There can be few fields of human endeavour in which history counts for
so little as in the world of finance. Past experience, to the extent that it is
part of memory at all, is dismissed as the primitive refuge of those who do not
have the insight to appreciate the incredible wonders of the present.
This
weekend, a commodities lesson from the long forgotten past. With the Communist
Party of China busy rigging China’s stock markets, always trying for higher of course, if unsuccessfully so far, my
money’s on a vast slew of new scandals to break in China, where since June,
five to eight trillion USD evaporated from Chinese stocks. A massive hit to the
shadow banking system.
Back
in my day, it was the commodity markets that were the wild west. Thanks to
serial bubbles blowing, “Bubbles Greenspan” “Bernocchio,” and the current Fed’s
“talking chair,” the wild west long ago moved on into much more lucrative rigged
banking and stocks. Better yet, whilst erring commodities gamblers were sent to
jail, banksters and Great Vampire Squids and their ilk, are too big to fail or
jail.
When
the next Lehman hits, and the world plunges back into the next recession, the
next scandal will graduate from the billions into the trillions. Although if we
can run QE forever, ZIRP, and NIRP for long enough, say about another decade
would do it, our brain dead central banksters might just hit the real jackpot
in the Quadrillions. Always keep a little fully paid up physical gold and
silver around against the day our house of cards collapses.
In central banking as in diplomacy,
style, conservative tailoring, and an easy association with the affluent count
greatly, and results far much less.
J. K. Galbraith.
Figure from LME Sumitomo scandal returns
October 23, 2014 6:51 pm Paul Murphy
It
is eighteen years since Norma Cohen, a Financial Times reporter, introduced
this newspaper’s regular commodities column at the time in unconventional
fashion. Recent gyrations in the price of copper on the London Metal Exchange,
Ms Cohen revealed, had led to emergency ministerial-level meetings between the
British and Japanese governments.
The
report pulled the pin on a financial grenade. Later that day, in June 1996, top
brass at the LME were forced to admit that dark rumours of rogue market activity
– which had circulated in London for months – were indeed true: the
world’s most influential metals trader, Yasuo Hamanaka
of Japan’s Sumitomo
Corporation, had been cooking his books, running up
huge losses in the process.
---- As the scandal ripped through the City of London –
engulfing banks like Credit Lyonnais, Merrill Lynch and Morgan
Stanley – the flashy little metals brokerage at the heart of
the affair, Winchester Commodities, through which Mr Hamanaka conducted much of
his business, imploded.
And
Winchester’s two principals, Charles Vincent and Ashley Levett, having banked
scores of millions doing Hamanaka’s business, skipped off to Monaco.
Except
that Mr Levett is back. Nearly two decades after the Sumitomo scandal, which
cost the Japanese firm at least $2.6bn, the Winchester man was at the annual
London Metals Week dinner in London on Tuesday, busy raising money for his new
copper trading venture, Levmet.
It
transpires that Levmet was actually established two years ago as a joint
venture with two brothers from Italy’s Bolfo family, which has a long history
in the steel business. Mr Levett along with Bruno and Massimo Bolfo were hoping
at the time to tap in to the nascent market in steel derivatives, but with
mounting stresses across the steel industry and some ugly volatility in the
price of iron ore, development of the steel forwards market proved
frustratingly slow.
---- “In terms of copper, a big vacuum has been created
within the LME, with a number of big players pulling out due to regulatory
capital requirements, overheads or banks simply de-risking across the board,”
says Mr Levett. “So we see an opportunity there, since there are still plenty of
trading houses, hedge funds and the like that require liquidity. We can provide
that both through our physical metals business and also proprietary
trading.
More
Copper scandal case settled
Robert Lea, Evening Standard Tuesday 26 October 2004 17:26 BST
ONE of
the great 'rogue trader' cases in financial history came to an end in the High
Court today after giant Japanese conglomerate Sumitomo settled its claim
against London copper broker Credit Lyonnais Rouse.
Settlement
of the case over the 1990s copper market fixing scandal in which Sumitomo lost
$2.6bn at the hands of its disgraced trader Yasuo Hamanaka, also takes the
spotlight off CLR boss Roy Leighton, who has just been appointed to a key
position at the Financial Services Authority, the City's top watchdog.
Having
previously recouped $400m in settlements from US trading houses Merrill Lynch
and JP Morgan, Sumitomo this month embarked on its last major Hamanaka-related
case, with a $1.1bn (£600m) action against CLR with whom Hamanaka did business.
However,
after only five days in court, both sides announced today that they had reached
a secret settlement over the weekend.
They said
in a joint statement: 'Without any admission of wrongdoing, CLR has agreed to
pay a contribution to Sumitomo's costs. Sumitomo has expressly and unreservedly
withdrawn all allegations of dishonesty against CLR and its employees past or
present.'
Neither
side would comment on the amount CLR has paid, although it is thought CLR's
settlement does not go further than making a payment to cover Sumitomo's legal
bill.
It is
believed Sumitomo had budgeted £25m to cover the bill of its lawyers, Ashurst,
for what was originally scheduled to be a 30-week case and for which it had
hired £1m-a-year QC Christopher Carr. CLR's costs are reckoned to be vast after
hiring Clifford Chance to mount its defence.
Before
the case was settled, the court heard that Leighton and fellow CLR bosses were
paid £4m bonuses after the broker and another City firm, Winchester - headed by
Charlie 'Copperfingers' Vincent and Ashley Levett - made about $100m profit
from trading with Hamanaka.
Leighton,
a senior executive at CLR parent Credit Agricole, was this week appointed
deputy chairman of one of the FSA's most important regulatory arms, the
Financial Services Practitioners' Panel, regarded as a bridge between the FSA
and the firms it oversees
In our current
rising scandal, Volkswagen just gave a big push to Electric vehicles of all
description. And we still await some statistician or actuary coming up with the
figure on just how much the extra pollution created untimely deaths.
Below, with malice
aforethought.
Volkswagen Said to Manage Faked Test Results From Germany
September
25, 2015 — 2:15 PM BST Updated on September 25, 2015 — 4:48 PM BST
Volkswagen AG executives in Germany controlled the key aspects of emissions
tests whose results the carmaker now admits were faked, according to three
people familiar with the company’s U.S. operations.The criteria, outcomes and engineering of cars that missed emissions targets were overseen by managers at Volkswagen’s base in Wolfsburg, according to the people who asked not to be identified because they weren’t authorized to speak publicly.
Their accounts show the chain of command and those involved in the deception stretched to Volkswagen headquarters. While the company has asked German prosecutors to open an investigation, the executive committee of the supervisory board has backed former Chief Executive Martin Winterkorn’s statement that he knew nothing about the malfeasance.
Emissions testers at the company’s site in Westlake Village, California, evaluated all the cars involved according to criteria sent from Germany and translated into English, and all results were sent back to Germany before being passed to the U.S. Environmental Protection Agency, one of the people said.
If any vehicle failed to meet emissions targets, a team of engineers from Volkswagen headquarters or luxury brand Audi’s base in Ingolstadt was flown in, the person said. After the group had tinkered with the vehicle for about a week, the car would then pass the test. VW had no engineers in the U.S. able to create the mechanism that cheated on the test or who could fix emissions problems, according to two other people.
A spokesman for VW wasn’t immediately available for comment.
More
China Pushes Ahead With Electric Vehicles Amid Diesel Scrutiny
September
25, 2015 — 7:38 AM BST
China
will forge ahead promoting electric vehicles as part of its energy policy to
reduce dependence on fossil fuels, as regulators increase scrutiny of diesels
following Volkswagen AG’s admission to cheating emissions rules.
“The
Chinese government has been paying attention to air pollution prevention given
that it affects China’s development and economic structural adjustments,” Zheng
Shanjie, vice administrator of China’s National Energy Administration, told
reporters Friday in Beijing, in response to a question about Volkswagen and
diesels. “China is now vigorously promoting development of electric vehicles,
which is part of our measures on comprehensively addressing the issue.”
Unlike
Europe, where diesel is popular as an automotive fuel, most cars in China run
on gasoline. The country has in recent years spent billions promoting the
adoption of electric vehicles, doling out research grants and subsidies to
automakers and battery suppliers to reduce air pollution in its major cities
and seize leadership in what it sees as the next mainstream automotive
technology.
China has
said it will target raising the proportion of non-fossil fuel energy use to
total consumption to 15 percent by 2020, increasing further to 20 percent by
2030.
More
"On the whole human beings want to be good, but not too
good, and not quite all the time.”
George Orwell.
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