Saturday 26 September 2015

Weekend Update – Asian Fun & Games. VW!



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.

J. K. Galbraith.

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.

No comments:

Post a Comment