Friday January 5, 01:09 am Eastern Time
World Renowned Billionaire Cuts Deal With Greenspan--Rescues Markets Around The World From Disaster
By Paul Harvey
NEW YORK (Reuters) - World famous investment legend Victor Lazlo rocked the international investing community this evening when it was revealed that he secretly did an about face, reversing his steadfast bearish stance of nine months. Mr. Lazlo, nicknamed Victor "The Predictor" by traders around the world, is famous for his timely calls on investment vehicles such as bonds, currencies, energy and a little known hi-tech start-up named Rambus Inc (NasdaqNM:RMBS) located in Mountain View, CA. Always showing a keen flair for the dramatic, he confounded all the pundits with his brilliant bet to sell the 10 year note and go long the US stock market on Wednesday afternoon just hours before the Federal Reserve announced a half a percentage point reduction in the key federal funds rate, the rate that banks charge each other for overnight loans. The rate cuts, rare because they occurred between meetings of the Fed's policy-making body, are intended to stop the world's largest economy from slowing more.
Associated Press sources have confirmed that Federal Reserve Chairman Alan Greenspan made an emergency phone call to the Mr. Lazlo about an hour before the official rate cut. Mr. Lazlo had been on record the past nine months warning of the risk of recession due to steadily declining asset prices and an erosion in consumer confidence. He had purportedly been short $10-15 billion USD on once high flying stocks popular with the investing public such as AKAMAI TECH INC (NasdaqNM:AKAM), PRICELINE.COM (NasdaqNM:PCLN), E-LOAN INC (NasdaqNM:EELN), VENTRO CORP (NasdaqNM:VNTR) and AMAZON COM (NasdaqNM:AMZN).
A long-time former business associate of Mr Lazlo who asked to remain anonymous commented, "Alan Greenspan is well known for having the utmost respect and regard for Mr. Lazlo's prescient views on the nature of the US economy and it's financial markets. Mr. Greenspan deemed it necessary to request his advice as to when the best time to enact an intervention should occur, in order to stabilize the financial markets." That is the story which has been widely disseminated by the mainstream media the last couple of days.
Now here is the rest of the story about what happened on the historic day of January 3rd, 2001.
Alan Greenspan was totally unprepared for what he was about to hear when he rang Mr Lazlo. He had some disturbing news, and he shared it with Mr Lazlo. "You know Vic, I've gotta be frank. We're in a little bit of a bind here. I've got word that there are two major banks in Japan that are going to go under any day now. They tried to climb out of the hole they were in by speculating on stock futures and technology stocks this past year. They have only made things worse by getting themselves deeper into debt from which they cannot recover. I don't even have time to get into all the details of the debacle in the hedge fund community. Not only are we facing another Long Term Capital kind of situation, but we have more than one. They are so large and so leveraged that they make LTCM look like the size of Cramer Berkowitz. All the banks here in the US are on the hook to these guys, and they are going to fail if we don't do something." Mr. Lazlo paused for a minute, agreed that it was time for the Federal Reserve to take some serious action, and agreed that he would need to help out to make it happen. But Greenspan was not prepared for the ultimatum he was about to be given. Mr. Lazlo reportedly told Greenspan, "Sure, cut fifty. Any more than that and they will panic. But gimme an hour or two to put on some positions and call a few friends before you do." Greenspan, retorted, "I can't let you front-run the announcement. Isn't there something else we can work out?" Mr. Lazlo reportedly told him, "Remember Alan, I am still on record as telling the investing public not to buy until rates are cut for the second time. If you fight me on this, I will go public with an announcement to sell on the first cut of fifty, saying that I have information which leads me to believe that you are doing a panic rate cut because there are five major world banks that are going to collapse and shut down. People will listen to me and disregard your ease and there will be pandemonium. Do you really want to be known as the Federal Reserve Chairman who presided over the two largest financial crashes in history?" (The other crisis being the infamous crash of 1987 where the Dow Jones Industrial Average plummeted 508 points or 22.7% in one trading day, just months after Greenspan became Chairman of the Federal Reserve.) Greenspan, dumbfounded for a minute and still in shock, realized he had no choice. Backed into a corner, he couldn't let the world financial markets collapse, causing undue pain on billions of people around the world after the ensuing depression which would surely follow. "Ok Vic, but I don't like this one bit. I guess I don't have much choice. I can't be responsible for causing irreparable damage all in the name of principle. You've got 90 minutes."
Just like that, with one phone call lasting no more than two minutes, occurred the greatest financial hoodwinking in the last one hundred years. Fast forward 30 minutes...
Treasury traders in the "pits" at the Chicago Board Option Exchange, knew something was up. One trader commented to another. "You see that GIGANTIC offering? That's not who I think it is, is it? Could it be?"
"Nahh, that order has the look and feel of the the 'Predictor', but he wouldn't be dumping his paper now in this market! The Naz is making new lows and treasuries are flying!"
Yeah, I guess you are right, he did say it wouldn't be time to go long until the second rate cut. We aren't even going to get the first cut until Friday, and of course everyone knows that Vic is right--you don't go long the market until right before the second cut."
Suddenly they both looked at each other with a big grin. "Ahh", they chimed in at the same time. "It's gotta be HJ "Philip" Morris. He's the only other player big enough for an offering that size. I wonder why he would be dumping his 10 year paper ahead of Vic?"
"Well I dunno. But he's pretty tight with Vic and he may know something so we better square our positions so we can make a little dough off this."
"Yeah, good idea."
In truth, it was Victor Lazlo dumping his billions in ten year paper. He was jettisoning the safety provided by those government backed securities in order to free up billions in cash so he could place a gigantic tech bet ahead of the announcement he knew was on the way.
Furious? Well you shouldn't be. You should thank Victor Lazlo for saving your portfolio, your retirement, even your job. If it wasn't for his billions and his name on the line supporting technology stocks when they were on the brink of disaster, you might be witnessing the greatest financial collapse in modern civilization. Without Victor Lazlo's backing this market would not have been able to withstand the selling pressure developing from the all too-true rumors that were spreading about impending bank failures. Well let me tell you, there wasn't just one bank that was about to collapse, there were a half dozen. The financial aftershocks caused by this revelation would have caused a domino effect of epic proportions, leading to massive bank failures worldwide. But Victor "The Predictor" Lazlo is not a bad guy. He has the best of intentions. He could have profited handsomely without making that deal with Greenspan. He could have shook his head and said, "Sorry, Uncle Al. I'm long treasuries and short $15 billion in tech stocks. I'm short several hundred thousand out of the money OEX calls. You 'aint gettin a vote of confidence out of me. People will discover the truth soon enough and half of my shorts I will never have to cover. They are going to zero. No dice." Instead, in another flash of brilliance and generosity, he hatched a plan that saved the US--make that the World--economies. And he did it in a way that under normal conditions would be highly illegal and subject to intense criticism. But you can't criticize a man who gets results that benefit everyone, even if he benefits the most himself.
Most of the money pumped into the markets which fueled a 325 point rally in the Nasdaq--it's largest one day gain ever, came from Victor "The Predictor" Lazlo. Not only did he not wait for the second rate cut before going long like he advised traders around the world to do, but he didn't even wait for the first rate cut! He got long 60 minutes ahead of time. The worlds most successful investor has orchestrated himself long at the bottom, but now that he has single handedly stabilized the markets, now is your chance to climb aboard. You see, Victor Lazlo and Alan Greenspan won't tell you this story. They don't want you to think they've got the whole world in their hands. That might scare you. Or infuriate you. So they came up with another idea, to get this market pumping a little faster and get consumers to feel more confident and rescue this economy in crisis. Victor told Greenspan to go ahead and cut the discount rate another 25 basis points today so we could technically have that second cut and he could tell investors it was safe to get back in. Well here's your chance. Victor Lazlo was quoted a few hours ago as saying. "The Federal Reserve has cut rates for the second time in as many days, and like I stated before, after the announced second rate cut now is the time to increase your exposure to US equities across the board. This is the buy signal I have been predicting."
Investors worldwide can breathe a huge sigh of relief this evening thanks to Victor "The Predictor" Lazlo. He has given you the all clear signal to get long equities. Thanks to him everything is back to normal. Now go and give your loved ones a hug.
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Associated Press reporters Ron Kirkpatrick and Michael J. Snerdly contributed to this report. |
