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FTR #641 Were We Controlled? (Part II), The Collapse of Bear Stearns

MP3: Side 1 | Side 2

INTRODUCTION: Begin­ning with dis­turb­ing analy­sis of the appar­ent sab­o­tage of invest­ment bank Bear Stearns, this pro­gram high­lights appar­ent maneu­ver­ing in the world of big busi­ness and high finance by cor­po­rate ele­ments asso­ci­at­ed with the glob­al Nazi mon­ey machine and the polit­i­cal inter­ests served by it. Send­ing shock waves through an already-trou­bled finan­cial land­scape, the col­lapse of Bear Stearns in March of 2008 may well have been delib­er­ate­ly engi­neered by forces hos­tile to the firm. Among the pos­si­ble co-con­spir­a­tors in this gam­bit are three hedge funds and Deutsche Bank, a prin­ci­pal ele­ment of the Bor­mann cap­i­tal net­work. Pre­sen­ta­tion of the destruc­tion of Bear Stearns–in what one com­pa­ny insid­er described as an assault by “the shorts”–is set against the back­ground of the short-sell­ing oper­a­tions asso­ci­at­ed with the assas­si­na­tion of Pres­i­dent Kennedy and the attacks of Sep­tem­ber 11, 2001. Among the play­ers in the events of 11/22/1963 was the giant German/Argentine com­modi­ties trad­ing firm of Bunge, which recent­ly increased its glob­al pro­file in the mar­ket­ing of corn syrup, a key ingre­di­ent in the pro­duc­tion of many food­stuffs. The rise in the price of essen­tial com­modi­ties such as corn–driven by mar­ket spec­u­la­tion– threat­ens much of the world with dire hard­ship and even star­va­tion. Con­clud­ing the pro­gram, the dis­cus­sion notes the com­bin­ing of the I.G. Far­ben-derived Fis­ch­er-Trop­sch Process with the cul­tur­ing of algae, in order to con­sume the car­bon diox­ide gen­er­at­ed by that fuel-syn­the­siz­ing tech­nique.

PROGRAM HIGHLIGHTS INCLUDE: The employ­ment of a key for­mer Bear Stearns employ­ee by Deutsche Bank; sus­pi­cions on the part of Bear Stearns Per­son­nel that the for­mer employ­ee may well have had much to do with the sab­o­tage that brought down Bear Stearns; the role of “nova­tion requests” in the destruc­tion of Bear Stearns; a recent rul­ing by the SEC that may well have result­ed from the attack on Bear Stearns; the ben­e­fi­cial cap­i­tal pro­file of Deutsche Bank and pos­si­ble co-con­spir­a­tor Cred­it Suisse in the wake of the col­lapse of Bear Stearns; a recap of the tor­pe­do­ing of Wall Street on 11/22/1963.

1. Ana­lyz­ing the col­lapse of Bear Stearns, the pro­gram sets forth infor­ma­tion strong­ly sug­gest­ing that the fir­m’s demise was delib­er­ate­ly engi­neered by hos­tile forces that prof­it­ed from the com­pa­ny’s death. Against the back­ground of the appar­ent sab­o­tage of Bear Stearns, the sec­ond side of the broad­cast recaps the tor­pe­do­ing of Wall Street on the morn­ing of 11/22/1963, an event that was great­ly exac­er­bat­ed by the assas­si­na­tion of Pres­i­dent Kennedy that after­noon.

Con­tem­plat­ing the death of Bear Stearns, one might con­sid­er: the prof­its derived from the caper by its engi­neers; the poten­tial for wide­spread destruc­tion of the U.S. finan­cial infra­struc­ture by gam­bits of this type; the poten­tial for intim­i­da­tion of indi­vid­u­als and insti­tu­tions that might con­sid­er resist­ing the will of the archi­tects of the oper­a­tion. As dis­cussed below, fac­tu­al and his­tor­i­cal evi­dence points in the direc­tion of the Under­ground Reich and its Bor­mann economic/capital net­work as the most like­ly cul­prit in this affair.

“ . . . It was then, ques­tion­ing his trad­ing desks down­stairs, that [Bear Stearns Chief Finan­cial Offi­cer Sam] Moli­naro first heard the rumor: Bear was hav­ing liq­uid­i­ty trou­bles, Wall Street’s way of say­ing the firm was run­ning out of mon­ey. Moli­naro made a face. This was crazy. There was no liq­uid­i­ty prob­lem. Bear had about $18 bil­lion in cash reserves. Yet the whiff of gos­sip Moli­naro heard that morn­ing was the first tiny rip­ple in what with­in hours would grow into a tidal wave of rumor and spec­u­la­tion that would crash down upon Bear Stearns and, in the span of one fate­ful week, destroy a firm that had thrived on Wall Street since its found­ing, in 1923. The fall of Bear Stearns wasn’t just anoth­er finan­cial col­lapse. There has nev­er been any­thing on Wall Street to com­pare to it: a ‘run’ on a major invest­ment bank, caused in large part not by a crim­i­nal indict­ment or some mam­moth quar­ter­ly loss but by rumor and innu­en­do that, as best one can tell, had lit­tle basis in fact. Bear had endured more than its share of self-inflict­ed wounds in the pre­vi­ous year, but there was no rea­son it had to die that week in March. What hap­pened? Was it death by nat­ur­al caus­es, or was it, as some sus­pect, mur­der? More than a few vet­er­an Wall Streeters believe an inves­ti­ga­tion by the Secu­ri­ties and Exchange Com­mis­sion will uncov­er evi­dence that Bear was the vic­tim of a gigan­tic ‘bear raid’—that is, a mali­cious attack brought by so-called short-sell­ers, the vul­tures of Wall Street, who make bets that a firm’s stock will go down. It’s a sur­pris­ing­ly dif­fi­cult the­o­ry to prove, and noth­ing short of gov­ern­ment sub­poe­nas is like­ly to do it. Faced with a thick­et of law­suits and fed­er­al inves­ti­ga­tions, not a soul in Bear’s board­room will speak for the record, but on back­ground, a few are final­ly ready to name names. . . .”

“Bring­ing Down Bear Stearns” by Bryan Bur­rough; Van­i­ty Fair; August/2008; p. 108.

2. Despite the fact that Bear had strong cap­i­tal liq­uid­i­ty, a “run” on the insti­tu­tion was start­ed by hedge funds plac­ing “nova­tion“ requests (explained in the text that fol­lows).

“. . .the first to pull their mon­ey from Bear were sev­er­al major hedge funds. So Moli­naro and his men can­vassed the repo lenders, which give banks bil­lions of dol­lars in overnight loans that have to be renewed each day. How­ev­er, Moli­naro found that all planned to ‘roll over’ Bear’s loans the next morn­ing. ‘Nobody was cut­ting us off,’ says a Bear exec­u­tive involved in the events. ‘There was a lot of chat­ter though. The hedge funds were agi­tat­ed. That was con­cern­ing, because they could influ­ence the out­come by pulling out cash bal­ances. The same day, Bear exec­u­tives noticed a wor­ri­some devel­op­ment whose poten­tial sig­nif­i­cance they would not appre­ci­ate for weeks. It involved an avalanche of what are called ‘nova­tion’ requests. When a firm wants to rid itself of a con­tract that car­ries cred­it risk with anoth­er firm, in this case Bear Stearns, it can either sell the con­tract back to Bear or, in a nova­tion request, to a third firm for a fee. By Tues­day after­noon, three big Wall Street companies—Goldman Sachs, Cred­it Suisse, and Deutsche Bank—were expe­ri­enc­ing a tor­rent of nova­tion requests for Bear instru­ments. Alan Schwartz thought it strange that so many requests were being chan­neled to the same three firms, but did his best to assure them all that Bear remained on sound foot­ing. ‘Deutsche Bank we talked to, and they said, ‘We’re get­ting killed!’’ says a Bear exec­u­tive. “We said, ‘We’ll take you out of your posi­tions,’ and we did. But it was too late.’ . . .”

Ibid.; p. 151.

3. A major cul­prit and [per­haps] ben­e­fi­cia­ry of the appar­ent­ly-engi­neered demise of Bear Stearns appears to have been Deutsche Bank and/or per­sons and ele­ments with­in that insti­tu­tion. Note in this con­text that Deutsche Bank–like the oth­er Ger­man core com­pa­nies and finan­cial insitutions–are part of the Under­ground Reich/Bormann cap­i­tal net­work. Three hedge-funds have been named by for­mer Bear Stearns per­son­nel as pos­si­ble suspects/beneficiaries as well. (For more infor­ma­tion about the Bor­mann cap­i­tal net­work, read Mar­tin Bor­mann: Nazi in Exile by Paul Man­ning.) Note that a for­mer Bear Stearns exec­u­tive occu­pied a key posi­tion in Deutsche Bank at the time the dev­as­tat­ing rumor-mon­ger­ing began. Cred­it Suisse, anoth­er Bor­mann net­work-con­nect­ed insti­tu­tion was also a vehi­cle for the “nova­tion” requests that were cen­tral to the demise of Bear Stearns. At the con­clu­sion of this descrip­tion, read about the rel­a­tive­ly pos­i­tive cap­i­tal posi­tions of both Deutsche Bank and Cred­it Suisse as the dust from the Bear Stearns col­lapse set­tles on the trou­bled inter­na­tion­al finan­cial land­scape.

Note, also, that sev­er­al hedge funds and Gold­man Sachs are also viewed with sus­pi­cion by for­mer Bear Stearns per­son­nel.

“ . . . Even among the cir­cle of top exec­u­tives who lived through that fran­tic week, no two peo­ple see the cri­sis at Bear the same way. Many, though, agree with some ver­sion of the sce­nario Alan Schwartz has come to believe. Yes, Schwartz tells friends, mis­takes were made. Yes, the firm was finan­cial­ly weak­ened. But the more he learned about what had hap­pened behind the scenes that week, the more Schwartz came to believe that Bear’s col­lapse was a pre-med­i­tat­ed attack orches­trat­ed by mar­ket spec­u­la­tors who stood to prof­it from its demise. Accord­ing to those Schwartz has briefed, these unnamed speculators—several now being inves­ti­gat­ed by the S.E.C.—employed a com­plex scheme to force a hand­ful of major Wall Street firms to hold up trades with Bear, then leaked the news to the media, cre­at­ing an arti­fi­cial panic.‘Something hap­pened Mon­day that trig­gered this mess,’ says one Bear exec­u­tive who has spo­ken to the S.E.C. ‘It was as though a com­put­er virus had been launched. Where the hell was this com­ing from? Who start­ed it? We tried, believe me, but we could not track it down. We know lots of big hedge funds were spread­ing rumors, but how can you pur­sue that? Only the S.E.C. can, and they’re all over this.’

At the heart of this the­o­ry are the ‘nova­tion’ requests that began to pick up steam that Tues­day and Wednes­day. As Bear exec­u­tives lat­er ana­lyzed these trades, they dis­cov­ered the over­whelm­ing major­i­ty had been made with just three firms: Gold­man Sachs, Cred­it Suisse, and Deutsche Bank. Schwartz came to believe this was no acci­dent. In his mind, the flood of nova­tion requests was designed to force at least one of the three firms to put a tem­po­rary halt to accept­ing them, which is what hap­pened: Gold­man and Cred­it Suisse did. News of that halt not only swept Wall Street trad­ing floors, it appeared to gain cre­dence the next day when David Faber asked Schwartz about it on CNBC. ‘I like Faber, he’s a good guy, but I won­der if he ever asked him­self, ‘Why is some­one telling me this?’?’ a top Bear exec­u­tive asks. ‘There was a rea­son this was leaked, and the rea­son is sim­ple: some­one want­ed us to go down, and go down hard.’ (Faber says his report­ing was accu­rate, and arose from talks with a source he has known for 20 years.)

But who? Accord­ing to one vague tale, ini­tial­ly picked up at Lehman Broth­ers, a group of hedge-fund man­agers actu­al­ly cel­e­brat­ed Bear’s col­lapse at a break­fast that fol­low­ing Sun­day morn­ing and planned a sim­i­lar assault on Lehman the next week. True or not, Bear exec­u­tives repeat­ed the sto­ry to the S.E.C., along with the names of the three firms it sus­pects were behind its demise. Two are hedge funds, Chica­go-based Citadel, run by a trad­er named Ken Grif­fin, and SAC Cap­i­tal Part­ners of Stam­ford, Con­necti­cut, run by Steven Cohen. (A spokesman for SAC Cap­i­tal said the firm ‘vehe­ment­ly denies’ any sug­ges­tion that it played a role in Bear’s demise. A Citadel spokes­woman said, ‘These claims have no mer­it.’) The third sus­pect, at least in Bear exec­u­tives’ minds, is one of its main com­peti­tors, Gold­man Sachs. (‘Gold­man Sachs was sup­port­ive of Bear Stearns,’ says a Gold­man Sachs spokes­woman. ‘There is no foun­da­tion to rumors that we behaved oth­er­wise.’)

Sev­er­al Bear exec­u­tives also named an indi­vid­ual they believed was spread­ing rumors about them that week, Jeff Dor­man, who briefly served as glob­al co-head of Bear’s prime bro­ker­age busi­ness until resign­ing to take a sim­i­lar posi­tion at Deutsche Bank last sum­mer. ‘We heard Dor­man was say­ing things last sum­mer,’ says a Bear exec­u­tive. ‘At the time we reached out to Deutsche Bank and told them he bet­ter stop it.’ (Asked about the alle­ga­tion, a Deutsche Bank spokes­woman acknowl­edged that Bear had sent its exec­u­tives a let­ter last August ask­ing Dor­man not to solic­it its clients, as he had agreed upon leav­ing Bear. Deutsche Bank replied that he wasn’t. The exchange didn’t explic­it­ly address what Dor­man might have been say­ing about the firm, nor would the spokes­woman.) . . . Maybe the S.E.C. will fig­ure out whether Bear was mur­dered. But maybe it won’t. Even those who believe the firm was the vic­tim of a preda­to­ry raid have their doubts it can ever be proved.

‘Even with sub­poe­na pow­er, I’m not sure the S.E.C. will get to the bot­tom of this, because the stan­dard of proof is just so dif­fi­cult,’ says a vice-chair­man at anoth­er major invest­ment firm. ‘But I hope they do. Because you can look at this as just anoth­er run on a bank or as a sem­i­nal point in the finan­cial his­to­ry of this coun­try that could bring about a change, per­haps a dras­tic change, in the way we gov­ern finan­cial mar­kets. If there is a solu­tion to this kind of thing, it must be found in the roots of what hap­pened at Bear Stearns. Because oth­er­wise, I can guar­an­tee you, it will hap­pen again some­where else.’ 

Ibid.; pp.155–156.

4. The sig­nif­i­cance of Deutsche Bank to the Bormann/Underground Reich cap­i­tal net­work can be briefly, con­cise­ly under­stood by exam­in­ing an excerpt from the FBI’s file on Bor­mann. Bormann’s FBI file revealed that he had been bank­ing under his own name in New York for some time.

” . . . The file revealed that he had been bank­ing under his own name from his office in Ger­many in Deutsche Bank of Buenos Aires since 1941; that he held one joint account with the Argen­tin­ian dic­ta­tor Juan Per­on, and on August 4, 5 and 14, 1967, had writ­ten checks on demand accounts in first Nation­al City Bank (Over­seas Divi­sion) of New York, The Chase Man­hat­tan Bank, and Man­u­fac­tur­ers Hanover Trust Co., all cleared through Deutsche Bank of Buenos Aires. . . . ”

Mar­tin Bor­mann: Nazi in Exile by Paul Man­ning; Copy­right 1981[HC]; Lyle Stu­art Inc.; ISBN 0–8184-0309–8; p. 205.)

5. Much of the sec­ond side of the pro­gram reca­pit­u­lates infor­ma­tion from FTR#327. (The book Were We Con­trolled?–orig­i­nal­ly pub­lished in 1967–has been repub­lished and is avail­able. The mate­r­i­al from FTR#327 is culled from that book.) On the morn­ing of 11/22/1963, a com­plex maneu­ver involv­ing the Argentine/German com­modi­ties trad­ing giant Bunge dev­as­tat­ed Wall Street. Cen­tered on the appar­ent­ly delib­er­ate destruc­tion of Antho­ny “Tino” De Ange­lis’s Allied Crude Veg­etable Oil Refin­ing Cor­po­ra­tion, the gam­bit was effect­ed through short sell­ing and net­ted the German/Argentine archi­tects of the oper­a­tion a half-bil­lion dol­lars in profits–garnered through short-sell­ing. (That half-bil­lion is in ear­ly 1960’s dol­lars, a lot more mon­ey at the time.) Once again, the Bor­mann cap­i­tal net­work appears to have been the execu­tor of that coup, fol­lowed with­in hours by the assas­si­na­tion of Pres­i­dent Kennedy, which forced the clos­ing of the New York Stock Exchange for the first time in his­to­ry. As dis­cussed in–among oth­er pro­grams–AFA#37 and FTR#120, Nazi ele­ments linked to the Bor­mann net­work were cen­tral­ly involved in the assas­si­na­tion of Pres­i­dent Kennedy.

Note in the above con­text that the New York Stock Exchange was also closed fol­low­ing the attacks of 9/11/2001 and the stocks of numer­ous com­pa­nies were–once again–the focal points of sus­pi­cious short-sell­ing in the run-up to the attacks. This short sell­ing is described in the afore­men­tioned FTR#327. Nazi and Bor­mann net­work ele­ments were involved in the 9/11 attacks as well. For more about Nazi/Bormann links to the 9/11 attacks, see–among oth­er programs–FTR#‘s 456, 513, 530.

One should not fail to note that Bunge–a cen­tral ele­ment of the finan­cial gam­bit of 11/22/1963–has ben­e­fit­ed from the rise in food prices, and is expand­ing its influ­ence and infra­struc­ture.

“Bunge Ltd., the world’s largest oilseed proces­sor, agreed to buy Corn Prod­ucts Inter­na­tion­al Inc. for $4.2 bil­lion in stock to add corn-based sweet­en­ers as demand increas­es for soft drinks and processed foods in Chi­na and India.

Bunge will pay the equiv­a­lent of $56 for each share of Corn Prod­ucts, White Plains, New York-based Bunge said today in a state­ment. That’s 31 per­cent more than Westch­ester, Illi­nois- based Corn Prod­ucts’ clos­ing price of $42.90 on June 20. Bunge also will assume about $414 mil­lion of Corn Prod­ucts’ debt.

Bunge Chief Exec­u­tive Offi­cer Alber­to Weiss­er, 52, will gain refin­ing oper­a­tions that sell high-fruc­tose corn syrup and food addi­tives to cus­tomers includ­ing Coca-Cola Co. and Pep­si­Co Inc. The addi­tion gives Bunge a port­fo­lio of projects sim­i­lar to U.S. com­peti­tor ADM, which derived 35 per­cent of its oper­at­ing prof­it from corn pro­cess­ing last year.

‘Bunge will become a more for­mi­da­ble com­peti­tor in glob­al grain pro­cess­ing by broad­en­ing the prod­ucts it sells to cus­tomers, strength­en­ing cus­tomer rela­tion­ships, dri­ving down costs by com­bin­ing logis­tics and risk man­age­ment, and extend­ing Bunge’s reach into new mar­kets,’ Cred­it Suisse ana­lyst Robert Moskow said today in a note.

Corn Prod­ucts is the fourth-largest mak­er of high-fruc­tose corn syrup in the U.S. and will give Bunge new cus­tomers in Pak­istan, South Korea and Thai­land, Moskow said. . . .”

“Bunge Agrees to Buy Corn Prod­ucts for $4.2 Bil­lion” by Mark Her­li­hy and Choy Leng Leong; Bloomberg News Ser­vice; 6/23/08.

6. The recent run-up in glob­al food prices may well be the result of spec­u­la­tion. Not­ing the deci­sive posi­tion of the Bormann/Underground Reich eco­nom­ic engine in the glob­al econ­o­my and cap­i­tal mar­kets, it is worth con­tem­plat­ing the role of that net­work in the esca­la­tion of com­mod­i­ty prices and those of food­stuffs in par­tic­u­lar. In addi­tion to the enor­mous gen­er­a­tion of prof­its, one should con­sid­er the effect of a sig­nif­i­cant rise in the prices of essentials–food, heat­ing and cook­ing ener­gy, med­ical care and the oth­er goods and ser­vices req­ui­site to the sus­te­nance of exis­tence.

If they become too high, the plight of the less for­tu­nate will become dire indeed.

“Unless you live in a bub­ble, like George Bush, who expressed total sur­prise in Feb­ru­ary when a reporter told him gas was near­ing $4 a gal­lon, you’ve been socked hard in the pock­et­book by ris­ing prices. It’s most evi­dent at the supermarket—according to the Bureau of Labor Sta­tis­tics, the cost of a gal­lon of milk has jumped 17 per­cent and a dozen eggs have leaped 40 per­cent in the last year and a loaf of bread is up near­ly 30 per­cent in the last two years. At the gas pump the nation­al aver­age for reg­u­lar gaso­line notched a record $3.63 a gal­lon in ear­ly May, dou­ble from 2005, and it looks set to break the $4 bar­ri­er this sum­mer.

As dra­mat­ic as the con­sumer price increas­es are, the fren­zy on com­mod­i­ty exchanges, where traders nego­ti­ate “futures” prices (and relat­ed finan­cial prod­ucts known as “options”) is even more pro­nounced. The Com­mod­i­ty Futures Trad­ing Com­mis­sion (CFTC), in an unprece­dent­ed pub­lic web­cast, held hear­ings on April 22 exam­in­ing why agri­cul­tur­al com­mod­i­ty prices are sky­rock­et­ing. It not­ed, “In the last three months, the agri­cul­tur­al sta­ples of wheat, corn, soy­beans, rice and oats have hit all-time highs.”

Over the last year, wheat prices are up 95 per­cent, soy­beans are up 88 per­cent, corn is up 66 per­cent, and Thai B grade rice, the world’s trad­ing bench­mark, end­ed 2007 at about $360 a met­ric ton. It hit $760 at the end of March and con­tin­ued its dizzy­ing climb to $1,080 less than a month lat­er. On top of that, crude oil futures have more than dou­bled since Jan­u­ary 2007, com­ing with­in a hair of $120 a bar­rel this April.

One strik­ing aspect of the ris­ing com­mod­i­ty prices is that when chart­ed, they look sim­i­lar to the Inter­net stock mania a decade ago or the charts of soar­ing (and plung­ing) home prices of late. This is no mere coin­ci­dence. One of the main fac­tors in accel­er­at­ing com­mod­i­ty and food costs is finan­cial spec­u­la­tion. The same Wall Street banks and hedge funds that gave us the stock bub­ble and the hous­ing bub­ble are report­ed­ly throw­ing bil­lions of dol­lars at the com­mod­i­ty mar­kets, bet­ting they can make a fast buck. One ana­lyst inter­viewed by the Wall Street Jour­nal esti­mates that “investors have poured rough­ly $175 bil­lion to $200 bil­lion into com­mod­i­ty-linked index funds since 2001.” The Jour­nal explained, “As with ener­gy mar­kets a few years ago, pen­sion funds and hedge funds have flocked to grain invest­ments as the sup­ply of farm acreage and crop out­put shrinks rel­a­tive to the grow­ing glob­al pop­u­la­tion and new demands for crops for bio­fu­els and food. Many such investors make pre­dom­i­nant­ly bull­ish bets,” that is, expect­ing the price to rise.

The dai­ly fluc­tu­a­tions on com­mod­i­ty exchanges are at times greater than used to occur in an entire year. On Feb­ru­ary 25 alone, at the Min­neapo­lis Grain Exchange, one type of wheat jumped 29 per­cent. On a sin­gle day in March, “the price of cot­ton jumped 15 per­cent despite reports show­ing cot­ton sup­plies were at near record highs,” accord­ing to the Toron­to Globe and Mail. Dur­ing the CFTC hear­ings, com­mod­i­ty pro­duc­ers laid the blame for soar­ing prices at the spec­u­la­tors’ door. A rep­re­sen­ta­tive of the Nation­al Grain and Feed Asso­ci­a­tion tes­ti­fied, “Six­ty per­cent of the cur­rent [wheat] mar­ket is owned by an index fund. Clear­ly that’s hav­ing an impact on the mar­ket,” while a cot­ton pro­duc­er stat­ed, “The mar­ket is bro­ken, it’s out of whack.”

If there is a main cul­prit, it is the mar­ket. There is a lot of talk about grow­ing con­sump­tion and falling sup­plies for both food and ener­gy, but most of the data con­tra­dicts these claims. For exam­ple, despite a drought in Aus­tralia, ice and snow storms through­out Chi­na, and a cold, wet win­ter in the Amer­i­can bread­bas­ket, the UN Food and Agri­cul­tur­al Orga­ni­za­tion projects glob­al cere­al pro­duc­tion for 2007–2008 to increase by 92 mil­lion tons to 2.102 bil­lion tons. But almost all this increase is from a record U.S. corn har­vest, which is feed­ing the mar­ket for bio­fu­els.

In essence, large spec­u­la­tors rang­ing from Wall Street banks and hedge funds to oil com­pa­nies and agribusi­ness giants are mak­ing a killing from trad­ing com­modi­ties. . . .”

“How Spec­u­la­tors Are Manip­u­lat­ing & Prof­it­ing from the Glob­al Food Cri­sis” by A.K. Gup­ta; Z Mag­a­zine; 6/2/2008.

7. Bio-fuels and the Fis­ch­er-Trop­sch Process, dis­cussed in sev­er­al pre­vi­ous pro­grams, may be joined in ener­gy devel­op­ment pro­grams to come. For more infor­ma­tion about the Fis­ch­er-Trop­sch Process, the Standard‑I.G. Agree­ment of 1929 that licensed it and its recent resus­ci­ta­tion and appli­ca­tion, see–among oth­er pro­grams: FTR#‘s 385. 506. 552.

” . . . There is broad con­sen­sus through­out the indus­try that, longer-term, algae rep­re­sent the opti­mum solu­tion to avi­a­tion’s fuel needs. A num­ber of basic prob­lems need to be solved, such as ensur­ing enough light gets to every part of an algae tank to enable all the cells to grow prop­er­ly; and dry­ing algae cells suf­fi­cient­ly to enable the oil they con­tain to be extract­ed and cracked into jet fuel.

But Boe­ing and Air­bus are con­fi­dent these prob­lems can be solved — and the ben­e­fits that algae offers as a “third-gen­er­a­tion bio­fu­el” are immense. Algae can pro­duce an oil yield 15 times that of sec­ond-gen­er­a­tion bio­fu­el plants: The world’s entire air­lin­er fleet could be pow­ered from a cul­ti­vat­ed area just the size of West Vir­ginia, or Bel­gium, says Boe­ing.

Addi­tion­al­ly, because algae can be grown in tanks any­where, bio­fu­el-pro­duc­ing algae farms could be sit­ed next to facil­i­ties pro­duc­ing jet fuel from coal or nat­ur­al gas using the Fis­ch­er-Trop­sch process. These “coal-to-liq­uid” or “gas-to-liq­uid” process­es gen­er­ate large amounts of CO2 from fos­sil fuels, mak­ing them unsuit­able as sus­tain­able fuel sources. How­ev­er, if the CO2 they gen­er­ate is piped off and used to grow algae in near­by farms, the two forms of fuel pro­duc­tion togeth­er could cre­ate an effi­cient, car­bon-neu­tral sym­bio­sis for jet fuel pro­duc­tion. . . .”

“Bio­fu­els Become Avi­a­tion’s Big Focus” by Chris Kjel­gaard; Aviation.com; 6/26/2008.

8. A recent rul­ing by the SEC may well be a response to the “mur­der” of Bear Stearns.

“The SEC issued its emer­gency rul­ing against “naked” short-sell­ing to build investor con­fi­dence in mar­ket infor­ma­tion, SEC Chair­man Christo­pher Cox told CNBC.

“What we are par­tic­u­lar­ly con­cerned about is the poten­tial for there to be mali­cious­ly man­u­fac­tured, false infor­ma­tion that feeds into a run, which is fur­thered by not legal short sell­ing, but ille­gal naked short sell­ing,” Cox said.

In a reg­u­lar short sale, investors sell stock they’ve bor­rowed, hop­ing to return the shares lat­er at a low­er price and pock­et the dif­fer­ence. In “naked” short sell­ing, the investor sim­ply “sells” the stock with­out ever bor­row­ing any shares.

Cox said “naked” short-sell­ing isn’t ille­gal, con­trary to what some mar­ket experts say, so the SEC imposed an emer­gency rule that pro­hibits naked sell­ing in the stocks of 19 major finan­cial insti­tu­tions. . . .”

“SEC’s Cox: ‘Naked’ Short Ban to Restore Con­fi­dence”; CNBC.com; 7/16/2008.

9. Both Deutsche Bank and Cred­it Suisse may be poised to escape the dam­age done to oth­er finan­cial insti­tu­tions by the cred­it crunch and the sub­prime cri­sis. Does this have any­thing to do with the firms’ deal­ings with Bear Stearns, as described in the Van­i­ty Fair arti­cle?

“Deutsche Bank AG has avoid­ed the worst of the bank­ing car­nage by pulling off a series of trades that have light­ened its load of soured invest­ments. While it still could need to write down assets or raise cap­i­tal, Ger­many’s largest bank by mar­ket val­ue is posi­tion­ing itself to be an acquir­er in the sec­ond half. [Ital­ics are Mr. Emory’s.] . . . On Thurs­day, Switzer­land’s Cred­it Suisse Group defied ana­lysts’ expec­ta­tions by post­ing a 1/2 bil­lion Swiss franc ($1.16 bil­lion) prof­it after min­i­mal write-downs, which bodes well for Deutsche’s results. The Swiss bank also was able to sell 6.5 bil­lion francs of cor­po­rate loans in the sec­ond quar­ter reduc­ing its port­fo­lio to 14.3 bil­lion francs. . . .”

“Deutsche Bank Took Its Pain, But Is It Now Poised to Gain?” by Neil Shah and Car­rick Mol­lenkamp; The Wall Street Jour­nal; 7/29/2008; pp. C1-C2.


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