Soros Goes Long on Italian Bonds

Remember MF Global, the John Corzine flameout? Guess who was able to write a check for $2 billion (with a B) to buy some of the one year maturity Italian government bonds from MF Global’s bankruptcy trustee? None other than the Daddy Warbucks of the left, George Soros. A few tidbits from the story in the Wall Street Journal today:

The Soros move, in turn, is something of a wager that a wider collapse of euro-zone finances will be averted. Italy has emerged as the center of the financial storm engulfing Europe because, following bailouts of Greece and other nations, Italy is widely considered too big to save should it run out of funds to service its debts, though some on Wall Street view pessimism surrounding the country’s finances as overdone.

Mr. Soros’s credibility as an investor rests in part from a controversial bet he made against the British pound in 1992, which netted more than $1 billion and is considered one of the most successful trades in history.

Scott Bessent, who managed Mr. Soros’s European investments for eight years earlier in his career, returned to Soros Fund Management this year as its chief investment officer. Mr. Bessent is believed to have played a role in the big European debt trade.

Mr. Soros recently took his $26 billion (with a B) fund into his private account:

After a disappointing second quarter, Mr. Soros decided to hand back $1 billion to outside investors and turned his firm into a “family office,” a move that allows it to avoid a new level of regulatory oversight facing many hedge funds.

Of course he did. Don’t want those nasty regulators getting in the way of a little currency manipulation for fun and profit.

His bonds mature in December 2012, giving him twelve months to make sure nothing happens to the value of his investment. Now we know why Obama stands ready to help bail out the Euro. He might as well have the Federal Reserve write a check to Soros for $2 billion (with a B) and be done with it.

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  • retired.military

    ” a move that allows it to avoid a new level of regulatory oversight facing many hedge funds”

    The liberal motto.  Regulations are good for everyone but me.

    “His bonds mature in December 2012, giving him twelve months to make sure nothing happens to the value of his investment. Now we know why Obama stands ready to help bail out the Euro. He might as well have the Federal Reserve write a check to Soros for $2 billion (with a B) and be done with it”

    Make a bet on it since Obama is still in office at that time.

  • Anonymous

    Barry might yet collect that BILLION for his reelection bid.

  • http://pulse.yahoo.com/_OEL6MKIDWFC7LIUHOFEFTKLXQA Stephen

    This line “He might as well have the Federal Reserve write a check to Soros for $2 billion (with a B) and be done with it” demonstrates a lack of understanding.

    Soros PAID $2 Billion for the bonds. Nobody is going to write Soros a check for $2  billion.

    “Make a bet on it since Obama is still in office at that time.”

    Oh, look, there goes another moron. Funny how they run in packs and congregate around misinformation and lies.

    • Anonymous

      “Soros PAID $2 Billion for the bonds. Nobody is going to write Soros a check for $2  billion.”

      He paid $2 billion for bonds that most people would consider to be a very, very poor risk.  They were part of the reason MF Global went bankrupt, by the way – they were considered to be too high of a risk to be fully counted as collateral.  Unless (surprise!) the US or Germany backs Italy’s bonds – and Germany keeps saying they don’t want to.  Italy doesn’t have the cash (and still won’t by this time next year) to pay them off.

      “Oh, look, there goes another moron

      Funny how often we hear this from someone who really BELIEVES in Obama, as opposed to knowing anything about the thing they’re complaining about

    • Anonymous

      “Soros PAID $2 Billion for the bonds. Nobody is going to write Soros a check for $2  billion.”

      He paid $2 billion for bonds that most people would consider to be a very, very poor risk.  They were part of the reason MF Global went bankrupt, by the way – they were considered to be too high of a risk to be fully counted as collateral.  Unless (surprise!) the US or Germany backs Italy’s bonds – and Germany keeps saying they don’t want to.  Italy doesn’t have the cash (and still won’t by this time next year) to pay them off.

      “Oh, look, there goes another moron

      Funny how often we hear this from someone who really BELIEVES in Obama, as opposed to knowing anything about the thing they’re complaining about

      • http://pulse.yahoo.com/_OEL6MKIDWFC7LIUHOFEFTKLXQA Stephen

        “He paid $2 billion for bonds that most people would consider to be a very, very poor risk.”

        “Paid” $2 billion. Thank you for confirming that nobody is going to write Soros a check for $2 Billion dollars.

      • http://pulse.yahoo.com/_OEL6MKIDWFC7LIUHOFEFTKLXQA Stephen

        “He paid $2 billion for bonds that most people would consider to be a very, very poor risk.”

        “Paid” $2 billion. Thank you for confirming that nobody is going to write Soros a check for $2 Billion dollars.

        • Anonymous

          I know you’re kinda dim, but you do know that a lot of the last couple of months of European Union issues have been about who’s going to pay on the Greek and Italian debt.  As of right now, Italy cannot do that – those bonds are (without intervention by other countries) junk.

          And, by the way, he bought $2 billion in face value in bonds – he got them for a lot less than face value.  Other investors say he got them for as little as 80% of face value.On the other hand, a lot of politicians (including Obama) are saying we need to “write checks” to keep the Euro stable.  Which means “writing checks” to Soros when those bonds mature, right before Obama leaves office.  They’re pretending that the International Monetary Fund would be doing it – but the money would come from the United States.I know you have a lot of trouble with this “cause and effect” thing, but that’s just dim.

          • jim_m

            I know you’re kinda dim,

            LOL.  You’re awfully kind.

        • Anonymous

          I know you’re kinda dim, but you do know that a lot of the last couple of months of European Union issues have been about who’s going to pay on the Greek and Italian debt.  As of right now, Italy cannot do that – those bonds are (without intervention by other countries) junk.

          And, by the way, he bought $2 billion in face value in bonds – he got them for a lot less than face value.  Other investors say he got them for as little as 80% of face value.On the other hand, a lot of politicians (including Obama) are saying we need to “write checks” to keep the Euro stable.  Which means “writing checks” to Soros when those bonds mature, right before Obama leaves office.  They’re pretending that the International Monetary Fund would be doing it – but the money would come from the United States.I know you have a lot of trouble with this “cause and effect” thing, but that’s just dim.

        • herddog505

          If Soros doesn’t expect SOMEBODY to eventually write him a check, then why did he buy the bonds in the first place?

          I suggest that it’s the same reason that everybody buys bonds: they expect to get back the purchase price plus interest.  Just now, the interest on Italian 10 year bonds is about 7%.  Further, Soros got the bonds at below-market price because they were sold as part of the bankruptcy of MF Global.  In other words, he stands to make quite a tidy profit from selling the bonds so long as they retain their value.  If the Italian government defaults or (ahem) restructures its debt, then Soros is screwed: the bonds will be worth far less than what he paid.

          If, however, the Italian government doesn’t default (because somebody provides a huge pile of cash to them; who might do that???) and the bonds are paid at full value plus interest, then he will get a nice profit, i.e. somebody will write quite a large check to him.

          • PBunyan

            Actually Stephen’s right.  The check the Fed will end up writing Soros will be for way more than $2 billion.  Still when you’re fabricating hundreds of billions every year, that’s pocket change.

          • herddog505

            I stand corrected!
            :-)

            But I think that you hit on how libs get around it.  The US Treasury will NOT write a physical check to Soros’ order (well, PROBABLY not; who knows with Barry and Tax Cheat Timmy in charge).  Rather, it will borrow some money from China and our other creditors; take some more in taxes from our people; print the remainder; and launder it through the IMF, the European Central Bank, the UN, the EU, and ultimately the Italian government, who will convey the money to Daddy Redbucks via electronic transfers.

            “SEE!  The US Treasury did NOT write a check to Soros!  You reichwingnut rethuglikkkans are so STUPID!”

        • Anonymous

          Stephen, you aptly demonstrate that the ability to type has no association with intelligence or reason.

    • http://profiles.yahoo.com/u/EU5DQWQTTHTPO4A4ZYSL3AAV2U Adjoran

      Hey, Half-wit:  sure, he PAID for his bonds, but if there is a default he won’t get it back.  UNLESS there is a bailout.

      Get it NOW, Zippy?

      Someone as completely ignorant as you should be careful about calling others “morons,” mmmkay?

      • Anonymous

        “Hey, Half-wit”

        Way too much credit given!

        • Anonymous

          I think he’s one of the 99% witless.

  • herddog505

    So, OWS will be marching on Soros’ office any time now, right?  Yep.  Aaaaaaany time.

    / sarc

    If Soros is up to what is suggested*, then it really shows how good an investment he made… in Barry.  “Hey, I bought the president of the United States!  I expect quite a nice return on that investment.”

    Funny how lefties who were CERTAIN that Bush invaded Iraq solely to enrich himself and his buddies in Big Oil and at Halliburton don’t say a word about Soros and his magical investments.  What was it last year?  That he invested in Brazillian oil shortly before Barry gave them money for oil development and exploration AND cut off our own exploration in the Gulf?  Magic, I tell you.

    Magic.

    —-

    (*) Can anybody else think of a reason why he or anybody in his right mind would buy Italian bonds unless he had (ahem) good reason to think that the Italian government will get the money from SOMEWHERE to pay them back?

  • Anonymous

    O.k, so we have offshore Brazilian oil, natural gas, and now this.  Where else is this crony capitalist going to be taking $$ from the U.S. taxpayer?

  • Anonymous

    Great, print money to prop up the Euro, so the USA can default on its own debt later on – especially on the bonds in the Social Security trust fund.

    Maybe you SS privatization advocates should take the tip and buy Italian bonds for your IRAs.

    • http://www.facebook.com/people/Ryan-Murphy/100001624276605 Ryan Murphy

      So CHico. . how do you think the Social security system as stands can possibly be solvent again?  And what do you have against successful private versions which have been done in many places?  You hate them because the government has less control?

      • Anonymous

        I’m not against phasing any system in, as long as it doesn’t involve a default on the debt to American workers who already paid the regressive FICA tax into SS.

        The government will always have to have control, as they do in the system in Chile, to prevent fraud and provide guidelines for prudent investing.  MF Global shows how shaky investor portfolios can be. 

        But I don’t know a category of assets which are rated as safe as, and could be bought in such quantity as, U.S. Treasuries.  Like the SS fund now.   What would the private system invest in?  Presumably there would be a heavy presence of U.S. Treasuries in its portfolios.  Beyond that, what?  Italian bonds, Apple, Berkshire Hathaway, REITs, Facebook?

        • herddog505

          Why should the government have to have control of my or anybody else’s investments?  Why should I believe that the Congress or some nameless functionary in the Treasury Dept. has a better grasp of how I should invest my own money than I’ve got?  And let’s keep in mind that Social Security was not originally intended to be a universal retirement program: it was intended to provide assistance to people who, through no fault of their own, had NO retirement at all.  It was, in a word, charity.

          Now, you have a point: the MF Global incident shows that the market can be risky (especially when democrats are involved).  However, sensible people realize this, and if people knew that they HAD to be responsible for their own retirement funds, then I suggest that they’d be even more aware of that fact and take steps to further educate themselves.  Really, investing is no different than buying a car, choosing a doctor, or any other financial decision that people make every day.

          The problem is that there is a small minority of dimwits in our population who are too damned stupid to take care of themselves, and unscrupulous, power-hungry politician use their sob stories as an excuse to enact policies that give government control over our lives.

          The converse of liberty is responsibility. I am not prepared to give up my liberty because some people have no sense of responsibility.

        • Anonymous

          OK, you take the high libertarian position.  I get it.

          Most systems of governance have a “social safety net” to account for the fact that a hell of a lot of people don’t have the income,  judgment, knowledge or even the basic cognitive skills to save, invest prudently, or defend themselves from smarter people who are sociopathic fraudsters.   I am not so sure it is “a small minority.”  Even very smart people put their money with Madoff and Corzine.  The number of bad calls Jim Cramer has made is legend.

          It’s been offensive to the modern sensibility to have large numbers of beggars and old people starving on the street, a ‘la 18th century Europe.  So who pays to prevent that?  One way or the other, the system accounts for it.  Some guidelines which provide for prudent investing in a pension system while maximizing freedom seem to be the best way. 

        • Anonymous

          Why is it you keep insisting that the so-called SS Trust Fund actually holds marketable anything?  The money collected from FICA during any fiscal year in excess of Social Security benefit payouts is spent immediately in other government programs, e.g. your beloved Afghan/Iraq military operations.  The trust fund receives in return for this largess a non-marketable IOU which can only be sold back to Treasury, which is then obligated to issue real bonds into the real market in order to obtain the funds that the trustees need to pay benefits.  Algore’s famous “lockbox” is empty of real, marketable assets.  The FICA tax receipts have already been spent for, e.g. testing shrimp on treadmills, or Jell-O wrestling in Antartica or other priority public purposes.  As the trust fund dives further into the red (inevitable), the USG – in reality taxpayers and their children – will be forced to pay higher taxes, borrow more, reduce benefits or – gasp – reform the whole Rube Goldberg system for long term sustainability.

          • Anonymous

            The obligations that are bought by FICA collected from American workers are no less obligations of the government than bonds bought by the People’s Republic of China.

            As for “my beloved military operations” you are either speaking ironically or have not read what I have written about those wasteful wars.

    • retired.military

      But Chico you siad that there was no problem wit the Social security trust fund since there are bonds there.  You said repeatedly that it isnt a problem.

      I am totally against bailing out Europe.

    • Anonymous

      Said it ten times before here – the U.S. debt obligations that the SS fund has should be no different than bonds held by the Chinese, Saudis, the banks, or George Soros.

      The main threat to SS is a political threat, when our elected leaders decide not to pay the debt owed to American workers but pay the Chinese and banks instead.

  • retired.military

    And remember Chico.  Your buddy Obama is Soros’s lapdog so he will insure Soros will be taken care of.   And you will still vote for Obama in 2012.

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