wpe50.jpg (1913 bytes)      TigerSoft News Service     3/13/2008    www.tigersoft.com    

Carlyle Group Bailout?  You Bet.  
           Fannie Mae and Freddie Mac Bailout?  Sure.
                        "American Socialism for The Rich and Connected."
                                           "Abolish The Fed", Says Jimmy Rogers.

                      The Bailout of Bankers Could Easily Cost Taxpayers $1 Trillion
         (Washington Post - 3/14/2008)    

                  Carlyle borrowed $20 billion with no more than $900 million.                
  (Washington Post - 3/13/2008)

                      --------------------------------    by William Schmidt, Ph.D.  ----------------------------------------
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  Carlyle Group Bailout?

"The Stock Market has to be turned around." Well-connected hedge funds are
struggling to meet margin calls.  It's a good bet that giant MBIA will go into
default and Citigroup and Fannie Mae will need billions from the Fed.  Everytime
I look, we see reports showing rising delinquency report.  The Mortgage
Bankers Association said that 5.8% of ALL home mortages were delinquent
in the 4th quarter of 2007 and foreclosures rose to 2.04% for ALL US
mortgages, not just those in the subprime category. 

But watch who gets the loan guarantees. Compare this with what happened with past
bailouts of Chrysler, Savings and Loans, Lockheed in 1971, NYC in 1975,  and airlines,
NYSE Speicalists in October 1987.  Long-Term Capital Management in 1998.

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http://www.mortgagebankers.org/NewsandMedia/PressCenter/60619.htm )

                                                        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.              

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              "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.         


              "(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
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                                                                 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.)

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                     "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 )

wpe4F.jpg (5363 bytes)             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.  A
sked 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 -

                           Who Will Buy US Bonds with Dollar Falling 11.4%/yr and Accelerating              

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         Read this when you have time:


         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.
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."

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       (Source: http://www.corpwatch.org/article.php?id=14963 )

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