57 Varieties Of Bullshit from Sir Tony O'Reilly, Head of Heinz

The mainstream media plays a huge role in dispensing misinformation about the ways and wiles of the world. There was a classic recent case published in the Cape Times, and presumably the entire Independent Group, an international group of newspapers headed by pro business interests, including Sir Tony O'Reilly, head of Heinz. Seems like the man wants to serve us up 57 varieties of bullshit.

Copy of the full article is below.

Anyrate I sent a letter to the Cape Times, which they obviously failed to publish as it laid waste to their policies. The fact that their new deputy editor is a well-established believer in market fundamentalism may explain their lapse, but who gives a toot? So here I provide you with my take and expose some of the crap we are expected to believe, the fairy stories about a rogue trader being the cause for the world's economic ills. Jeez, what will they cast up next?


Letter to paper, unpublished, along with many others .......

Evidently the Cape Times and the Independent Group will soon be moving to publish fairy stories to replace its leader page articles, judging from the lead article on Jan. 28 2008, 'Unlikely hero who saved the world from recession.'

So now the entire global economic crisis is to be blamed on young Jerome Kerviel, the rogue SocGen trader? Please, let's pull the other one. And now he is somehow a hero because he will trigger the global financial system into action to save us from its recklessness? I suggest the loon who wrote this 'analysis' be downgraded to the sports pages where he can do less damage to your reputation.

Clearly the mainstream media is desperate to allay the real and well-founded economic fears that the world economy is headed downhill. That pundits will evidently go so far as to suggest that the most recent downturns could be pinned on Kerviels dangerous games shows just how desperate they are.

It seems far easier to blame some poor misguided kid let loose on the rickety futures trading floors than to blame the worlds banks for a long run of reckless lending as evidenced by the US sub-prime and monoliner mess. It is much easier to pass off real market worries as mere mischeviousness, some misguided dabbling gone wrong, rather than malfeasance on the part of reckless lenders and rogue bankers, is it not?

Please. Grant your readers a modicum of intelligence and foreswear from printing this drivel, let alone print it on the leader page. It belongs in the tabloids, or is this what this supposedly serious newspaper has become? Soon we will be told is that the economy is tanking because the empire has no clothes. Oh, but it does, it does. It's its policies which are naked of logic but nobody dare mention that, do they?

Or maybe it was just an early April fools story and I missed heaps of sarcasm and irony? Well, April fool you – there are still months to go to that date!


And here is the fairy story.......or perhaps we should call it economic smoke and mirrors. But some of us are not so easily fooled, are we dear reader?

http://www.capetimes.co.za/index.php?fArticleId=4226104


  Unlikely hero who saved the world from recession


  Rogue trader jolted us monetary policy

January 28, 2008 /Edition 1/

*John Lichfield*

paris: The five billion euro man, Jérome Kerviel, emerged last week as an unlikely and unwitting hero for the global age: the man who accidentally saved the world from recession. He was also arrested.

Kerviel, 31, was taken into custody by police in Paris on suspicion of three different kinds of fraud. He has reportedly told investigators he was ready to explain - if he can - how his late-night "virtual" trading on share futures cost his bank, Société Générale, e4.9 billion.

The case for Kerviel as a hero, as well as a suspected fraudster, is complicated - but not that complicated.

Société Générale's chairperson Daniel Bouton dismissed as "absurd" suggestions that his decision to dump more than e50bn in unauthorised trades by Kerviel last week had plunged European stock exchanges into a tailspin. Market experts pointed out, however, that heavy selling by the bank last Monday - especially of German shares futures - reinforced a mood of panic and helped push all markets down.

This in turn jolted the United States Federal Reserve into cutting its interest rates sharply last Tuesday, preventing a copycat crash on Wall Street and possibly also steering the world out of recession.

As a result, some respected US economists are now feting Kerviel as an unwitting saviour. "Merci, Jérome," said the influential economic analyst, Ed Yardeni, former head economist of Deutsche Bank Securities. "The recession is almost over, thanks to Jérome Kerviel in Paris and the panic reaction (of the Fed) in Washington … I cannot remember any precedent for such strong support for the economy before the evidence of a recession became manifest."

But there are equally good reasons to be scared by the Kerviel saga.

A junior trader at his desk on the sixth floor of a building just west of Paris accidentally nudged the steering wheel of the entire world economy. What does that tell us about the uncontrolled might of the immense sums of "electronic" money being traded on futures and hedge funds?

A young man earning e100 000 a year was allegedly gripped by a belief he had discovered a magic new trading formula. He was able to make unauthorised trades on share futures worth at least e50bn, equivalent to the GDP of Cuba or Slovenia.

For the whole of last year, Kerviel was making substantial, secret trades in late-night sessions at his desk - quite separately from his authorised work. He made a profit he could not easily explain to his bosses. Instead of trying to steal the money and abscond, he set out this month to make a deliberate, off-setting "loss".

As stock markets began to weaken 11 days ago, he found he had accidentally gone much further than he intended, so plunging his secret "business" into a e1.4bn deficit.

Société Générale finally grasped what was happening. It tried to "unwind his positions", or dump his deals, in the teeth of a falling market, last Monday and Tuesday.

By doing so, SocGen, France's second largest bank and the world leader in financial futures, appears to have made the market tumble even further, so increasing its own losses. This led one rival French banker to say Kerviel had himself actually lost "only" e1.4bn: "The board of SocGen lost the rest."

How all of that came to happen is now the subject of several criminal and government inquiries in France. Kerviel was arrested last week at an undisclosed address in Paris, where he had been looked after by his mother and brother. He was brought to the offices of the Paris anti-fraud brigade at rue du Château-des-Rentiers in the 13th arrondissement on the Left Bank. (A rentier in French is someone who makes profits from the work of others.) He faces charges relating to the falsification and fraudulent use of bank records, and to computer fraud.

Police earlier visited the headquarters of SocGen in La Défense, the skyscraper park west of Paris, to gather computer records to help track Kerviel's actions. On Friday, night, they had raided his empty flat in Neuilly-sur-Seine, a wealthy suburb between Paris and La Défense.

Kerviel, a Breton from a modest background, with a mediocre academic and business career, has not been seen publicly since the scandal broke. But it was soon learnt his father had died less than a year ago, and that a relationship had later ended. He is said not to have taken a holiday in eight months.

Quite apart from its failure to police the actions of its junior employee, SocGen faces a raft of awkward questions. French politicians and markets experts have accused the bank of using the Kerviel case to "hide" much larger losses on the US sub-prime market than the e2bn it admitted last week.

Share traders are furious the bank allowed normal trading in its shares to proceed for three days without warning the market. Questions are also likely to be asked about the behaviour of the French central bank. SocGen has said it warned the Banque de France on Sunday. The European Central Bank and the Federal Reserve in Washington were apparently not warned of the coming storm until Wednesday.

But the greatest single outstanding question is how Kerviel - a young man armed only with a computer screen - could bet e50bn, 30% more than the value of his bank, on the future direction of European stock markets. How could his superiors not notice?

Bouton last week gave the fullest explanation so far of the astounding events of the past few days. In an interview with the French newspaper Le Figaro, he explained that Kerviel had been playing an immense computer game with the markets - and the bank's money - "for the whole of 2007".

Kerviel used to work in the bank's "middle office", checking on the legality of the trades undertaken in the "front office". Two years ago, he was promoted to the bank's Delta One trading desk. His job was to trade in "plain vanilla" (that is, uncomplicated) futures contracts on share movements on the Frankfurt, London and New York stock exchanges.

His brief was to bet simultaneously on upward and downward movements, and make a small profit on spotting and "arbitraging" tiny price differences between contracts. He was performing this task in a competent and unspectacular way. At the same time, Bouton revealed, Kerviel had created a quite separate multibillion-euro business, or experiment, or game, for himself - unknown to his employers.

In this separate world, he was buying thousands of genuine futures contracts betting on share price movements, and faking the "hedging" contracts that were supposed to balance his risks. He disguised his activities by using stolen passwords and log-ons, and by constantly changing his positions before routine controls became due. As far as the bank was concerned, his position was "neutral". In reality, he was taking a huge bet throughout last year that stock markets would broadly fall.

Since they did broadly fall, he ended last year in a "winning" position, but one he could not reveal to the bank without admitting the huge risks, and illegal liberties, he had been taking.

He therefore set out, Bouton said, "deliberately to take losing positions, so as to wipe out his previous potential gains".

The problem was that Kerviel's "losing" positions were much too successful - something Bouton described as a "Greek tragedy", but which might equally be called a French farce.

Last Friday week, as European stock markets headed downwards, "his losing position became immense", Bouton said. Kerviel's overall position - neutral at the start of the day - plunged deeply into the red by the close of trading to the tune of e1.4bn.

His supervisors, finally, twigged something was wrong. The previous weekend, Kerviel was grilled by senior bank officials. He claimed he had created "a new trading technique that was performing very well".

The bank, appalled at what it found, decided to close down (or sell off) all his positions as soon as the markets commenced trading last Monday. When European markets opened, they crashed, after the rout of Asian markets overnight.

Bouton dismissed as "absurd" claims that SocGen had caused the European market crash. He said the bank had been careful to respect the rule that institutions should trade at no more than 10% of the volume of any one market. It was precisely because the bank was so cautious - and honourable - that it lost so much money, he suggested. By the time all Kerviel's positions had been closed down on Wednesday, SocGen's loss had exploded from e1.4bn to e4.9bn.

Bouton angrily rejected accusations that SocGen had "buried" other embarrassing losses by blaming them all on Kerviel. "I wish people would stop and think," he said. "We shifted into a new hole losses from an old hole. How could that go unnoticed by our auditors?"

Many questions remain. Most of all, what on earth was Kerviel trying to achieve? And what were central bankers up to?

Questions are now being asked about whether Ben Bernanke, the US Federal Reserve chair, was told by SocGen or Europe's central bankers that the bank was going to unwind its trading positions last Monday. The French bank informed the Bank of France governor, Christian Noyer, last Sunday about the losses, and it is understood that he told Jean-Claude Trichet, chair of the European Central Bank (ECB). But the Fed denies being told of what was happening in Europe.

Senior banking sources in London say it is "astonishing" if the ECB did not inform the Fed of what was going on. Further, they say that if Bernanke did not know, then his action in cutting rates can be seen as a panic reaction. - The Independent