Carlyle Group:
How To Get Rich with The Right Connections
Critics of the
Bush family have long maintained that the secretive Carlyle Group, which runs and
owns much of Carlyle Capital, is a virtual Who's Who in
Washngton political power: George Bush, Sr.,
James Baker, his Secty. of State, James Carlucci, Reagan's
Secty.of Defense and Bush Jr.'s Budget Advisor,
Darman have all sat on Carlyle's board of directors and had
a stake in the company. Critics assert that
this company has dangerously close connections with the Bin
Ladens and have profited inordinately from
the war in Iraq. This is the type of company
that has grown fabulously because of its political connections.
In 2003, when one combines all the companies like US Marine
Repair and United Defense Industries
that the Carlye Group owns, Carlyle is the 11th largest US
military contractor. (Source: Lucky Twice",
Forbes, December 8, 2003.)
Now when times
get tough, this is the type of company the FED will not allow to fail. That
Bush Sr. has
some large and undisclosed stake in the Carlyle Group seems
almost certain. How can Bush Jr. not
want to help his Dad? Won't Bush Jr. profit some day
from his dad's holdings? Privatization has certainly
made these potential conflicts of interest much more more
egregious. Welcome to "Crony Capitalism" or
as Jim Rodgers calls it: "Socialism
for the rich". See the Carlyle Group's website.
THE FED GUARANTEES PRIVATE BANKERS AGAINST RISK!
"Have
some bonds you don't like or are going against you? Don't worry. The FED will take
them
off your hands and give you US Treasury Bonds."
It's now earmarked $400 billion for that. This is truly
a US government out of control! The Washington
Post mocked them today: "Pretty
soon you'll be able
to
walk into any Federal Reserve bank and hock that diamond brooch you inherited from Aunt
Mildred."
The FED will print money just as it pleases for
whomever it pleases. Sure, Wall Street types will
tell us: "This is for all of us if it prevents a
melt-down."
The scope and
scale of this baleout is unprecedented. Perhaps, it shows how very severe the
credit problems are. Or perhaps, the bailout shows how corrupt, predatory and dedicated to
protect the rich and influential, the Federal
Government and the FED have become. Some
have estimated the FED will have to burn $1 trillion
dollars before this is all through. That's
because the severe credit crunch is not over.
Tthere will have to be more meltdowns. Look at
Bear Stearns' chart.
WHAT HAPPENED IN .FEBRUARY.
"(T)he
real problem began in late February, as several of Wall Street's biggest investment banks
prepared to close their books for the quarter
and realized they were looking not only at big declines
in profit from issuance of new stocks and bonds
and fees from mergers and acquisitions, but also another
round of write-offs in the value of their
holdings. In response, the banks began to hunker down, instructing
their trading desks to raise margin
requirements for hedge funds and other customers, requiring them, in
effect, to post more collateral on their heavy
borrowings.
"Thus began a
chain reaction in which hedge funds began selling what they could -- largely
mortgage-backed securities guaranteed by Fannie
Mae, Freddie Mac and Ginnie Mae -- to raise the
cash to meet their new margin calls. That wave
of forced selling drove down the price of those bonds,
which prompted more margin calls and more
forced selling. By the end of last week, the interest rate
spread on those securities -- the difference
between their yield and that of risk-free U.S. Treasury bonds --
had jumped four, five, even 10 times the normal
rate. "Among those
caught up in the vicious cycle were hedge funds run by such blue-chip names as KKR
and Carlyle Group, along with Thornburg Mortgage, a big mortgage lender. News of their troubles
swept through Wall Street, heightening the
sense of panic, as did rumors that Goldman Sachs was about
to post big losses and Bear Stearns was about
to run out of cash. Meanwhile, Lehman Brothers announced
that it would lay off 5 percent of its staff in
what was viewed by many as a first installment of a consolidation
that would eventually eliminate 20 percent of
the jobs on Wall Street. Analysts began to warn that
financial-sector losses from mortgages,
commercial real estate, failed takeover loans and other
bad gets could reach as high as $1
trillion."
(Quoted from - http://www.washingtonpost.com/wp-dyn/content/story/2008/03/11/ST2008031103060.html?hpid=sec-business
)
Bear Stearn is still in free-fall
MY BIGGER CONCERN
While I fear for
the US Dollar and those on fixed incomes, my biggest concern is less Carlyle's sense
of entitlement and their drive for profits at the taxpayer's
expense than the vested interest this
company has in war and military aggression.
Peace is not profitable for them. And their latest failing
with mortgages, shows they are not really equipped to make
money except by using their connections
to policy makers. (I want to add somethng else.
Things are not well, but I can find no evidence supporting
the wild assertion that the Carlyle Group has bought up
nearly all the US bullet makers? But these
are the fears created by military privatization and crony
capitalism.)
"Bush stands in line to profit handsomely from his
son's war making. The former president is on
retainer
with the Carlyle Group, the largest
privately held defense contractor in the nation. Carlyle is run
by Frank
Carlucci, who served as the National Security advisor and Secretary of Defense under
Ronald Reagan.
Carlucci
has his own embeds in the current Bush administration. At Princeton, his college roommate
was Donald
Rumsfeld.
They've remained close friends and business associates ever since. When you have friends
like this,
you don't
need to hire lobbyists.. Bush Sr. serves as a kind of global emissary for Carlyle. The ex-president
doesn't
negotiate arms deals; he simply opens the door for them, a kind of high level
meet-and-greet. His
special
area of influence is the Middle East, primarily Saudi Arabia, where the Bush family has
extensive
business
and political ties. According to an account in the Washington Post, Bush Sr. earns around
$500,000
for each
speech he makes on Carlyle's behalf. One of the Saudi investors lured to Carlyle by Bush was the
BinLaden Group, the construction
conglomerate owned by the family of Osama bin Laden. According to an
investigation by the Wall Street Journal, Bush convinced Shafiq Bin Laden, Osama's half
brother, to sink
$2 million
of BinLaden Group money
into Carlyle's accounts. In a pr move, the Carlyle group cut its ties
to the
BinLaden Group in
October 2001." (Source: http://www.counterpunch.org/stclair05222004.html
)
Jim Rogers: 'Abolish the Fed'
Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished
as a way to boost
the falling dollar and speed up the recovery of the U.S. economy, investor
Jim Rogers, CEO
of Rogers Holdings, told CNBC Europe Wednesday. Asked what he
would
do if he were in
Bernanke's shoes, Rogers, who slammed the Fed for pouring liquidity in the system
and accepting
mortgage-backed securities as guarantees, said: "I would abolish the Federal Reserve
and I would
resign".... Rogers reminisced of the 1970s, when the Fed printed money to avert a
recession,
boosting inflation and then forcing interest rates to more than 20 percent to keep a lid
on
price rises.
"No country in the world has ever succeeded by debasing its
currency," he said. "That's
what this man is
trying to do. He's trying to debase the currency as a way to revive America. It has
never
worked in the
long term or the medium term." For rest of interview this morning -
http://www.cnbc.com/id/23588079
Who Will Buy US Bonds with Dollar Falling 11.4%/yr
and Accelerating
Read this
when you have time:
http://www.financialsense.com/fsu/editorials/willie/2008/0116.html
A Key Part of The Carlyle's Conglomerate
Is Going Bankrupt.
Banks Let Carlyle Borrow $20 Billion
Using only $970 Million.
Carlyle Capital
Corp, Ltd is about to go bankrupt. It has defaulted on $16.6 billion of debt and
failed yesterday to meet new margin calls of more than $400
million. The fund was established in August 2006
with about $709 million from Calyle owners and $300 million
more raised in a public stock sale. That
capital
was
taken to banks who let it borrow 20 times this amount for the purpose of buying mortgages.
Specifically,
Citigroup, Bank of America, Merrill Lynch and
Deutsche AG loaned Carlyle $20 billion to buy mortgage debt
issued by Fannie Mae and Freddie Mac. Carlyle
bought at least "$22.7
billion in long-term securities with
$21.2
billion in short-term loans."
This is not just
a shock to the well-connected investors who created the fund, the fear is that the
liquidators
will throw $16 billion in mortgage securities on a weak market.
And that may bring new margin calls and
possible bankruptcies on Wall Street. No wonder the
Fed is loosening its purse strings and has offered to
guarantee $400 billion in mortgage loans. But the
residential default rate on homes (and cars and businesses
and hedge funds) keeps rising.
Carlyle
Capital is, or was, a hedge-fund run by the Carlyle Group. The parent company had to lend
it $200 million recently. Carlyle Capital was very
important and very visible. The
parent, Carlyle Group,
employees, partners and advisers run Carlyle Capital,
control its board and own 17 percent of the stock.
Most of the other big investors in Carlyle Capital are also
investors in Carlyle Group funds. Carlyle Capital's
expected profits were meant to finance the Carlyle Group's
deals and investments elsewhere. The parent
company Caryle Group manages $75 billion in investments
that range from military contracts to donuts.
"(T)here's the annual management fee of 1.75
percent of equity paid by the investors of Carlyle Capital
to the Carlyle Group.
That's a guarantee of $15 million. Add to that the incentive fee if the fund earns more
than an 8 percent
return on equity, which is not much of a stretch when you're working with 96 percent
leverage.
The incentive fee for
the first half of 2007 came to $4.7 million.... And for what? Borrowing $21.2 billion from
Wall Street
broker-dealers at 5.3 percent and using it to buy asset-backed securities that yield 6.5
percent.
How hard can that
be?", they thought.
(Source: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/09/09/BU89RVHIH.DTL&type=business
)
Now the parent Carlyle Group needs some
financial aid. On March 8th, it was reported that the Carlyle
Group intneds to acquire the $2 billion government
contracting business of consulting giant Booz Allen Hamilton,
one of the biggest suppliers of technology and personnel to
the U.S. government’s spy agencies. That
company has gathered in many privatized functions of the
CIA.
Booz Allen employs more than 10,000 Top Secret Cleared
Personnel.
"(A)mong the many services Booz Allen provides to intelligence agencies, according to
its Website,
are war-gaming –
simulated drills in which military and intelligence officials test their response to
potential
threats like terrorist
attacks – as well as data-mining and analysis of imagery and intelligence picked up
by
U.S. spy satellites, the design of
cryptographic, or code-breaking, systems (an NSA specialty) and
“outsourcing/privatization strategy and planning.” The company’s 2007
annual report spells out several
other areas of expertise,
including “all source analysis,” an intelligence specialty managed by the CIA
and
the Office of the Director of
National Intelligence (DNI) that draws on public sources of information, such
as foreign newspapers and
textbooks, to add texture to data gathered by spies and electronic surveillance."
(Source: http://www.corpwatch.org/article.php?id=14963
)
|
TigerSoft
News Service 3/13/2008 www.tigersoft.com 
