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Monday, November 16, 2009

Greed

A few years ago I lost a fair bit of money. And I don't mean I mislaid it, I mean it was stolen from me. Coincidentally the thief, a greedy low-life scumbag called Charles Schmitt, was arrested the week I moved to Singapore from Hong Kong.

I gave the details of this prick in my old blog a few years ago here and here. Schmitt was low-level Madoff-type character, who was using a fund he had set up and sold to gullible saps like me as a great money-maker - for himself! It was his personal yacht-party cash-flow generator and he was able to buy a nice beach-front house in Hawaii.

I have always intended to use this scenario as one of the plot lines of one of my terminally unwritten novels.

A letter arrived yesterday from the company that is managing my meagre remaining investment accounts to tell me that another 25% of the lost funds have now been placed into my cash account, added to previous installments of 35% in Dec 2005, 10% in April 2006 and another 10% on July 2006. Hey I didn't even remember them they were so long ago! Apparently there were some other claimants who came out of the blue back in 2006 and tried to get a chunk of the realised money as well, and the legal proceedings have swallowed both time and perhaps some more of my money. They tell me I can expect to see another 3% (the final installment) within a few more months.

Initial expectations were quite gloomy, about 60-70% return post liquidation but it looks like I'm going to end up with... you do the math. OK, it's 83%. Better than nothing! Mega-salary bonuses all round for Price-Waterhouse, who were in charge of the liquidation.

And, yes it has been quite a while. By the time I obtain the last of my partial refund, Schmitt will almost be due for release from prison - he got 4 and 1/2 years.. He could be out now for all I know.

He suckered in a lot of his Christian Church buddies too. The Protestant Embezzlement Ethic I called it last time. If it's not call-girls or rent-boys, it's embezzlement when these holy rollers go off the rails...

(Ah, that's such a good line - where do I come up with this shit?)

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I guess you might have been wondering why I have always been so hard against the stock market in the past. My god I hate it. Now you know why (again). But as has been pointed out by my libertarian friends acquaintances - which may or may not include frequent commenter here, ex-blogger Knobby - my understanding of this fine institution is limited and perhaps blinkered by our misfortunate history.



Well, after reading When Genius Failed (a book I bought before the GFC but never got around to reading) I have to admit that both of us are right/wrong. The stock market is OK after all, it keeps industry turning. But the DERIVATES market and HEDGE FUNDS are other things altogether. Man, here be fuckedness. Compared to the whole derivatives and hedge funds shebang, your typical stock market is a fair and equitable place such as what armchair Marxists' dreams are made of...

The hedge fund "bank" called Long Term Capital Management which boasted Nobel Prize winners Robert Merton and Myron Scholes as partners with their managed risk protocols, nearly blew up the financial world back in 1998 and NOBODY LEARNED A FUCKING THING. Amazing to think that ten years later it all happened again.

Experience is the ability to recognize your mistakes when you make them again.

The other books that I grabbed recently on these armchair Marxist friendly topics are The Predator State by James K Galbraith (yes, his son) and The Divine Right of Capital.



So it's not the stock market I hate, but more the derivatives and hedge funds and all these fancy new "products" that feed into the greed of all of us... I paid my money, I took my chance with a person's honesty and was betrayed.

Wasn't the first time, won't be the last.

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Gambling has never interested me, by the way. Which is another reason I am not a stocks player. I've had arguments about this since I was 18. I thought it was all macho bullshit. ("It's a thrill, you put your balls on the line," Max Z said. "SEE!" I replied. He was not the last person to give up in exasperation whilst arguing with me.)

All I can see in a casino are mindlessly optimistic reality-denying morons sitting like they were trapped in an some vast interior traffic-jam throwing away their family's welfare cheques to organized crime and to the government's tax/revenue department (not necessarily in that order and not necessarily all that far apart.) The reason casinos exist is that governments want to get tax income from gamblers, and the conversely the reason non-casino gambling is illegal is that governments can't get any tax income from it.

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Those same Governments couldn't put their tax-hungry hands on derivate trading, nor could they regulate it. In the days of LTCM at least, regulations only covered actual trades (in stocks, shares, bonds) whereas derivates, fuck, they are only 'promises' of the intention to trade. Profit on these shadow deals were called "capital gains" thanks to changes in the Reagnomics era and were taxed differently to any conventional profit made on a real trade. Because the trade hadn't actually taken place, the regulators' hands were tied.

This excess (low-taxed) money is where CEOs big salaries have come from according to Galbraith. That's why people running these companies are driving them into the ground with stupid deals. The profit goes directly to the managers as bonuses and mega-salaries...

Greed, rapacious greed.


E@L

10 comments:

savannah said...

we put our money into a jazz club. yeah, it failed, we lost money, but it was damn fine fun while it lasted, sugar! the MITM & i would do it again, if we could. i miss that life. xoxoxo

Indiana said...

Maybe you should start collecting "first editions" and invest in a library?

The Peranakan Dude said...

Dude, better off investing in your personal wine cellar for personal consumption! :D

expat@large said...

The old "let your savings work for you" didn't work for me with these rip-off creeps out there.

Indy: There are first edition scams out there to.

Sav: As many know I have a small interest in a restaurant chain in HK (Wooloomooloo steakhouse) - that industry has been through hard times too of late, but I'm going long on it. Business is picking up now though, I might even get a dividend later this year!

Dude: books and wine, are great, they ain't gonna help to ensure a cash-flow post retirement.

Indiana said...

Well you could just collect cardboard in your retirement or sell tissues in your restaurant...or maybe open the "E@L Escort Agency"?

expat@large said...

Indy: yep, I could get a stable of girls going. I could run them from my taxi.

MercerMachine said...

but... but... you have a *system*! You're the Baccarat badass!

expat@large said...

MercMac: I had a *paradigm*, remember? I must said the word 400 times that weekend (at Genting Highlands, for you perplexed others). And it wasn't such a complicated one either was it? Just bet on whatever was the last result...

Hey, I don't even think I got a massage that trip. We should go back. I need a massage.

knobby said...

oi! don't you know my political views are "opinionated but unclassifiable"?? :)

expat@large said...

Well you got my son's Black Scholes joke ten years before I did, so you must be more high finance than I am!

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