House of Paine

bamboo network

  read some wild ass shit

about 

DPRK 
WORLD CURRENCY SLAP STICKS

vis a vis 
the 97 east asian exchange rate crisis 

THOUGHT I MIGHT PASS IT ALONG 


  the pak interview
   
  dateline june 15 , 2003
  a special alert  release
   by global money watch institute



   1        q  well  Mr. pak seems  you have an amazing story to tell
   the world 
 a. yes thats right I do 
 I guess its maybe  too amazing for some folks

 2               q   including  your old employers 
 at BIZWORLD magazine I understand

 a. yes  your right
  they seem to  completely discount my story
  
 3            q. didn’t  they pay for all your  research
 and give you a sabbatical of sorts
 to write it up
  
   a.  yes they sure did
     and  thats the problem 
now that its completed
 they won’t let it out
  
  4       q  who won’t 
 
a  BIZWORLD ‘s  owners 
 Global Foxtrot limited

  5         q what?
 
a well they said some thing like sorry 
this wont fly we think the reds duped you 
 oh and by the way find a new job

   6        q wow 
   ill be honest with you
 twenty years in and around the news business
 I never heard  too many like that
 
a     well welcome to my place
let me add  the other big shows
 in town print electronic
 none of them 
not one
will even touch this story 
  its not a secret  conspiracy 
its a public lock out

 7          q amazing  they put a  padlock on the truth
 ufo stuff gets a better ride
 ummh uh 
 Johnny Milton where are you now 

  willco and out   

you must be ripped

   but  as I understand it 
 these  foxtrot people
 can’t actually  stop  you
 from telling  anyone your story
 
 a thats correct
  i can tell anyone
 any part
  any where
any how any time
 im free  
 to talk 
write whatever
  long as someone
 with a megaphone
 lets me use it
beyond or above that 
  thats where the bigs 
lock out comes in
  even though im jobless
    IM free 
like the rest of you 
to  say anything i want 

 but as far as outreach goes
 
its like eating 
i can eat or publicize
  anything i choose 
   long as  I can pay for it

 8        q  well we have as you know 
a  press conference planned
 for today at 3 pm

 a yes  it should be fun 
the coin  traders i'm sure 
have gotten  the word 

this pak man guy 
is spreading
 DPRK disinfo

  and the big  press 
will send their cubs
 to laugh
  
 circular file material's 
always a laff


q    you’re probably right  
 it won’t fly high 
 not  like that 
baby clone thing 
the other day 

a I wish
 I  could pitch it that way
 p t barnum style
at least those spread fast

 9    q  ya yer right

so
 now we’ve  cleared that  up 
  tell us your tale

a  its probably best   I start at the finale
   the big bang ending
 back in the summer of  97 
   the 	DPRK
 that is  the present  government of north Korea
   fired off  or should i say
activated   a top secret 
 currency intervention mechanism
  they had been developing
covertly for about twenty   years 

  they’d done a lot of small test firings
but this was a total force unleashing 
 the mechanism’s  first  full montee so to speak
 and it was indeed a full montee
they nearly sent the global economy
 into a massive cataclysmic financial 
  contraction
 we almost had world depression two
 
 according to some
 pretty top people 
it was a very close call

   10        q what was the motive behind 
this whole thing anyway

a    simple really
 they wanted to make a hard currency  killing on
 the predictable exchange shifts
 they could create
   by  the mechanism’s  interventions

  with an ability to   blow away a currency 
  there ‘s a down side play
  you  can make yourself  a fortune on the right markets
  spec plays with  perfect  foresight  can be rewarding  
  
 11       q ah OK be specific

a     sure 
  in this case  after laying down 
a well disguised but significant
  obligation  to supply at a future date
 various  national currencies
     and financial issues.and instruments...like stocks bonds mortgages you name it
  long as theyre in the target currency..
     
  q slow down here  for  us little people
       this is not    the trading floor

  a      right well it should be 
   thats who needs this most theyre
 the greedy morons the reds are duping
 
   12        q maybe but  tell us about 
 the underlying exchange markets themselves 

a ok lets see    lets see well to begin with
 there’s  lots of international  traders
 meaning real traders 
people with real goods and services 
to sell or buy
on international markets
 not speculators
these real traders are
 looking  to world money  markets
  to cover both  present and  future
    foreign currency needs
 for    purchases and  payments 

  and then theres asset buyers 
 too ofcourse 
and they can be for real
though more often then not they aren’t

at any rate
 these folks  want the money 
of a particular  nation
 to do something real   with it
 not to  hold it or sell it for other money
  like the specs do
   say  an American  contractor needs some jap steel 
  japs make great steel and cheap too

so  hes got  yen  needs 
  maybe hes bought the steel already 
on credit and has to make 
a scheduled payment  in thirty days
   and he doesnt want to guess what 
the dollar yen exchange will be on pay day
well the specs have made a market for him
 he can buy his yen now or get an option 
either way hes turned his dollar cost for those needed yen
  from a guess 
into a certainty
 a lot of people  want to lock the future in now 
as best they can
 in this case 
   what the dollar cost will be
   so they buy yen  on the future market 
  for delivery  in thirty days  
 
q OK but 

 a wait IM  not done yet 
    now these types of service  transactions
  whether they’re staight forward exchanges
 no different then a tourist makes
 or future hedges like my contractors
either way they all 
   lay the basis  for a lot of
 very elaborate secondary markets

  no sense going into it all

    heres an over used  analogy
imagine a horse race that never ends
 the horses just keep going
 lap after lap around the track
 now imagine the cumulative 
      distance between 
 each pair of horses
 flashes on a board continously
 thats the exchange ratios
those cumulative distances
 the constantly  changing
  
 relative distances
travelled by the horses
not just their postions
  that is what gets bet on those relative changes
 in the  distances each horse
has travelled
 thats  the first layer of action 
everything is laid over that
      the  hedgers
    those nongamblers looking to narrow the risk range
 since they’re  dependent 
on a future   point in time
   boards showing the expected positions 
  at a given future point in the race
   back to the money markets
  this is a real service 
 futures markets let people
      lock that ratio in now 
  by so locking  today’s future  rate
  becomes  tomorrow’s certain rate
  no nail biting 
   waiting for that dates
  spot rate to learn ones fate
  
  13       q spot rate? 

  a oh ah the rate of exchange on
     that day for that day delivery
   the basic exchange market itself
  the real turnover  of holdings 
  
  you see the futures markets
   cure uncertainty
   and thats a real service 
  but like anything else 
 where there’s 
    seemingly uncontrollable 
     unforeseeable action
  wagers go down on eventualities
    

q   lots of bets go down i take it 
  

a  
right lots and lots of   bets

 they out way the real 
transactions by 10 to 1
they all    get laid over these basic money changing services
  it has its beauties
  if the ratio were reversed
if it were all mostly exchange for use or hedge
but its not 
profoundly not 
  the fable of  unavoidable good deeds
  done  by spec sharks
 like pollunating bees  
has long  long since been  dwarfed
 by the byplay
 their specs create most of the volitility
and uncertainty
hedging is meant to surmount 


    to  get some high flying  action 
  cooking 
 speculators
 goose their action 
 they hedge they option 
   they derivate 
  they  leverage 
 all to up the play 

  13     q sounds like roulette wheel stuff 
  

    a  it  would be except the play itself
the bets actually are what propells the wheel
 and determines the various landing places
 no thats nonesense l’ll cut out the analogies 
   
q what 


a sorry i know your point 
  but  the market to be a roulette wheel
  would have to be random with a set of states
   with a corresponding set of  probabilities
   of occurring
 the specs do this they hit the biz types 
on the head with huge asprin bottles
to sell them asprin for the head ache their beatings create

 also the bets are also the play
there is no side action or at least there is an overwhelming
amount of direct interference called 
generously market making
 no   
    markets arent modeled well that simply  
  regularities predictabilities exist 
     the second way to the same result is to claim 
the market knows what its players know
   whats knowable if  its  widely known
     ends speculation 
 it would be pure service then
but it would also 
happen once and for all
on the spot not before and over and over like
  a dream trauma
    
to know something to really know it 
could make you rich in a world that
generates so much uncertainty


  14      q thats why the insiders freak everyone

   a     exactly they know the future
    so its unlawful to trade on that info

    the incentive to appear to be running 
 a clean show is obvious
    even suckers won’t knowingly 
     play at a  rigged table 
  
q so wheres the edge come in 
  wheres the poker champs skill  

 a the speculators are only better if  there exists
    incompleteness they can exploit
    the market info may be only useable
        ie profitable  
          to the first wave of reactors
  that grab     the fallible markets fumbles
   few and rare or many and often
  as they may be 


 the informed hunches
 the guy who sees one step
 ahead cause hes been there before
    or the guy who can feel
    the depth or 
    height of a  sudden big move as it just gets started
     
  15    q  as a  sidewalk super can you tell the diff
between luck and insight

  a not really
    except the good ones are just too lucky 
    we’re told by some of  the math models 
          god love them
         if the market’s are a best possible  reflection
    of the future no one can beat it except by luck
    making a fortune on that type of  market 
     is literally
    a fortunate wealth
  i know a chap that  actually believes in
 in these  math conjuries 
 he really trusts they  model
 something that exists
 this side of the looking glass
  for one thing he    thinks George Soros
  is no wizard
 he’s  just the inevitable   high tail of the bell curve
some one had to end up around there
   just happens to be old george
    so dont trust him he 
  could go cold any moment
   fortuna means fate
 the course of events 
 that remain ever and always
principally out of your control
       information is no edge
 when all have it 
and know  what it means
 or none have it 
and its just  a crap shoot

16 q whats the small player assumption

a ah now theres a huge huge  point
  yes  the small player assumption
   what a villain that plays in my tale
   if you are governing players size 
  by this you are    
 assuming everyone is  too small to effect the market
 the math  here uses analytic numbers
 makeing each player a nonarchimedean quantity
  an infintesimal in nonstandard terms  
 like too much ecomath it assumes away the problem
 by  saying no player can ever grow large enough
 to effect the market  solely by his own actions
   well no real market is like this ofcourse
  and 
 this is crucial
   because if your big enough to be noticed
 your big enough to give away
the advantage of  your inside knowledge
  when you act on it 
 the possibility observation of your acts
by  suspicious or  wised up  copy cats
  leads to a dilemma 
either dribble out your play over time
and risk a premature swamping  
 by sharp eyed imitating band wagoners
   or plunge 
  all at once risking a rise by over taxing 
the availible resources to cover you
 or after the kill finding some flags down on the play
and  you get a possible foul call pending 
 and an investigation


all corners crams and punch thrus 
 to work must
 go undetected
stealth trading is the only trading
 if your after a big kill
   and brother thats tough to pull off
  how do you grab 
that big a piece of the action unnoticed
  even if your not made in the placement

you move big enough 
and you move  the numbers
yourself like a mole digging to close to the surface
 they see your tunnel
and pounce

  say your shorting the badt
  now you need to cross up the other big players
  thats where good will comes in 
 all those good little tips
   set up the one big bum tip

    17   q why when they found they’d been burned didnt they scream

 a come on for the opposite reason 
they kept quiet when they prospered
from the tip offs 
the other side of the competitive coin
 why warn the opposition
just dont fall  it yourself again
 hope its them next time

18 q how did they figure to rebuild their team
 after the burn

a  well  given time and turn over 
the dupe roster refills all those little micvahs
  to anew crowd and the slow tentative
from the  opposite direction
  reapproach to the burnt  indespensibles
pay off 
gragually the water  cannon slowly
  reloads rebuilds pressure

    19   q  yes  lets see
corporations   desire to eliminate
 the uncertainty of 
 normal exchange volatility
 so this  service is  provided by
  speculators  who are gambling on 
which way the currency will flux

a  right 
for them  the speculators
its a   gamble
    the market  is a bunch of
 revolving  wheels  of fortune 
  its  chance 
  no clear shots
 the corporations certainty 
is their uncertainty 
 that is unless
  you can predictably
 influence the wheels motion
 with out a tilt getting  called on you

q  quite


a   the faith of the players 
  rests on a homely hope
   the real life small player assumption
 no one playing is   big enough 
to have that sort of impact
 and if they are big enough
 the history of stock and commodity 
markets is riddled with big chancers  
and in the past some have
 succeeded for a while
but  they were and are
  not  able to avoid detection
  and exposure for long
 or this is the faith of traders
a necessary faith one can say
unless your in on it
 few traders believe in rigs 
 any more then in pro baseball
  i didnt  
that is until 
the north koreans 
came through the swinging doors
 at me 

 q right until now 

a for years  no one caught on at all 
  actually the operation 
as incredibly complex
 as it was
involving scores of fronts
 and twice as many dupes
  never caused a serious ripple
even after the   ’97
 tsunami
oh I should add
  they never used a dime
 of their own money up front 
all their own trades 
 were credit trades
early on they figured how to tap
the credit facilities of several major banks

 backed only by  
 “ borrowed”  creditworthiness
  q what


a  yes they used without 
detection “the good faith and credit’
 of  several of the worlds 
leading  private banks

  21  q they did it all with filtched bank  
  credits

a yes  
heh this type of thing happens often enough
remember that guy from BarRents a few years back 
 BILLIONS WASNT IT HE LOST 
ofcourse its easier
 when you know 
   no ones ever  going to 
  approach  the “marked”  bank to collect
 their winnings
   cause you’ll never lose
   thats what busted other such scams

   22  q OK now the north Koreans go out 
and contract through fronts to pay out
 in the future various currencies
 
 a right in exchange for dollars or yen today
   thats what their after HARD STUFF

q  all right I’m with you so far then what
 
 a then when all was ready
they just went out 
and  blasted the hell 
out of  the weakest links and kept on blasting
 till it ignited the self moveing stage

 q 24 what about their socalled bubble meter
   
a   you see they discovered quickly 
the easiest regularity
 in the system  to spot 
  was a bubble forming
 they had a calculation involving the relation 
between the expansion rate
of a countries financial assets 
and the growth rate of real tradeable output
 find a bubble pop a bubble
and a bubble will pop
  and heres what they found next
  
   when one big enough bubble pops
 others follow pop pop pop
 because  after a big one goes south
the market stops boiling
  a bubble big enough will bring on
 the bear cold front
 the whole market temperature drops
drive out the hot  bull  fast and furious enough
  the whole market does a head change
  flee for safety 
like a drunk driver  ten seconds
 after a fatal  car accident 
  he s clear headed now 
  sees hes run over the 6 year child 
 knows his in for it 
so he steps on the gas
  and flees the scene

so sure enough  they then figured out
 how to pop bubbles

 that had to be done the hard way 
by creating a vast string of dupes


  by the way they never bothered 
to learn how to  blow any bubbles
  they all too soon realized 
the system
 by itself produced all
the bubbles they needed 
spontaneously
 specs just by being  specs
 blow bubbles
 without bubbles 
the game has no  frist prize
 sure specs want plus sum action
  but only to draw in more outside rubery 
all that spec play 
wouldnt be much fun
 if the action didnt move fast
  and often
 and didnt bring in the
 long long line of  bigger fools
 for specs themselves  
each downs as good as up 
  long as the ups out weigh the downs 
  by say one percent a month 
alls well 
  cause  of  the  rubecube rule 
which states the  rube suck in power rises
 as the cube of the market  rise
 ofcourse it does
 we’ re back to bubble dynamics   
    rubes need  that brightening glow
  that “come sucker follow the light “
 now  jump right in
 the bonfire’s fine   
and of course the sharper 
the streak runs up
  the shorter and higher it is 
 the better
  the only bad market is a slow market
  motionless dramas are not watched 
  the stasis where the market poses
 must be brief
    
  thats why the tug of war isnt a big spectator sport
  in the doldrums sucks the rubes scatter
once their nerves crack
  the chips dont  get harder to win
just less and less plentiful
  then again there is the fear of too much sharp action
  hence the monthly climb for say at least a 6 month period
 the dopes take time to thaw out of the last major burning
  since 67 weve had 4 turn arounds of various dimensions
  but the rubes only rush when its too late
    make them a nice new market and they hesitate

q oh

a you ‘ll like this 
the theory of stock markets
 cant stop run away bubbles
 they call it the southsea paradox
  because the guy who showed it most elegently
  used that mother of all stock rages
  concluding
  if the system were really rational 
  the soth sea company would now own everything
 or would have at one point
  and then spun off  a better  part 
 and the market  would have found it better
 and it would reswallow south sea
 and on and on to kingdom come 
q back to the red raiders

a yes so  now they blown away
 their targets 
   
 one after the other till they’d so 
cheapened their obligations
 they stood to make a fortune
 because the rates were now  wildly
favorible to them after the smash ups
 they’d induced with the mechanism

   25 q I see but how did they manage to
 suck in the other players to handle their action

a right question
 thats where all the good will
 built up over time
by letting them in on kills little bunches at a time 
came in they convinced
 the duped players to take their action





  a by the way they also experimented with bond 
 futures even a few state chartered stocks 
when a currency collapses
 their denominated bonds
 collapse as well
 not just because their credit rating colapses
but also because 
of the expected inflation 
explosion

 such are the wages of a rigged bet
   
  26  q yes not a happy moment one suspects 
   for the chap on the other side
 even if he thinks its all 
just beastly luck and the lot

 a  kinda like finding   a cat kill
  on your stoop 
 when you were expecting a pizza 

  27 q how many times did they fire this thing back in ‘97
 
a 9 times in three groups of three shots 
  each group fired at
 fairly seperate intervals
 each shot fired in a  quick bursts
of shots
  over a period of 
no more the 5 trading days
    
 
   28    q and  then what happened

  a     well all  went more or less
according to plan   they  blew   away
 currencies right and left 
 turning even a few former winners
 into the  riff raff  of three continents
  
  many  remember that time im sure 
   the whole Asian exchange structure quaked 
     Malaya    Indonesia Taiwan  south  Korea
    the shrewdly judged DPRK whack 
 kicked off a huge Asian tigers 
financial correction
 and then beyond that 
  a world wide currency culling
 and financial crisis
 that  hit out as far as
 Russia brazil even Israel and  south Africa
  q  like dominoes they fell many of us  remember it well
  

 a  right 
 

 29       q and the north Koreans afterwards
   what they find

a    well when the debris settled  they found
  they’d made
 a   fortune
 after buying the various  now pancake flat
dirt  cheap   what nots floating in the wake 
of the rolling bust up

 they dutifully  fulfiled all their  contracts
 
    30   q   you got any idea how much
they made

a ive heard estimates as high as 300 billion
  dollars thats twenty  thousand dollars 
for every adult in the DPRK

  31     q  wow  how did a place like north Korea
  know enough and have enough clout 
   to pull something  this big  off
 theyre not even 
 supposed to be 
 capitalists 
let alone market manipulators

    a you’d be surprised
 at  the type of outfit they’d 
  pulled together over the prior
 25 years
  its a long tale 

32   q tell it 
we can cut 

well it seems 
old kim’s   politbureau
 started being interested 
in world financial markets 
 as far back as the  mid 70’s
  back then they were looking for
 a source for hard currency to buy
 western   technology
 useable in  advanced weapons 
  systems
 unlike say poland 
 basically the whole place 
was one big army base and arms plant
  
 this was the ultima thule 
of military-industrial complexes

they found quickly enough 
   private western  banks
 were more then  willing to lend
 the hard cash to them
 the problem was paying it back
 they themselves  couldn’t earn enough
  on world markets
  to service the borrowings
  they tried and it was a disaster 
  it turned out they had little to sell that
  the transnational corporations
 were willing to buy from a socialist enterprise
  actually thats a whole other story
 

   32 what  whole other  story


 a OK while working on this story
 I discovered every soviet bloc state
  got hoisted by the same neck  rope around then
  for years since the second world  war really 
since stalin dropped his iron curtain 
none of them 
could get much of a loan out of western banks 
then boom it was made availible all at once
like cheap heroin      they all got
 hooked 
  on borrowed western  bank  dollars
  east germany hungary poland
   all of them including the one asian 
   outfit the DPRK  
 which like the rest got way
 over their heads in a flash


   I had specialists tell me
  those  mid 70’s easy creidt
   recycled oil  dollars days 
 when 
the  big western banks were pushing
  dollars harder then a 
  dealer on 110 th street 
  pushes his smack

  its hardly consensus
but many scholars of the era
are convinced that 70s  borrowing spree
busted the block
not reagans  star wars 
 yes they bought 
  a  taste of the good life
  and cause it was unsustainible
   it ended up croaking 
the whole  soviet set up  

q kinda like the second mortgage 0%
 for a year trap they drub the ghettos with

a exactly only the banks wanted 
access to  whole economies 
  in this scam 
 not just  a few slum blocks
 well it worked look 
what a can opener
it turned out to be
 it was  a free fire zone for the
 transnationals there for ten
   years





      q  its all amazing once you dig a little
isn’t it

a you bet

    33 q at any rate back to Pyongyang
   they unlike their easteuro comrades 
kept the faith

a yes in a sense
 but  they’ re in a jam 
 they have big  dollar/ yen  debts 
and no means
  to service them
   they the land of judche
   just another third world 
   scape grace
 right then a curious confluence occurred
seems that an economist from the central  planning office
 and two nuclear physicists
  in their spare time had cooked up this 
 algorithm they claimed might model
 any complex trading system
 
 one day these folks some how
convinced one top bureaucrat
 on the hook 
for the borrowing thing
 that maybe they could 
dig all the  way out
 by playing  the money markets
 if they could just find
 the right  wedge and the right edge
  and maybe this algorithm
was simply magically 
mysteriously exactly that
  the proper tool

  34 q what about the hacking
 into bank credit systems
 you mentioned


  a  well as i understand this happens all the time
  the corporate systems are struck successfully every day
 a generation or two of kid-hackers do it for sport
 kills are beneath them
  we here
  about this from time to time but real scores are hushed up
  like shoplifting numbers no one boasts about these things
least of all   private banks


  at any rate the boys up  at the complex near the  resevoir
  at chosan 
 “ the chosan few” as i came to  call them
( an odd twist on 
  a  maudlinly named  us  marine vet group)
  also learned how to get a lot of their computation work 
done on other machines as well
 under the leadership of economist yoo
and with the unending  fresh insights    
  from the kengs