There are so many revelations coming out of the Jeffrey Epstein files that it’s difficult to know where to start.
But the key question we’re interested in here at the Blind Spot concerns how Epstein navigated and influenced financial markets, and whether he may have benefited from insider information obtained from the highest levels of government to enrich himself and his network.
At the popular level, most people understand Epstein as the organizer of an elite pedophile ring. More recently, there’s been talk of Epstein offering tax avoidance and money laundering services to the rich. The latest revelations, however, imply something far more concerning for markets as a whole. It looks increasingly like Epstein was tapping senior politicians, bankers, and Treasury officials to give him advanced knowledge of political or corporate news so that he and his network could profiteer from it in markets.
Steven Swinford of The Times fished out the below email yesterday. It reveals Peter Mandelson very matter-of-factly gave Epstein the heads up on the €500bn bailout to save the euro. Truly market actionable intel.
But there are other, even wilder revelations. It seems Epstein’s attempt to redeem funds from the famous Bear Stearns High-Grade Structure Credit Strategies Enhanced Leverage fund may have acted as a catalyst for the collapse of Bear Stearns.
The DoJ files include a bunch of legal documents outlining Epstein’s attempt to recover his money post facto, which provide great insight into his cosy relationship with Bear CEO Jimmy Cayne and Chair Ace Greenberg. The files also include a copy of the 2003 New York Post profile of Jeffrey Epstein, which reported that the financier left Bear Stearns around the same time authorities began investigating the investment bank for potential insider trading.
Today, it turns out that Epstein was quietly encouraging Peter Mandelson to get himself an advisory position at Deutsche Bank.
For anyone who was around in the crazy whipsaw days of early bitcoin and who wondered where the deep-pocketed “whale” support was coming from, should be particularly enlightened by the news that Epstein was a prominent investor in bitcoin development with an extremely close relationship with Coinbase.
From afar, it’s not looking good for the capitalist system.
If anything, it looks very much like a deep-pocketed international network of pedophiles has recruited or honeytrapped informants at the highest levels of government and business so that they can profiteer from front-running markets.
We don’t know how lucrative or market destabilizing this activity has been. There are no concrete sums doing the rounds as yet. But let’s face it, they’re unlikely to be trivial. After all, if your network has access to Treasury-level discussions (Larry Summers, ahem), you’re not going to put a mere few quid on a flutter. This is the sort of actionable intelligence that can turn small-time market participants into George Soros overnight. Who needs fancy models or predictive algorithms when they’ve got Peter Mandelson on the inside?
The key thing is realising that governments pursuing market-touching policy don’t stand a chance against such networks, especially in FX and bond markets, if not others (gold, bitcoin, even equities in some cases). It’s not bad policy vs. bond vigilantes, at work anymore. At its worst, it’s any policy the network doesn’t like vs. pre-positioned capital with an agenda.
It’s hard to imagine how honest nodes within democratic governments or central banks could possibly defend themselves against such interests, at least not without recruiting hedge-fund assets (or “national teams) of their own.
If they did resort to that, you might call the exercise countermarketintelligence. But the emergence of any strategic Financial Intelligence Operations Department would, I’d imagine, have to remain highly classified for as long as Peter Mandelson was about. So if it existed, I doubt we’d know about it.
