not be stolen?
    Pay the policia.
    Not worry about theft of your possesions?
    Pay the policia.
    It worked.
    Some of my friends did not go along with the program and it cost them far more than the amounts they would have paid in bribery.
    Now, decades later, the criminal system seems to be behind every action of nations, businesses, NGOs and on and on.
    Passing laws would be nice, the tough part is to find a police agency which would enforce the laws.
    I believe that unless one is in that tiny minority at the top, one is doomed to be no more than a peon and victim of whatever the powers that be might dream up.
    Real problems, such as the collapse of the environment, are going to expose the failure of this social organisation, and people are going to be forced to deal with some sort of solution which involves more than a fast buck.
    Lenin said that he could control Russia with a few thousand men willing to use a bayonet, I fear that this is the highest state of development we might find under a system of capitalism.
    Change will come, whether or not humans will survive that change is another question.
    Don Smith