Banks Monitor Hedge Funds, The Latest Joke...

I am going to be brief here but follow up more precisely later. During a speech today our US Federal Reserve Chairman, Bernanke and the Bush Administration (whatever that is) suggested an industry with no regulation, national allegiances or any other guideline that drives them but to make as much money as possible "moving paper assets" and has grown from $50 billion in assets to over $1 Trillion in assets in under 6 years should continue to be allowed to function with, well, no regulation.

Mind you, $1 trillion in assets is their "assets". These funds do everything on leverage of anything from 10 to 1 to 100 to 1 ratios. They have the ability to crash a currency, drive up the price of an asset to unrecognizable levels and short a market to squeeze every last dollar out of it. They have a herd mentality and play with very technical products.

Now Bernanke suggests that banks, yes BANKS of all institutions should monitor hedge funds. Need someone remind this idiot that:

It was BANKS that lent much of their unlimited amount of oil dollars (from the last oil spike in the 1970's) to Latin American countries. That same debt had to be restructured in the late 1980's into new debt called "Brady Bonds".

It was BANKS that went on a lending spree in the 1980's to finance a commercial real estate development explosion that collapsed with a bail out of the entire S&L industry, a near collapse of the BANKing industry, government scandals and jail time (all overturned quietly in succeeding years of course) of dozens of "BANKers", a $500 billion (real dollars not including the 30 years of interest the government is still paying on the debt) bail out of the BANKing industry's bad loans later packaged into the "RTC" (Resolution Trust Corp.) who’s property was later sold at auction at fire sale prices.

It was BANKS that lent unscrupulously to Asian nations in the mid 90's to countries like Thailand, Indonesia, Malaysia, Korea and others that created so much development in commercial real estate and "luxury" resorts that the entire system collapsed causing one of the largest currency and economic crises in the 20th century.

It was BANKS that lent to Long Term Capital Management, the hedge fund (yep hedge fund) that had to be bailed out in 1998 with an emergency meeting called by the Fed in New York with 8-10 of the top banks and investment houses in the world where they were given the ultimatum, “raise a couple billion dollars by Monday morning or the entire financial system could unwind”.

It IS BANKS that today provide loans, settlement funds and liquidity to the hedge funds operating today and those BANKS are making BILLIONS on these services and lending and are the last institutions that should be asked to better “manage, regulate, request better information” or whatever other twist you want to put on these responsibilities.

It was 2003 when the SEC conducted a thorough “unofficial” report on the hedge fund industry and concluded that some kind of standards needed to be set up to monitor these institutions if nothing else.

It was George Soros, the international billionaire who proposed after the Asian financial crises that some kind of international body needed to be set up to monitor money flows and advise individual companies when gross imbalances are appearing so they would alter their lending and investing habits to avoid the bubble and burst cycle that is so frequent in the investment community mostly because of the heard mentality of these institutions, ahem, BANKS have in their business practices.

Could someone stand up and tell Bernanke there is AN ELEPHANT IN THE ROOM AND HE HAS NO MORE THAN 2 YEARS BEFORE IT TRAMPLES EVERYONE!!

Enough said for now.