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Unafraid In Greenwich Connecticut

Clifford S. Asness, Ph.D.

AQR Capital Management, LLC

 

Last updated: 5/5/2009

Comments welcome: info@aqrcapital.com

Updated versions available at: StumblingOnTruth.com

 

The President has just harshly castigated hedge fund managers for being unwilling to take his administration’s bid for their Chrysler bonds.  He called them “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”

 

The responses of hedge fund managers have been, appropriately, outrage, but generally have been anonymous for fear of going on the record against a powerful President (an exception, though still in the form of a “group letter”, was the superb note from “The Committee of Chrysler Non-TARP Lenders” some of the points of which I echo here, and a relatively few firms, like Oppenheimer, that have publicly defended themselves).  Furthermore, one by one the managers and banks are said to be caving to the President’s wishes out of justifiable fear. 

 

I run an approximately twenty billion dollar money management firm that offers hedge funds as well as public mutual funds and unhedged traditional investments.  My company is not involved in the Chrysler situation, but I am still aghast at the President's comments (of course these are my own views not those of my company).  Furthermore, for some reason I was not born with the common sense to keep it to myself, though my title should more accurately be called "Not Afraid Enough" as I am indeed fearful writing this...  It’s really a bad idea to speak out.  Angering the President is a mistake and, my views will annoy half my clients.  I hope my clients will understand that I’m entitled to my voice and to speak it loudly, just as they are in this great country.  I hope they will also like that I do not think I have the right to intentionally “sacrifice” their money without their permission.

 

Here's a shock.  When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back.  However, they know, or should know, they take the risk of not being paid back.  But if such a bad event happens it usually does not result in a complete loss.  A firm in bankruptcy still has assets.  It’s not always a pretty process.  Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first.  The process already has built-in partial protections for employees and pensions, and can set lenders' contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend.  But, without this recovery process nobody would lend to risky borrowers.  Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.

 

The above is how it works in America, or how it’s supposed to work.  The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler’s creditors.  Some bond holders thought this plan unfair.  Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court.  So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process.  But, as his quotes above show, the President thought they were being unpatriotic or worse.

 

Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can.  They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrifice”, they are stealing.  Clients of hedge funds include, among others, pension funds of all kinds of workers, unionized and not.  The managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their personal political views.  That’s how the system works.  If you hired an investment professional and he could preserve more of your money in a financial disaster, but instead he decided to spend it on the UAW so you could “share in the sacrifice”, you would not be happy. 

 

Let’s quickly review a few side issues.

 

The President's attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him.  Why is he not calling on his party to "sacrifice" some campaign contributions, and votes, for the greater good?  Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power. 

 

Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities.  That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous.  That hedge funds might not participate in these programs because of fear of getting sucked into some toxic demagoguery that ends in arbitrary punishment for trying to work with the Treasury is distressing.  Some useful programs, like those designed to help finance consumer loans, won't work because of this irresponsible hectoring.

 

Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large.  Find me a hedge fund that has been bailed out.  Find me a hedge fund, even a failed one, that has asked for one.  In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying.  The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people's money. The President’s comments here are backwards and libelous.  Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protestors soon.  Hedge funds really need a community organizer.

 

This is America.  We have a free enterprise system that has worked spectacularly for us for two hundred plus years.  When it fails it fixes itself.  Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.

 

I am ready for my “personalized” tax rate now.

THE WAR IN EUROPE IS ENDED

The War in Europe is Ended! Surrender Is Unconditional; V-E Will Be Proclaimed Today; Our Troops on Okinawa Gain

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Germans Capitulate on All Fronts

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American, Russian and French Generals Accept Surrender in Eisenhower Headquarters, a Reims School

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Reich Chief of Staff Asks for Mercy

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Doenitz Orders All Military Forces of Germany to Drop Arms -- Troops in Norway Give Up - Churchill and Truman on Radio Today

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By Edward Kennedy

Associated Press Correspondent

Reims, France, May 7 --- Germany surrendered unconditionally to the Western Allies and the Soviet Union at 2:41 A. M. French time today. [This was at 8:41 P.M., Eastern Wartime Sunday.]

The surrender took place at a little red school house that is the headquarters of Gen. Dwight D. Eisenhower.

The surrender, which brought the war in Europe to a formal end after five years, eight months and six days of bloodshed and destruction, was signed for Germany by Col. Gen. Gustav Jodl. General Jodl is the new Chief of Staff of the German Army.

The surrender was signed for the Supreme Allied Command by Lieut. Gen. Walter Bedell Smith, Chief of Staff for General Eisenhower.

It was also signed by Gen. Ivan Susloparoff for the Soviet Union and by Gen. Francois Sevez for France.

[The official Allied announcement will be made at 9 o'clock Tuesday morning when President Truman will broadcast a statement and Prime Minster Churchill will issue a V-E Day proclamation, Gen. Charles de Gaulle also will address the French at the same time.]

General Eisenhower was not present at the signing, but immediately afterward General Jodl and his fellow delegate, Gen. Admiral Hans Georg Friedeburg, were received by the Supreme Commander.

Germans Say They Understand Terms

They were asked sternly if they understand the surrender terms imposed upon Germany and if they would be carried out by Germany.

They answered Yes.

Germany, which began the war with a ruthless attack upon Poland, followed by successive aggressions and brutality in internment camps, surrendered with an appeal to the victors for mercy toward the German people and armed forces.

After having signed the full surrender, General Jodl said he wanted to speak and received leave to do so.

"With this signature," he said in soft-spoken German, "the German people and armed forces are for better or worse delivered into the victors' hands.

"In this war, which has lasted more than five years, both have achieved and suffered more than five years, both have achieved and suffered more than perhaps and other people in the world."

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London, May 7 (AP) - Complete victory in Europe was won by the Allies today with the unconditional surrender of Germany.

[The first announcement that Germany had capitulated came at 8:09 A.M., Eastern Wartime, when German Foreign Minister Count Lutz Schwerin von Krosigk stated in a broadcast over the Flensburg radio that Grand Admiral Karl Doenitz, new Chancellor of Germany, had ordered the unconditional surrender of all German armed forces.

[In his broadcast announcing the German surrender, Count Schwerin von Krosigk called upon the Germans "to stand loyally by the obligations we have undertaken."

["Then we may hope that the atmosphere of hatred which today surrounds Germany all over the world will give place to a spirit of reconciliation among the nations, without which the world cannot recover," he added. "Then we may hope that our freedom will be restored to us, without which no nation can lead a bearable and dignified existence."]

Germany's formal capitulation marked the official end of war in Europe, but it did not silence all the guns, for battles went on in Czechoslovakia.

Boehme Says Troops Were Unbeaten

In Norway, however, Gen. Franz Boehme, German Commander in Chief, broadcast an Order of the Day over the Oslo radio tonight commanding his troops to lay down their arms in obedience to Count Schwerin von Krosigk's "announcement of unconditional surrender of all German fighting troops."

The Norwegian garrison surrendered at the order of Boehme, who said that the capitulation "hits us very hard because we are unbeaten and in full possession of our strength in Norway and no enemy has dared to attack us."

"In spite of all that," he added, "in the interests of all that is German we also shall have to obey the dictate of our enemies. We hope that in the future we shall have to deal with men on the other side who respect a soldier's honor * * * clench your teeth and keep discipline and order. Obey your superiors. Remain what you have been up to now - descent German soldiers who love their people and homeland more than anything in the world."

He said he also "expected" that the Norwegian population "will keep the discipline with respect to the Germans that the German soldiers in Norway always kept toward the Norwegians."

Under the terms of the capitulation, the Germans will march across the border into internment in Sweden.

The Swedish Telegraph Agency in a broadcast said an Allied naval force of forty-eight ships had been sighted at the entrance of Oslo Ford and a landing was expected "at any moment."

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Sevez Says Negotiators Differed

By Wireless to The New York Times

Paris, May 7 -- There was one official voice on the surrender heard in Paris tonight or rather it will be heard when the Figaro appears tomorrow morning. That was the voice of General Sevez who, in spite of German's capitulation, told a reporter for the Figaro, that it was he who had signed the capitulation for France.

General Sevez said that the discussion sent on all afternoon and late into the night. German General Friedeberg seemed crushed by the emotional effect of the surrender, General Sevez said.

"Sometimes we were separated from the Germans and discussed questions among the Allies," he declared. "Sometimes the Germans took places facing us. Each point discussed led to further discussion.

"We were seated behind a narrow school table. General Smith had General [Lieut. Gen. Sir Frederick E.] Morgan and me at his right while General Susloparoff was at his left. When the Germans came in, we were already seated. All three Germans bowed before us without a word.

"Repeatedly the Germans went to a telephone booth connected directly with Doenitz. We did the same to talk with our superiors. Only General Smith remained in direct contact with General Eisenhower, whose residence was at Reims.

"When the capitulation was signed General Eisenhower received the three Germans. It was finished at 2:40 o'clock Monday morning. I was called by telephone by General Eisenhower who put a plane at my disposal to take me to Reims. Soon afterward I arrived in the small schoolhouse where the offices of the Supreme Command were."

General Sevez, who is Assistant Chief of Staff of the French Army, said he was called because the French Chief of Staff, Gen. Alphonse-Pierre Juin, was in San Francisco.

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Surrender of Criminals Required

By Wireless to The New York Times

London, May 7 -- The terms made ready for Germany by the European Advisory Commission are believed first of all to call for the disarmament of all forces, the surrender of war criminals and complete obedience to the orders of Allied Military Government authorities for restoring order in Germany.

At a time to be jointly decided by the Allies, the Allied Control Commission, composed of the Commanders in Chief of the British, American, Soviet and French forces in Germany, will take charge of the Reich.

The permanent shape of the future Reich is not expected to be decided until the peace conference is held, perhaps two years hence, but some adjustments of the German border in favor of Poland and the Soviet Union may take place in the interim.

One question that may be settled 'promptly' is that of drafting labor from Germany to rebuild the devastated European countries. More than 10,000,000 men may soon be in Allied captivity and until peace has been signed they will remain prisoners of war and can be sent to work wherever they are needed.

The British and American forces will soon have captured more Germans than the total number of men in their own forces and consideration must be given to the reallocating of these prisoners.

Евреи в командовании Красной Армии во Второй мировой войне

Все права принадлежат Александру Шульману(с) 2009
© 2009 by Alexander Shulman. All rights reserved
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Любые нарушения караются законом об авторском праве, действующим на территории Израиля.

Александр Шульман
Евреи в командовании Красной Армии во время Второй мировой войны

В годы Второй мировой войны в войсках антигитлеровской коалиции на советско-германском фронте, в Европе, в Сев.Африке,в Азии и на Тихом океане, на земле, в море и в воздухе сражалось 1 миллион 685 тысяч еврейских воинов.

В рядах Красной Армии воевало более 500 тысяч евреев,более 200 тысяч из них погибли в боях.

Евреи в командовании Красной Армии

Общевойсковых генералов — 92;
генералов авиации — 26;
генералов артиллерии — 33;
генералов танковых войск — 24;
генералов войск связи — 7;
генералов технических войск — 5;
генералов инженерно-авиационной службы — 18;
генералов инженерно-артиллерийской службы — 15;
генералов инженерно-танковой службы — 9;
генералов инженерно-технической службы — 34;
генералов интендантской службы — 8;
генералов юстиции — 6;
адмиралов-инженеров — 6.

Евреями были:
9 командующих армиями и флотилиями,
8 начальников штабов фронтов, флотов, округов,
12 командиров корпусов,
64 командира дивизий различных родов войск,
52 командира танковых бригад,
73 командира стрелковых, воздушно-десантных, артиллерийских, инженерно-саперных бригад, бригад морской пехоты и войск связи.

Всего в годы войны в вооруженных силах страны служили 305 евреев в звании генералов и адмиралов, 219 из них (71,8 процента) принимали непосредственное участие в боевых действиях, 38 — погибли…


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Poll: Don't investigate torture techniques

WASHINGTON (CNN) — A new national poll indicates that most Americans don't want to see an investigation of Bush administration officials who authorized harsh interrogation techniques on suspected terrorists, even though most people think such procedures were forms of torture.

 

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Хорошей Пятницы

Печень с тревогой ожидала предстоящей пятницы, Почки тоже волновались, что придётся много работать, Глотка разминалась, Нос чесался, Желудок готовился, Жопа переживала, что опять на неё найдут приключения, Ноги с Языком готовились заплетаться, Голова боялась заболеть, даже Сердце кровью обливалось. И только один Мозг радовался, что пятница не за горами.