Thursday, January 17, 2008
Soros Bets on U.S. Economic Collapse
Progressivism piece by
Cliff Kincaid
Senators Hillary Clinton and Barack Obama favor government support for people losing their homes because they can’t repay their subprime mortgages. But what about the financial wheeler-dealers in the hedge fund industry who may stand to make billions of dollars from this terrible debacle? Foremost among them is billionaire hedge fund operator George Soros, who has committed his life and immense financial resources to bringing the Democrats to power in the White House.
Ties to the controversial and mysterious hedge fund industry could become a major problem for the Democratic Party. Hedge fund money “appears to be tilting toward the Democrats of late,” the New York Times reported last year.
The connection is personal. Chelsea Clinton took a job in 2006 with Avenue Capital Group, a hedge fund whose founder, Marc Lasry, has contributed tens of thousands of dollars to the national Democratic Party and many of its candidates. Federal Election Commission records show $5,000 from Lasry to HILLPAC, Hillary’s political action committee, thousands more to Hillary’s senate campaign, and thousands more to Hillary’s presidential campaign.
Democratic presidential candidate John Edwards took some criticism when it became known that he had gone to work for a hedge fund. As noted by the Washington Post, “The hedge fund that employed John Edwards markedly expanded its subprime lending business while he worked there, becoming a major player in the high-risk mortgage sector Edwards has pilloried in his presidential campaign.” Edwards claimed he didn’t know anything about the firm’s involvement in subprime lending.
It is interesting to note that the co-author of the Post article, John Solomon, has left the paper to become editor of the rival and conservative Washington Times. Solomon had come under savage attack by left-wingers for doing stories about corruption in the Democratic Party. They probably realized that Solomon was on to something when he uncovered Edwards’ relationship with a hedge fund company. But Edwards is not alone.
For those reporters interested in getting to the bottom of this growing controversy, there are many tantalizing leads to pursue.
The Wall Street Journal on Tuesday ran a fascinating front-page story about John A. Paulson, a Wall Street trader who has made billions of dollars betting that the housing market would collapse. The Journal says that Paulson personally made between $3 and $4 billion, “the largest one-year payday in Wall Street history.” The story suggests he has been somewhat secretive about his activities but is now opening up about his “historic coup” in comments to Journal reporter Gregory Zuckerman.
While there is nothing improper or illegal in how Paulson made his money, there are no details about where he got some of his funds or exactly how he placed his financial bets. The paper notes that “European investors” gave him about $150 million and that he is so savvy that George Soros “invited Paulson to lunch, asking for details of how he laid his bets, with [financial] instruments that didn’t exist a few years ago.” The article said that “Soros is famous for another big score, a 1992 bet against the British pound that earned $1bn for his Quantum hedge fund.” Soros “declined to comment” about his meeting with Paulson, the Journal said.
Declined to comment? Since Soros is a major supporter of the secretive Democracy Alliance, a group backed by rich liberals who fund a network of liberal-left groups dedicated to electing Democrats to the White House and Congress, could the discussion have also been political in nature?
The American people should be quickly educated by our media on how very rich people like Paulson and Soros make “bets” on the rise or fall of national currencies and economies. Paulson is now telling investors “it’s still not too late” to bet on more economic problems. These are capitalists who seem to have a vested interest in the further decline of the U.S. economy.
We may not know much about Paulson, but we know a lot about Soros. He is a financial manipulator, convicted of illegal insider trading in France for playing financial games with a bank there.
We also know that he spent over $20 million trying to defeat George Bush for president in 2004 and has contributed to such groups as the Democratic National Committee, MoveOn.org, and candidates such as Hillary Clinton and Barack Obama. Soros, in short, is a major financial backer of the Democratic Party and will be in a position to collect on these debts if Hillary or Obama wins in November. Their election may depend on further substantial erosion in the national economy. Is it possible that the financial activities of Soros could make it more likely that the economy will go into a complete tailspin?
Any economic problems will, of course, be blamed by the Democrats and the liberal media on President Bush and the Republicans. The Republicans may not be smart enough to recognize that hedge fund managers and their links to the Democratic Party could become a potent campaign issue. Perhaps they will regard the issue as too “populist” for their taste.
If the Democrats succeed in exploiting the economic problems, they will not only keep control of Congress in this fall’s elections but will put Clinton or Obama in the White House. Their “mandate,” however, will go beyond new government programs for the economy into the social realm. And that’s where Soros has a keen interest.
The issue of Obama’s drug use has surfaced in the campaign, but Soros has put millions into the drug legalization movement. Some other money from his fortune, estimated at $7 billion, has been put into causes such as abortion rights, gay rights, voting rights for felons, euthanasia, and rights for immigrants and prostitutes.
Now that Obama and Clinton have patched things up on the race issue, can we count on the media to turn their attention to George Soros and other hedge fund managers who stand to profit from an economic recession or even depression?
With millions of people either losing their homes or a substantial part of their value, the media should not be content with a no-comment from these crafty behind-the-scenes money men.
Cliff Kincaid is the Editor of the AIM Report.
http://www.aim.org/aim-column/soros-bets-on-us-economic-collapse/
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