Thursday, July 07, 2005

The Politics Of Profits

Today's deplorable and cowardly attack on innocents in London is an unfortunate reality in this day and age, where violence without any semblance of reason is the tactic employed by terrorists - as it has been for 40 years, during which time it has never resulted in any terrorist objective being met or any policy being changed. And yet the carnage continues.

My observations have more to do with the way the markets reacted - they dropped, precipitously, far faster than one would have expected from retail investors selling in panic. It certainly would appear that some large interests decided to play the odds that this would cause a panic, and decided to prime the pump by shorting some key sectors.

The good news, or bad news for them, is that it didn't work very well.

But it highlights another important dynamic in the hedge fund/naked short selling controversy, namely that international hedge funds are completely unregulated, and nobody has any idea where the money is coming from.

To believe that it is all clean, that there is no middle eastern arms or terrorist money, no narco dollars, no criminally generated cash, is naive. Why wouldn't there be? Why not? It's the last frontier, the Wild West, and nobody knows what special interests are throwing money at what funds.

In point of fact, it would make good business sense to set up some hedge funds to trade in advance of these attacks if you were one of the bad guys - you could fund future attacks using the profits from the last one.

Someone traded in advance of 9/11, and effectively shorted the airlines and the insurance industry ahead of the attack. A halfhearted investigation was started, with no conclusion ever announced.

Is it just me, or does it seem strangely impossible that a nation that has passed sweeping laws impinging on the rights of every citizen in the name of national security, and that has invaded sovereign nations based on unabashedly false pretenses (to "defend ourselves", of course, against a "threat" that turns out to have had no threat capability), shows exactly zero interest in understanding how very real dollars are likely being made by unknown parties capitalizing on terrorist attacks? How is that possible? We have spent years trying to track a guy with a sat phone, whose primary tactic can be synthesized into "caves are good", and yet we don't want to understand who is benefiting from front running terrorist attacks? How can that be?

Perhaps it is all innocent. Perhaps the bad guys don't profit from their mayhem. Perhaps individuals who come from backgrounds of complicated mega-money transactions and who are terrorist-affiliated never thought of benefiting from their actions.


But I find it unlikely. They always need more money to fund the next round of atrocities. The requirement for cash is insatiable. So why, again, would they not use a completely anonymous mechanism for making money from their heinous deeds? And why are we completely silent on the subject?

Food for thought. Does money really buy you the ability to prey on a nation and its allies with impunity, and profit from it? If so, is the delicate contract between state and citizen valid, given that the citizen is a resource to be harvested, a subject to be manipulated, rather than an individual to be protected?

I believe that we need to understand who is putting the money in hedge funds. We need to understand how that money is affecting our national security, and the security of our allies. And we need to do it sooner rather than later, or all the rest is just impotent posturing in order to reassure the sheep that something is being done about the wolves.


Blogger Greg said...

It seems the terrorists may have profited from the London attack as well.

Who shorted British pound?

Naked shorting could turn out to be one of the largest national security issues facing us. It gives the terrorists the tools to cripple our markets. It will only be a matter of time before they realize that they will be able to use our markets against us, not just as a revenue source but as an offensive weapon. At the most elemental level, the global markets operate on nothing more than trust. Can I trust you to close the deal we agreed upon? We cannot leave open such a huge opportunity for that trust to be violated.

5:47 AM  

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