Wednesday, February 28, 2024

Future is Past

The future is the past, at least that's the hope for FTX's Sam Bankman-Fried (SBF).  CNBC reported:

Lawyers for Sam Bankman-Fried are asking a judge for a relatively short sentence like “junk bond king” Michael Milken instead of the 100 years that a presentence investigation report calls for.

Milken kept most of his ill-gotten gains and spent two years in prison out of a ten year sentence.  In 2020 President Donald Trump expunged Milken's record via a grant of clemency.

Michael Milken was a founding father of leveraged buyouts.  Leveraged buyout organizations morphed in private equity underwriters (PEU).  The Milken Global Institute Annual Conference is a gathering of the influential, many are PEUs.  Some call his gathering "the California Davos."

"Like Mike" is the mantra of SBF's lawyers.

“Milken was released from custody at an age when he was young enough to still make a positive impact,” the lawyers argued. “And he became a tremendous force for good in the world.” 

“Milken’s two-year sentence gave him a second chance. He has changed the lives of countless others for the better with that chance,” the filing said. 

 “Given the same chance, Sam would dedicate his post-prison life to charitable works, finding the best ways to help others, and put them into practice, consistent with his commitment to effective altruism.”

WSJ recently wrote a piece on Milken.  It starts with "Michael Milken wants to live forever."  Is it ever enough for these guys?

SBF's parents want their son not to die in jail.  His lawyers are doing their part:

Defense lawyers in their sentencing submission said that the loss calculation is unsupported by evidence, arguing that “the most reasonable estimate of loss is zero.”
Zero losses don't send a series of interconnected companies into bankruptcy.  The ring fenced assets can appreciate.  Bitcoin traded below $30,000 when SBF went to jail.  It's now over $60,000.

SBF was the face of crypto regulation on Capital Hill.  How might the approval of Bitcoin ETFs by the SEC help SBF's case?  

My wise friend wrote about Bitcoin and the PEU milieu's crypto fandom:

This contrived ecosystem is the power grab of the century, similar to the way trade routes around the world created the East India Companies and their brethren. Think of Bitcoin as the rails for money/investments/tokens/influence into every country of the world for the investment platforms of the oligarchs. Numbers only go up with the fiscal pulse and monetization of everything. It seems insane but it keeps pushing forward and nothing seems to get in the way. At the end maybe they nationalize all the REITs and private equity firms like they did with the East Indian Companies and give the insiders big dividends into perpetuity.
The East Indian Companies undertook PEU like strategies, asset stripping, levered debt, indifference to common people, an obsession with increased profits and the use of government connections and funding to achieve their global aims.

This wise friend wrote about Milken and his ilk:

Perfidious acts deserve pEutrid returns unless you can institutionalize darkness in a portfolio. Thank you Mike Milken and gang. 

The PEU Boys mastered the art of issuing discounted notes where the accretion goes to them in fees and other splits while the partner gets a warrant in the event of spectacular return. Along the way there were overlays: leverage, structured products, permission of conflict of interest, dilution of fiduciary rules, revolving door, accounting rule changes, plus others too long to list. 

I always thought this would end but it keeps getting worse. The Crypto/ AI mania moves on forecasts that only the legalization of Ayahuasca can bridge. 

Milken Conference 2019 had a session on psychedelics,  Tim Ferris moderated a panel

in front of a standing-room-only crowd at the Milken Institute’s Global Conference 2019. It includes a great overview of psychedelic science, investing opportunities, anecdotal personal benefits, legal challenges, and much more.

Motivational guru Anthony Robbins recently released a book calling private equity the "holy grail of investing."  Robbins spoke of his experiences with Ayahuasca in a podcast.  He didn't say if that helped change his view of PEUs.

The upcoming Milken meeting runs May 5-8, 2024.  It's theme:  "Shaping a Shared Future."  Seems a bit dubious given the PEU boys' propensity to not share.  

Update 3-16-24:  SBF's sentencing is scheduled for the end of March.  The Ruth Bader Ginsburg Prize is normally given to women who advance the causes Justice Ginsberg supported during her lifetime.  Elon Musk, Rupert Murdoch and Michael Milken received the prize this year.  Ginsburg's family wants her name removed from the award as it "strayed far" from the mission of the award.