Monday, October 31, 2011

Reality Bites: 3 biggest holes in Europe's debt deal

Hole #1- The bigger the better… According to Fortune, the first big hole in the plan seems to be a lack of firepower behind the rescue effort. The European bailout fund, the European Financial Stability Facility, is set to get larger in the plan thanks to some clever financial engineering, going from 440 billion euros to around 1 trillion euros. The fund would be levered up by offering a kind of state-sanctioned risk insurance on euro zone bonds, which would cover the first 20% of losses if it defaults. It should be noted that this is for new bonds, not existing bonds already in trouble. The second objective would be to arrange a special purpose vehicle to help the private sector buy bonds.

Sure, a trillion euros seems like a lot of money, but it can be spent very quickly given the large scope of the crisis. The markets seem to be very worried about the fund's ability in propping up the Italian and Spanish bond markets. The ECB took emergency action in August to keep those markets functioning by intervening directly in the secondary bond market. In just three short months the ECB has had to purchase a whopping 170 billion euros of Italian and Spanish debt. The deal announced last week would have the ECB transferring those bond-buying duties to the EFSF. Without the ECB back, it is clear how quickly that 1 trillion euros can be soaked up.

Hole #2 - As good as your credit That leads to the second big hole in this plan: Credit worthiness. The EFSF will issue bonds that are ultimately backed by the credit ratings of the 17-member nations of the euro zone. Since euro zone countries can't print money like the ECB can, the bond's credit worthiness will be based solely on the fiscal outlook of the member nations. That's scary given the economic outlook for the euro zone. Eurosat announced this morning that unemployment in the euro zone broke into the double digits at 10.2%, surprising analysts. Unemployment in Spain rose the fastest at 0.4% to a mind-blowing 22.6%.

Hole #3 - Greek haircut The last major hole in the deal is surrounding the Greek haircut. The deal calls for banks to accept a "voluntary" 50% haircut on their Greek debt. How this would be accomplished wasn't explained but it would probably force banks to swap their current bonds for ones that have a long maturity. While there has been some agreement with banks over the massive 50% haircut, nothing is official, so they can still refuse to participate. Without strong buy-in from the banks, the deal could trigger a credit event that could set off Greek credit default swaps. That could crush banks and hedge funds that are long Greek debt….


Guess How Much Money Jon Corzine Could Walk Away With From MF Global

BusinessInsider writes: The big story of the day in finance is the bankruptcy of MF Global -- the futures trading house run by ex-Goldmanite Jon Corzine. Even before filing for bankruptcy, the firm was suspended from dealing with the New York Fed, and two exchanges banned the firm's traders from accessing their trading floors. A major contributor to the firm's downfall: Outsize risks taken by Corzine, as it bet heavily on European debt last year, something that obviously hasn't gone so well.

So what happens when the firm goes bust, Corzine leaves, and lots of other people lose their jobs?

DealBook reported that Corzine's severance package could allow him to walk away with around $12 million in the event of a sale. That's $12.1 million for joining a company and, in two years, flying it into a mountain.

Someone go tell Occupy Wall Street pronto.



Stocks posted a double-digit gain in October. But the markets ended the month with Europe bringing everyone back to reality.

First, the scoreboard:
Dow: -276.1 pts, -2.3%
S&P 500: -31.8 pts, -2.5%
NASDAQ: -52.7 pts, -1.9%

And now, the top stories:
Global stock markets had been rallying big time after last Wednesday's huge EU leaders' summit. However, European debt markets have been telling us that there continued to be major problems in the area. This morning, stock markets finally caught on to Italy's woes when the cost of Italian debt soared this morning. Italy is the third largest economy in the eurozone. We've been alerting MoneyGame readers to this red flag for a while. People clearly have little faith in Silvio Berlusconi's ability to turn the country around. Most major European markets closed down 3%. Italy's FTSE MIB Index closed down 4%.

Late in the U.S. trading session, Bloomberg reported that Greek Prime Minister Papandreou wanted to hold a referendum on new reforms. This really spooked markets, which slid further after the news.

One firm that suffered from making bad bets in Europe was MF Global, which finally filed for bankruptcy today. DealBook reported that Interactive Brokers was in talks to buy parts or all of the company as late as last night. But those talks obviously fell apart. MF shares were halted today. However, shares of JP Morgan, MF's largest unsecured creditor, traded and they fell 5.3%.

MF's bankruptcy filing was affecting more than just the shareholders. A CME trader told us that trading activity on the floor dried up as MF Global was a major clearing firm. And MF wasn't allowed into the building.

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Corzine's MF Global files for bankruptcy; What happened to the (unaccounted for) $37 Billion?

Jon Corzine's bid to revive his Wall Street career crashed and burned on Monday when his futures brokerage MF Global Holdings Ltd filed for bankruptcy protection following bad bets on euro zone debt, Reuters reports

Corzine, who once ran Goldman Sachs and became governor of New Jersey, had been trying to turn MF into a mini Goldman by taking on more risky trades.

But once regulators forced it to disclose the bets on debt issued by countries including Italy, Portugal and Spain, the firm's fortunes quickly began to unravel.

MF Global's meltdown in less than a week made it the biggest U.S. casualty of Europe's debt crisis, and the seventh-largest bankruptcy by assets in U.S. history.

The Chapter 11 bankruptcy filing came after talks to sell a variety of assets to Interactive Brokers Group Inc broke down earlier on Monday, a person familiar with the matter said. MF Global's shares plunged last week as the company's credit ratings were cut to junk….

Regulators called an emergency call this afternoon. Does this mean a broader risk? Stay tuned for more details as they become available...


Goldman sued for $1.07 bln

According to Reuters Goldman Sachs Group Inc has been hit with a new $1.07 billion lawsuit for having allegedly sold risky debt that it expected would tumble in value to an Australian hedge fund, causing that fund to become insolvent.

The lawsuit by the Basis Yield Alpha Fund alleges fraud, breach of contract and negligence, and seeks to recoup $67 million of losses plus $1 billion of punitive damages. It was filed on Thursday with a New York state court in Manhattan. Basis Yield was managed by Sydney-based Basis Capital Funds Management Ltd.

Basis Yield sued three months after a U.S. judge dismissed a similar case, saying the fund could not sue in federal court under U.S. securities laws because its investment in the Timberwolf 2007-1 collateralized debt obligation did not qualify as a "domestic" transaction.

Timberwolf was cited in a scathing U.S. Senate panel report in April that faulted Goldman, Deutsche Bank AG and others for hawking debt they expected to perform poorly. That report said Goldman kept marketing Timberwolf even after Thomas Montag, an executive who is now Bank of America Corp's co-chief operating officer, in an email to a colleague called Timberwolf "one shitty deal...."

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Corzine Races to Save MF Global

Jon S. Corzine, the former New Jersey governor, raced over the weekend to find a buyer for MF Global Holdings Ltd. in an attempt to rescue the securities firm he now runs from a crisis partially of his own making, The Wall St Journal reports.

MF Global was nearing a deal late Sunday night to file for Chapter 11 bankruptcy protection as soon as Monday and sell assets to Interactive Brokers Group, said a person familiar with the matter.

The tentative agreement, reached after a marathon weekend of negotiations, could end the short tenure for Mr. Corzine at MF Global….


Batman Took Over Wall Street

Wall Street was barricaded Sunday afternoon and it wasn't to keep the Occupy Wall Streeters out.

This time it was closed off because filming for the next Batman movie "The Dark Knight Rises," directed by Christopher Nolan, was taking place, BusinessInsider reports.

We're told the scene being shot on Wall Street was a bank robbery scene in the building directly across from the New York Stock Exchange and Federal Hall.
Neither Christian Bale's character Bruce Wayne (aka Batman) nor the Batmobile was in sight.

The street, however, was filled with Gotham City SWAT trucks and police cars and there were tons of flashing red and blue lights.

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China Has To Throw Europe A Lifeline To Rescue Itself

Forbes writes that all eyes will be on China at this week’s G-20 meeting in Cannes. The expectation—or at least the hope—is that Beijing will contribute to Europe’s bailout fund, the European Financial Stability Facility. The Greece-rescue plan announced on Thursday in Brussels calls for an increase in the size of the EFSF from 440 billion to a trillion euros.

At the press conference announcing the deal, French President Nicolas Sarkozy said that the EU would like support from Beijing, and he called his Chinese counterpart, Hu Jintao, to ask for help. EFSF chief executive officer Klaus Regling immediately flew to Beijing and held consultations with officials late last week.

In response to the overtures to China, President Hu praised Sarkozy and European leaders for showing “determination” but did not promise support for their plan. Then, Zhu Guangyao expressed Beijing’s reluctance after meeting with Regling. “We need to wait for the technicalities to be clear and also to carry out serious studies before we can decide on investment,” the finance vice-minister said.

Finally, Xinhua News Agency ran a commentary today explaining Beijing’s position. “Amid such an unprecedented crisis in Europe, China can neither take up the role as a savior to the Europeans, nor provide a ‘cure’ for the European malaise,” the official organ stated….

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Europe Tries to Recapitalize Its Banks

According to the good folks at Bloomberg Europe’s largest banks may raise just a tenth of the total capital shortfall estimated by regulators, fueling concern policy makers’ plans to bolster the region’s lenders could fail.

European Union leaders ordered banks last week to increase the ratio of “highest quality” capital they hold by the end of June, creating a shortfall of 106 billion euros ($150 billion). Of Europe’s 28 largest lenders, only eight will need to raise a total of 11 billion euros from investors, Huw Van Steenis, a Morgan Stanley analyst, wrote in an Oct. 28 report…Rather than tapping investors or governments, firms are trying to hit the 9 percent core capital target by adjusting risk-weightings, limiting dividends, retaining earnings, reducing loans and selling assets…

Madoff's wife, son deny knowing about scheme

The wife and son of financial swindler Bernard Madoff said in their first interview to be broadcast on Sunday that they knew nothing of his estimated $65 billion Ponzi scheme, but feel shame for his "unforgivable" crime, MSNBC reports

Defrauded Madoff investors have long viewed the convicted swindler's sons, wife and other family member suspiciously, arguing it is impossible that they did not know about his lies. No family members have been criminally charged.

Madoff's younger son Andrew told the CBS program "60 Minutes" that the family was shocked when his sobbing father confessed his crime to them in December 2008. He said his mother Ruth's first question was "What's a Ponzi scheme?"

"She didn't even understand that. I think it was me who answered and said that "It means that it's all fake,'" Andrew Madoff said. "(Bernard Madoff) followed that up and said 'Yes, I've been lying to all of you — all of these years. I've been lying to everybody. I've been lying to myself.'"

Zombies worth over $5 billion to economy…Seriously

According to MSNBC the walking undead reflect our anxieties over scary times
Zombies may be the walking undead, but their contribution to Main Street’s economy is very much alive. In modern times, the zombie genre has evolved from a cult following to a highly popular theme. 24/7 Wall St. estimates that the today’s zombie genre economy is worth billions of dollars.

Think way beyond zombie movie ticket sales. Think about DVD sales, video games, comic books, novels, Halloween costumes, zombie walks, merchandise, conventions and even zombie art. Add to that all of the websites, homemade movies, Facebook sites, YouTube sites and other forms of “digital” zombies, not to mention music. And if you think the financial tab has been high so far, by the end of 2012 the tab is going to be far larger….


Occupy Wall Street Tested by Sudden Storm

Reuters reports that a rare October snowstorm tested the resolve of anti-Wall Street protesters camped out in a New York park Saturday, as police arrested demonstrators in Denver and evicted others from a Nashville plaza.

In Washington, demonstrators marched in sleet to the U.S. Treasury to urge higher taxes on the financial sector, beating a drum and chanting "Banks got bailed out, we got sold out!"

Buffeted by strong winds, protesters hunkered down in snow-covered tents in Zuccotti Park in Lower Manhattan, where the Occupy Wall Street movement against economic inequality first set up camp six weeks ago, sparking dozens of similar occupations in city parks across the United States.

A day after New York authorities confiscated their generators due to safety issues, hundreds of protesters struggled to stay warm and dry after more than an inch of snow fell in the city with temperatures forecast to drop to freezing overnight.

"We knew this would be tough.

We didn't start this as a sort of summer of love, it's the winter of discontent," said Alan Collinge, 41, from Seattle, poking his head out a tent. He estimated one in five protesters in the park had left due to the unusually early storm, but added, "They'll be back, we're not going anywhere."

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Sunday, October 30, 2011

Weird’s Deep Thoughts (Sunday Edition) Saab, GM, Chrysler and Why Sweden is More Capitalist than the US

The usual image we have of the Swedish economy is that they’re all rather dreary socialists, revelling in being able to charge some of the highest tax rates in the world. However, there are certain dimensions along which it is possible to prove that Sweden is more capitalist than the US.

Swedish car maker Saab may finally have secured its future after Chinese groups Pang Da and Youngman agreed to buy the company for €100m (£88m).

The loss-making Saab is in bankruptcy protection after failing to pay suppliers. It has not produced a car at its famous Trollhaettan base since April.

Numerous attempts to secure emergency funding for Saab, which employs 3,700 staff, have broken down, and Swedish courts appeared on the verge of scrapping its bankruptcy protection – leaving the company at the mercy of creditors.

The reaction to the local car company going bankrupt is rather different in the two countries. When GM decided that it didn’t want to keep subsidising Saab’s losses, the Swedish government said, in effect, that if no one wanted to buy it then of course it should go bankrupt. That no one actually wants it is proof perfect that there should be no government subsidy.

The Swedish government has been as good as its word too: when Spyker bought Saab they didn’t interfere, when Saab went bankrupt they didn’t interfere and now the Chinese have bought it they didn’t interfere.

This is just one of the ways in which Sweden just isn’t as socialist or left-wing or even modern day liberal as many seem to think. The country has no national minimum wage, no inheritance tax, capital and certainly corporate taxes are lower than in the US, in fact, the tax system as a whole is less progressive than that of the US or UK. It just isn’t what many seem to think it is….

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China a 'Savior' for Europe? Don’t hold your breath, sucka...

Europe should not expect China to ride to the rescue as its "savior" from the debt crisis, though Beijing will do what it can to help a friend in need, state-run news agency Xinhua said in a commentary on Sunday, according to CNBC.
The head of Europe's rescue fund sought to entice China on Saturday to invest in the facility by saying investors may be protected against a fifth of initial losses and that bonds could eventually be sold in yuan if Beijing desires. Though China has expressed confidence that Europe can survive its crisis, it has made no public offer to buy more European government debt.

Xinhua, in an English-language commentary, said China could not stand by while its largest trading partner foundered.

"Beijing's good-will gesture is a good response to those who see China as a threatening rival to Europe. Despite differences in politics, economy and culture, China and the EU are still good friends and partners," it wrote. "However, amid such an unprecedented crisis in Europe, China can neither take up the role as a savior to the Europeans, nor provide a 'cure' for the European malaise," Xinhua added.

"Obviously, it is up to the European countries themselves to tackle their own financial problems.


Meet The Mysterious Trading Firms Who Control The Price Of Commodities

Reuters writes: - For the small club of companies who trade the food, fuels and metals that keep the world running, the last decade has been sensational. Driven by the rise of Brazil, China, India and other fast-growing economies, the global commodities boom has turbocharged profits at the world's biggest trading houses.
They form an exclusive group, whose loosely regulated members are often based in such tax havens as Switzerland. Together, they are worth over a trillion dollars in annual revenue and control more than half the world's freely traded commodities. The top five piled up $629 billion in revenues last year, just below the global top five financial companies and more than the combined sales of leading players in tech or telecoms. Many amass speculative positions worth billions in raw goods, or hoard commodities in warehouses and super-tankers during periods of tight supply.

Their reach is expanding. Big trading firms now own a growing number of the mines that produce many of our commodities, the ships and pipelines that carry them, and the warehouses, silos and ports where they are stored. With their connections and inside knowledge -- commodities markets are mostly free of insider-trading restrictions -- trading houses have become power brokers, especially in fast-developing Asia, Latin America and Africa. They are part of the food chain, yet help shape it, and the personal rewards can be huge. "The payout percentage of profits at the commodities houses can be double what Wall Street banks pay," says George Stein of New York headhunting firm Commodity Talent….

How big are the biggest trading houses? Put it this way……

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Saturday, October 29, 2011

Weird’s Deep Thoughts (Weekend Inspiration Edition): Occupy Wall Street: It’s Not a Hippie Thing

Don’t be fooled by the drum circles. Today’s protests have more in common with the anti-Hoover 1930s than the antiwar ’60s and ’70s BusinessWeek reports.

For all its social snootiness, Wall Street has suffered far more from the meddling of members of its own class than from intrusions by those outside it. It was Franklin D. Roosevelt, an aristocrat, who held the lords of finance responsible for the Great Depression—securing legislation to establish the Securities and Exchange Commission, asserting federal authority over the stock exchange, and appointing a wealthy stock trader, Joseph Kennedy Sr., to ride herd. Not much better, from Wall Street’s perspective, was FDR’s Cousin Teddy, who as President prosecuted trusts as illegal monopolies. Or Louis Brandeis, a Harvard-trained corporate attorney turned crusader against the concentration of wealth and power.

These men changed the system from within, as have the ablest regulators in recent times. Arthur Levitt Jr., a vigorous SEC chairman under President Bill Clinton, was first the president of Shearson Hayden Stone. (Levitt is a member of the board of Bloomberg L.P., owner of Bloomberg Businessweek.) Paul A. Volcker cut his teeth at Chase Manhattan before running the Federal Reserve and becoming the gruff animating voice behind the Volcker Rule, which bans commercial banks from engaging in proprietary trading. It’s hard to imagine any of these “opponents” of Wall Street mounting a barricade. They didn’t need to storm the castle to know where the secrets were hidden.

In its very amateurism, Occupy Wall Street represents something new. Although it’s attracted some celebrities and well-heeled supporters, participants come chiefly from outside Wall Street. Many are unemployed or poorly employed. These are not bankers or reform-minded professors; these are also-rans in the capitalist race, upset with the system itself. Their chief weapon is neither eloquence nor argument, but their physical presence… As critics have noted, the protesters are not in complete agreement with each other, but the overall message is reasonably coherent. They want more and better jobs, more equal distribution of income, less profit (or no profit) for banks….


Goldman sued for $1.07 bln over “ one sh#tty deal”

Goldman Sachs Group Inc has been hit with a new $1.07 billion lawsuit for having allegedly sold risky debt that it expected would tumble in value to an Australian hedge fund, causing that fund to become insolvent, according to Reuters

The lawsuit by the Basis Yield Alpha Fund alleges fraud, breach of contract and negligence, and seeks to recoup $67 million of losses plus $1 billion of punitive damages.

It was filed on Thursday with a New York state court in Manhattan. Basis Yield was managed by Sydney-based Basis Capital Funds Management Ltd.

Basis Yield sued three months after a U.S. judge dismissed a similar case, saying the fund could not sue in federal court under U.S. securities laws because its investment in the Timberwolf 2007-1 collateralized debt obligation did not qualify as a "domestic" transaction.

Timberwolf was cited in a scathing U.S. Senate panel report in April that faulted Goldman, Deutsche Bank AG and others for hawking debt they expected to perform poorly.

That report said Goldman kept marketing Timberwolf even after Thomas Montag, an executive who is now Bank of America Corp's co-chief operating officer, in an email to a colleague called Timberwolf "one shitty deal."

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Deals, deals, deals: MF sale could be Sunday

MF Global is considering ditching a plan to offload its futures trading operation in favor of striking a deal for the entire company, The NY Post has learned. The development was first reported yesterday on

The beleaguered broker-dealer, run by CEO Jon Corzine, is aiming to find a suitor for the firm by Sunday, sources said. That said, MF Global is working on a number of other possible strategies to right the battered firm’s ship, the sources added.
A spokeswoman for MF Global declined comment.

The New York-based broker dealer, which has seen its stock crushed over the past week due to revelations about $6.3 billion in exposures to European sovereign debt, has been looked over by a number of firms for a possible deal, according to sources.

Goldman, State Street, and Australia-based Macquarie bank are among the firms that have eyed MF, according to a report in the Wall Street Journal. People familiar with the bank’s plans tell The Post that MF has narrowed possible suitors down to four or five serious prospects and is pressing to strike a deal in the next 48 hours -- at the latest…

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NYC Fire Dept Removes Gas, Generators From Protest Site; Rain/Snow is Expected

New York firefighters removed about a dozen gasoline cans and six generators from Zuccotti Park, where Occupy Wall Street protesters have camped for almost six weeks, Mayor Michael Bloomberg said.

About 30 to 40 firefighters were sent to the park along with the police department’s community affairs unit, Bloomberg said today on his weekly WOR radio show.
The equipment, which helped power computers and mobile phones and keep people warm as temperatures dipped near freezing, are safety hazards and illegal, Bloomberg said. Forecasts call for rain and snow in the metropolitan area tomorrow….

Groupon Appetite Is Strong

Bankers Confident IPO Could Bring Up to $11.4 Billion Valuation for Deals Site….According to the Wall St Journal don't expect discounts on shares of daily-deals site Groupon Inc.

Wall Street bankers are confident they have enough demand to sell the Chicago Internet company's initial public offering at its proposed price range of $16 to 18 a share, say people familiar with the IPO. The people added that the shares may be able to fetch a higher price, though they cautioned that no decision on pricing had been finalized.

The bankers' assessment of demand follows a week of "road show" meetings with investors, including a packed gathering of a few hundred attendees at the St. Regis hotel in Manhattan.

Go figure… If you've checked out the sh#! Groupon offers on your email lately, you're probably as puzzled as we are.


Barron's Explains This Week's Stock Market Rally With One Sentence

BusinessInsideer writes: So, some people are a little confused by this week's huge rally in the stock markets. After all, Europe's debt crisis isn't over and the U.S. economy has its share of problems.

This week's activity was all about Wednesday's EU leaders' summit. Ultimately, the markets were pleased. The Dow Jones Industrial Average jumped 339 points in its first trading session after the summit. However, analysts' takes on the EU leaders' proposals were mixed. And most warn there are major issues regarding the implementation of any of the agreed upon proposals. Bottom line: Europe is far from being fixed.

So, why did the stocks markets close 4% higher for the week? Here's what Michael Santoli says In the new issue of Barron's:

Sometimes, when enough folks are positioned for the world to end rapidly, the mere suggestion that it might occur gradually is enough to energize the bidders.

In other words, bad news can be good news if you are expecting worse sh#!. And stock markets are priced based on expectations of the future.

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'Dear Jamie Dimon': O.W.S. writes to bankers

After railing against Wall Street greed for weeks from their encampment at Zuccotti Park in New York, a group went on the move Friday, dropping off thousands of letters addressed to Wall Street execs according to an CNN report

Although the protestors have based themselves at the park in Lower Manhattan, a number of the biggest "Wall Street" banks actually have their corporate headquarters in Midtown, a few miles to the north. While bank executives did not emerge from their offices to accept the letters, group members outside the bank buildings used their "people's mic" system to ensure that their sentiments were heard loud and clear.

"Every day, the 99% are fighting to survive, and it's the hardest work you can imagine," said Maria Maisonet of Brooklyn, reading out a letter addressed to JPMorgan Chase CEO Jamie Dimon, Bank of America's Brian Moynihan, Citigroup's Vikram Pandit and Wells Fargo's John Stumpf.

"My nephews and my son tell me they feel like bums because, even though they're trying and trying, they can't get a job. You are the problem, not us."

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Watch Out, Warren: Here Comes China's Berkshire Hathaway

Long before investors developed their latest love affair with gold, executives at the Shanghai-based Fosun group saw its potential. In late 2003, when the precious metal was selling at $300 an ounce, the conglomerate learned through government contacts that a loss-making, state-owned gold mining company in northeastern China was desperate for capital to finance a restructuring and upgrade its technology. The execs, who were gearing Fosun to China’s rapidly growing middle class and anticipating an increasing appetite for gold jewelry among Chinese women, smelled an opportunity. They invested 161 million yuan ($25 million) for a 20 percent stake in Zhaojin Mining Industry Co. and persuaded an 18 percent-owned Fosun affiliate, Shanghai Yuyuan Tourist Mart Co., to do the same. In the process the two companies became the first private investors in a Chinese gold mining company.

Fosun’s biggest challenge was cultural: getting Zhaojin management to respond to a profit-driven board that included two Fosun representatives, rather than to government regulators. To that end, the new shareholders instituted a benchmarking system that set targets for containing costs even as the company ramped up production. They also boosted research and development spending, a move that helped Zhaojin develop a patented oxidation technique that improved the company’s gold extraction rates while reducing costs by 22 percent. Over the next three years, Zhaojin quadrupled its production while keeping costs below those of its rivals, boosting the company’s gross profit margin to 55 percent, the highest in China’s gold mining industry.

The turnaround allowed the company to go public in 2006 with an initial public offering on the Hong Kong Stock Exchange that raised HK$2.5 billion ($320 million) and diluted Fosun’s stake to 14.55 percent……


Friday, October 28, 2011

News You Can Use: Land a job in a boomtown!

What recession? CNNMoney reports that workers are landing jobs that pay six-figures in the oil boomtowns of North Dakota. But the abundance of jobs and money comes with some steep trade-offs, including a lack of housing and extremely harsh winters.
At 3.5%, North Dakota's unemployment rate is the lowest in the country. (Nationwide, the rate is 9.1%). But among the small towns that lie along the Bakken oil formation, like Williston, Watford City and Belfield, unemployment is just 1.5%.

Many of the highest-paying jobs are at oil companies, where workers make an average salary of about $100,000, often with little-to-no experience or need for a college degree.

Halliburton (HAL, Fortune 500), Continental Resources (CLR), Hess (HES, Fortune 500) and Whiting Petroleum (WLL) are among some of the biggest players in the area. And jobs include everything from working on a rig to hauling crude and equipment in trucks to helping with administrative work, said Shawn Wenko, workplace development coordinator for the city of Williston.

But it's not just the oil companies that are hiring. The oil boom has brought such a big influx of people that every single industry -- from hospitality to retail -- has been hit with overwhelming demand as a result. Driving down Main Street in the more than 20,000-person town of Williston, N.D., which has the highest average salary in the state of a little more than $57,000 and about 2,500 job openings at any given time, you'll see one hiring sign after another.

At fast-food chains, the going rate is about $15 an hour. Hair salons, pharmacies, banks, hospitals, gas stations, bars and clothing stores are also desperately looking for employees and paying a pretty penny to keep them from defecting for the oil fields. Even the local strip club is booming, with dancers making up to $3,000 a night….


Hedge Fund Takes Goldman Back to Court

Defunct Australian hedge fund Basis Capital filed suit against Goldman Sachs in the New York State Supreme Court, claiming fraudulent misrepresentation in its 2007 sale of two collateralized-debt-obligation securities, according to a copy of the filing dated Oct. 27.

The Wall St Journal reports that Basis originally filed suit against Goldman last year in the U.S. District Court for the Southern District of New York, but its claims were dismissed in July when the judge ruled the sale was a foreign transaction. The federal court, though, allowed the fund to replead facts regarding the location.

Basis, which managed around US$1 billion before its collapse, is seeking US$67 million in compensatory damages and US$1 billion in punitive damages, according to the filing.

"It's one thing to be forced to give someone back their money; it's another to be penalized for conduct that has wider-reaching ramifications," Basis Capital director Stuart Fowler said in an interview Friday….

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$1 Billion Long Island Scam Derailed

Eleven people, including two doctors and seven retirees, participated in a long-running disability-pension scheme that had the potential to defraud the U.S.'s biggest commuter railroad of up to $1 billion, federal prosecutors in New York said Thursday.

The scam allowed hundreds of Long Island Rail Road employees to retire as early as age 50 with combined pension and disability payments that in some cases added up to the salary they had received when they were working, prosecutors said. Some of the employees charged, who had claimed to be disabled, were seen doing things that would seem to be precluded by ...

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Raj and Rajat Go Hollywood

The story of billionaire hedge fund mogul Raj Rajaratnam, which shocked the investment community and led to the indictment this week of former Goldman Sachs board member Rajat Gupta, is headed to the big screen according to CNBC reports.

A New York production company says it is in pre-production for "Billion Dollar Raja," billed as "an investigative financial mafia drama," to be written and directed by New York filmmaker Nayan Padrai, who says he hopes to begin filming next fall. No word yet on the cast.

Rajaratnam was convicted in May on 14 criminal counts in what authorities called the largest hedge fund insider trading case in history. Earlier this month, he was sentenced to eleven years in prison. This week, his attorneys filed formal notice he plans to appeal.

The case has had no shortage of storylines or characters — many of them captured on undercover FBI audio recordings….

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Bill Gates Thinks Everyone Only Really Needs A Few Million Dollars

Bill Gates, the world's second-richest man, doesn't think you need anywhere close to that much money.In fact, he would settle for a five or six followed by six zeros, BusinessInsider reports.

“I can understand wanting to have millions of dollars, there’s a certain freedom, meaningful freedom, that comes with that. But once you get much beyond that, I have to tell you, it’s the same hamburger," Geekwire quoted the Microsoft founder saying during a talk at the University of Washington's Computer Science & Engineering Department.

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Hedge Funds in Asia: The crocodiles are coming!

According to the Economist: Where they are not greeted with apathy, Asia-minded hedge funds often face antipathy. Since the financial crisis of the late 1990s “fund” has been a four-letter word throughout Asia. George Soros, a famous hedge-fund investor, is still reviled for aggravating and profiting from the crisis. When the Chinese refer to hedge funds as ju e, or “big crocodiles”, it is not by way of a compliment on their killer instincts.
Despite muted interest and outright scorn, though, more and more hedge-fund managers are determined to make their mark on Asia. They see a lot of money to be made, a lack of entrenched competition and a vast number of potential clients.

Ravenous growth and maturing equity and credit markets should mean Asia offers a lot of opportunities. “Our investable universe has doubled in the last five years,” says one happy executive at a fund that recently launched in Hong Kong. At the same time there is little by way of an asset-management industry in much of Asia. Investors’ portfolios mostly consist of just property and stocks, which leaves lots of room for hedge funds’ offerings. And there are vast numbers of millionaires to whom such offers can be made….


Weird’s Deep Thoughts (Friday Edition) The 10 Worst Stereotypes About Powerful Women

Forbes writes:
No. 1: Ice Queen It is, of course, a Catch-22. “A woman who shows emotion in the workplace is often cast as too fragile or unstable to lead,” Bock said. “A woman who shows no emotion and keeps it hyper-professional is icy and unfeminine. For many women, it can be a no-win situation.”

No. 2: Single and Lonely Harvard lecturer Olivia Fox Cabane notes that the strong perception that powerful women are intimidating to men and will need to sacrifice their personal lives may stop women from going after power. Even those women who aren’t interested in marrying, face harsh judgments. Men get to be “bachelors” while women are reduced to “spinsters” and “old-maids.” In fact, when Janet Napolitano was nominated Secretary of Homeland Security, critics said her being single would allow her to “spend more time on the job.”

No. 3: Tough The first female Executive Editor of The New York Times, Jill Abramson is anything but stereotypical. She had a hard-charging career as an investigative reporter at The Wall Street Journal and edited her way to the top of the Times masthead. She’s also a true-blood New Yorker and is writing a book about puppies. Despite her complexities, she must contend with being called “tough” and “brusque,”

No. 4: Weak Costa Rica President Laura Chinchilla, the country’s first female leader, told me that successful women face typecasting largely because society is still adjusting to women’s recent decision-making power. Chinchilla believes the most pervasive stereotype is that women are “weak,” a perception that may stem from women’s greater desire to build a consensus. “We understand success not as the result of just one person but as the result of a team,” she said. “[It’s a] different way of dealing with power [that] is misunderstood as a kind of weakness.”

No. 5: Masculine The notion that powerful women must be, lead and look like a man really aggravates Christine Lagarde, the managing director of the International Monetary Fund. In a video interview with FORBES she said–pumping her fist–she hates the idea that “you have to look like a businessman.” She admitted she sometimes feels the pressure to look the “right” way, but tries to resist not being “overly businesslike…..”


BlackBerry Owners Flock to IPhone 4S in Record Numbers

BlackBerry owners are trading in their devices in record numbers, highlighting RIM’s struggles and Apple’s expected success with the iPhone 4S, Forbes reports.

Gazelle, an online tech product buyer, said the number of BlackBerry trades is up from its record highs earlier this month, citing an 80 percent increase last week. Android trade-ins, along with old models of the iPhone, also spiked.

Users’ sudden increased fleeing of BlackBerry phones follows the recent outages of Research in Motion’s service. BlackBerry users all over the world were left without Internet and instant messaging capabilities for days as RIM struggled to fix the problem. The outages may have been the final straw for many BlackBerry users contemplating moving on to another smartphone…

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More US Companies Shed Light on Political Spending!

Reuters reports that more American companies are bending to shareholder pressure to reveal their spending to sway political campaigns despite court decisions allowing unfettered corporate cash in elections, according to a study released on Friday.

Colgate-Palmolive [CL 90.94 0.40 (+0.44%) ], IBM [IBM 186.34 4.37 (+2.4%) ] and Merck [MRK 34.31 0.77 (+2.3%) ] are among the big names with the best grades from the Center for Political Accountability, a foundation-funded group that pushes companies to open up their books.

The landmark Citizens United ruling by the U.S. Supreme Court in 2010 ended most restrictions on campaign donations by corporations and unions, giving these groups the ability to write fat checks to back political causes. But pressure has been building for years from shareholders of public firms to shed light on such spending. Proponents of disclosure argue that getting involved in politics poses big risks for a company's reputation and brand.

Target [TGT 55.79 0.64 (+1.16%) ] learned that lesson the hard way, when it gave $150,000 in 2010 to a Minnesota business group that backed a Republican candidate for governor who was a staunch opponent of gay marriage…


SEC Enforcers Frozen as Watchdog Unleashes ‘Chilling’ Probes

The U.S. Securities and Exchange Commission’s internal watchdog has castigated the agency for missing the Bernard Madoff fraud, spotlighted employees who viewed online pornography and called for a criminal probe into the ethics of the SEC’s former top lawyer.

His blunt reports have won Inspector General H. David Kotz admiration on Capitol Hill, where lawmakers summon him to testify about his efforts to improve what they have criticized as flawed management and oversight at the regulator.
At the SEC, it’s a different story. While inspectors general are rarely beloved, a backlash against Kotz among staff and managers has grown in intensity and spread to the legal community outside the agency. Now critics led by former SEC Chairman Harvey Pitt say Kotz is undermining the market regulator’s effectiveness….

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Thursday, October 27, 2011

Dollar creamed in euphoria over Europe crisis deal

The dollar took its strongest beating against a broad range of currencies in more than two years on Thursday as investors celebrated Europe's plan to contain its long-running debt crisis by dumping the safe-haven greenback according to Reuters

The dollar appeared the biggest loser from the deal, which could refocus attention on weak U.S. budget fundamentals. The euro rose 2 percent to a seven-week high against the dollar and the U.S. currency slumped to a record low versus the yen.
The euro last traded around $1.4189, up 2.06 percent on the day. The single currency's peak for the session was $1.4247, its strongest since September 6, according to Reuters data. On its way higher against the dollar, the euro burst through its 200-day moving average, adding momentum to the rally.


Whoops! CITI: Failure To Trigger Greek CDS Could Cause The Whole Euro Bailout To Fall Apart

There's an ongoing debate about whether or not credit default swaps (CDS) on Greek debt will be triggered in the event of the proposed 50% writedown. BusinessInsider writes that The crux of the debate seems to rely on whether or not the writedown is "voluntary."

However, Citigroup's Willem Buiter thinks failure to trigger these CDS would be catastrophic.

First, he argues that a 50% writedown is indeed a credit event worthy of triggering the CDS…. Failure to trigger would all but discredit the entire CDS market.

Read about the rest at

Who Wants To Buy (A Piece Of) MF Global?

Bloomberg reports that MF Global Holdings Inc. is seeking a buyer for its futures brokerage unit and is looking to strike a deal within days, said two people with knowledge of the matter.

MF Global has been contacting large banks already in the futures business, said the people, who spoke on condition of anonymity because the talks are private. Under the plan being discussed, the New York-based firm’s holding company and other businesses wouldn’t be included in the sale, the people said.

Its futures unit could sell for around $765 million, equivalent to $4.60 per diluted share, Niamh Alexander, an analyst with KBW Inc. in New York, wrote in a note to clients today. She estimated the futures unit accounted for $1.02 billion of group tangible book value, which includes the firm’s broker-dealer unit, and could sell for 75 percent of that.

“We think that any of the big dealers could relatively easily tuck this business into their own portfolios,” Alexander wrote.

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Stop in the Name of the Law! Feds Accuse A Money Manager Of Lying About His Harvard Degree And Work Performance At Barclays

A Cambridge hedge fund had their assets frozen yesterday by the SEC on charges of fraud and setting up a fake firm. According to BusinessInsider the SEC's complaint alleged that Andrey Hicks was raising money from investors for his quantitative hedge fund, Locus Offshore Management and moving it into his own bank account for personal use. He had raised around $1.7 million when the SEC stepped in.

According to the SEC, Hicks had told potential investors that he had an undergraduate and graduate degree from Harvard, work experience at Barclays and that the fund already had $1.2 billion in assets under management.

And in fact, Hicks' LinkedIn profile says he obtained an undergraduate degree in biochemistry from Harvard in 2005, and a Ph.D. in applied mathematics in 2007. His LinkedIn resume also links to Locust's website, a marketing firm's site, and a Wikipedia page for himself that had been deleted.

Hicks told the Boston Business Journal yesterday that the fund was real and investing money, and that he was a Harvard alum. But when the Boston Business Journal called Harvard, a spokesperson could not confirm that Hicks had graduated….

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Occupy Wall Street reacts to Goldman Sachs pay cut

According to CNNMoney, Goldman Sachs has set aside $10 billion for staff pay so far this year, or roughly $292,000 per employee. Get out your hankie - that's down $78,000 from last year.

Sound like a big drop? Try telling that to the folks at Occupy Wall Street.
"I think it's ridiculous," said 31-year-old Amanda Seelen, a social worker who joined the gathering in Lower Manhattan on Tuesday. "I don't know how else to say it. It's ridiculous."

As the Occupy Wall Street rally stretches into its fifth week, inspiring similar demonstrations across the country and around the world, protestors have yet to coalesce around a single set of demands. They are clearly united, however, by their concerns about growing inequality and corporate excesses.

Few companies embody such excesses in the public mind more than Wall Street titan Goldman Sachs (GS, Fortune 500), which released its third quarter results on Tuesday and announced its second loss since going public in 1999.

Yet while the so-called vampire squid's profits are down nearly 75% for the first nine months of this year, its compensation expenses have only dropped about 25%.
As a share of overall revenue, these expenses are actually up 1% from last year, despite Goldman's weaker performance….


Will Bank of America experience a "Netflix" moment?

Fiercefinanc writes: We've noticed a lot of media outlets reporting that customers of big banks are moving their accounts to institutions perceived as more fee friendly.

Some have suggested that a "Netflix moment" is at hand for Bank of America and other banks that institute debit card fees. But as of right now, there's no way of knowing if this is really true, though there is plenty of anecdotal evidence. The bank critics and the media may have gotten ahead of themselves by assuming a mass defection. Bank of America no doubt studied the issue before it hiked the fee. It is obviously betting that demand for its services is relatively inelastic and that a price hike will lead to more total revenue, albeit some loss of customers.

It's way too early to tell if that gamble will pay off, as the fee will not go into effect until next year. The bank may have discounted the possibility of extreme public anger and the willingness of small banks and credit unions to make this a marketable moment--consider the Bank Transfer Day movement. There is no doubt the credit union industry is going all out to boost their assets at the expense of big banks. But still there's no way of know how many customers will make a change…


The 1% Watch: The Number Of People Buying Hamptons Houses Worth $5 Million+ Almost Tripled This Year

Luxurious houses are flying off the shelves in the Hamptons and the financial industry is behind it, reports Crain's New York Business.

Jonathan Miller, CEO of an appraisal firm, said “Wall Street continued to drive the market like it did in Manhattan."

Q3 saw 30 area homes sold worth at least $5 million—"almost triple" the amount from 2010's third quarter, the article reports.
Miller cautioned that this is more of a bounceback than a surge: overall sales rose to 398, which beats the five-year average of 374 but is well short of the ten-year average, 438...


With Gupta’s Arrest, Insider Inquiry Goes Beyond Wall St

The NY Times reports that with Mr. Gupta, the campaign has moved beyond financial professionals. As the head of McKinsey & Company, the prominent consulting firm, Mr. Gupta advised some of the world’s most influential people, rubbing elbows with the chief executive of General Electric, Jeffrey R. Immelt, and the former President Bill Clinton.

Mr. Gupta’s case has been tricky for the government. Although his name came up repeatedly at Mr. Rajaratnam’s trial, both in testimony and in secretly recorded phone conversations, the Justice Department never brought charges against him.

The S.E.C. filed an administrative action against Mr. Gupta. In response, he filed a separate lawsuit, asking to move the case to federal court, where it would be heard by a jury. Judge Rakoff allowed Mr. Gupta’s suit to move forward in July, saying the S.E.C. took a “cavalier approach” in approving the administrative proceeding. The agency later dropped the matter, but reserved the right to refile.

On Wednesday, the S.E.C. filed a civil complaint against Mr. Gupta and Mr. Rajaratnam, claiming an “extensive insider trading scheme.” It mirrored the agency’s earlier action against Mr. Gupta.

“Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets to the disadvantage of investors, shareholders, and fellow directors,” Robert S. Khuzami, director of the S.E.C.’s division of enforcement, said in a statement.

According to the indictment, Mr. Gupta gave Mr. Rajaratnam advance word of Warren E. Buffett’s $5 billion investment in Goldman during the financial crisis. After hanging up from a special board meeting in September 2008, Mr. Gupta called Mr. Rajaratnam within 16 seconds, prosecutors said. Moments later, Mr. Rajaratnam purchased shares in Goldman, ultimately netting about $840,000, according to the indictment…
In past Galleon-related trials, the government relied heavily on the use of wiretaps and recordings to make its case. But prosecutors may not have the same breadth of evidence this time, since the Goldman discussions between Mr. Rajaratnam and Mr. Gupta were not taped. Instead, the government has conversations between Mr. Rajaratnam and his employees....

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Shocker: Madoff Family May Keep $82M Under Mets Ruling

Bernard L. Madoff’s family would keep about $82 million of “other investors’ money” under a ruling that limited a bankruptcy trustee to claiming from the owners of the New York Mets only two years of withdrawals from the Ponzi scheme, according to a court filing, Bloomberg reports.

The con man’s family took out $141 million in the six years before Madoff’s firm went bankrupt in 2008, of which less than $59 million was taken in the two years before the bankruptcy, trustee Irving Picard said in a filing. Many other investors are trying to hang onto “stolen” money that belongs to customers who took losses in the fraud, he said.

“But the trustee is a fiduciary of all customers and, as such, must make every effort to obtain redress for all the customers of BLMIS who fell victim to Madoff’s fraud,” he said in the filing in U.S. District Court in Manhattan yesterday, referring to the Madoff firm.

Picard wrote about the Madoff family in court papers filed after U.S. District Judge Jed Rakoff told him to explain why another investor, James Greiff, shouldn’t keep money he says he took “in good faith” from the Ponzi scheme. Rakoff’s Madoff caseload includes Picard’s suits against the Mets owners and Greiff.

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What Were They Smoking? Greece and Italy Skeptical Over EU Debt Deal

A deal struck by euro zone leaders on Thursday to contain the region's dangerous debt crisis was greeted skeptically in the two countries most in the firing line, Greece and Italy, with some saying politicians were dreaming, according to Reuters.

Italian Prime Minister Silvio Berlusconi submitted an ambitious set of reforms intended to boost growth and cut debt as part of the deal, but analysts questioned the ability of his fractious coalition to implement the plan.

In Greece, opposition politicians and citizens feared further painful belt-tightening and years of recession , showing little enthusiasm for a plan for banks and insurers to accept a 50 percent loss on their Greek government bonds.

Berlusconi's pledges include raising the retirement age and making it easier for firms to lay off staff, but few expect a scandal-ridden government with a poor track record of pushing through reforms to be able to do so while battling for survival.
"It's hard to believe that yesterday's intentions can really be transformed into the biggest plan of market reforms Italy has ever put on paper….”

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The “Significant Downside Risks” The Fed Won’t Tell You

At BNP Paribas’ New York trading desk, Julia Coronado, the bank’s chief North America economist, watched as three words helped undermine the Federal Reserve’s latest attempt to aid the U.S. economy: “significant downside risks.”

According to Bloomberg the phrase, tucked into a seven-paragraph policy statement about the Fed’s plans to move $400 billion into long-term debt from short-term bonds, warned about the economic outlook while offering no clue on the risks’ severity. The Sept. 21 statement said Fed officials expected “some pickup” in the pace of recovery, though unemployment would “only gradually” decline.

Before they acted last month, members of the Federal Open Market Committee saw far more specific predictions. They had “the Teal Book,” an economic forecast that Fed Chairman Ben Bernanke’s staff of 50 or so Ph.D. economists produces every six weeks -- with numeric forecasts for unemployment, growth and inflation down to the decimal point. The document, so influential it’s been called the “13th member” of the 12- person FOMC, is withheld from the public for five years -- unlike the forecasts of other central banks.

Without such specifics, Fed watchers like Coronado, are left to parse the qualitative language of Fed statements. Last month, investors decided the words meant it was time to buy bonds and sell stocks; the Standard & Poor’s 500 Index closed 3 percent lower that day…..


Balls of Steel: Madoff Claims He Made people richer

Incredible? You betcha… The NY Post reports that in the off-camera interview conducted October 14 at the Federal Correction Complex in Butner, N.C., where he is serving a 150-year sentence for defrauding investors of billions, the 73-year-old Madoff described his life behind bars and his tattered relations with his family.

But he seemed to have fewer concerns about the victims of his massive fraud.
"I understand why clients hate me," he told Walters. "The gravy train is over. I can live with that.

"The average person thinks I robbed widows and orphans. I made wealthy people wealthier."

Madoff spoke off-camera because federal prison rules prohibit on-camera interviews.


Google Refuses Law Enforcement Request To Remove Videos Of Police Brutality From YouTube*

Videos of police brutality at Occupy Oakland are all over the Internet. According to BusinessInsider a few local law enforcement agencies would like to get the videos off of YouTube, going so far as to submit a request.The Internet giant refused.

Here's what Google said in a blog post explaining the decision:
“We received a request from a local law enforcement agency to remove YouTube videos of police brutality, which we did not remove. Separately, we received requests from a different local law enforcement agency for removal of videos allegedly defaming law enforcement officials. We did not comply with those requests, which we have categorized in this Report as defamation requests.”

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Rajat Gupta Not Sweating This Insider Trading Stuff

According to the Wall St Journal Rajat Gupta, once one of America's most-respected corporate directors, was indicted on six criminal counts in an insider trading case that prosecutors said was motivated not by quick profits but rather a lifestyle where inside tips are the currency of friendships and elite business relationships.

The U.S. accused Mr. Gupta of passing along nonpublic information to disgraced hedge-fund titan Raj Rajaratnam, gleaned from Mr. Gupta's role as a director at Goldman Sachs Group Inc. and Procter & Gamble Co. Mr. Gupta and Mr. Rajaratnam, the billionaire trader sentenced this month to an 11-year prison term, were good friends whose regular ..
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Meet Some Of The Most Interesting Female Hedge Funders In The World

This ain't exact;y new - as of last year, BusinessInsider reports the number of working women had surpassed those of men. Yet in the hedge fund world, that precedent is still light years away. According to Hedge Fund Research, women only manage about 3% of the $1.6 trillion invested in hedge funds.

That should change soon -- it's been statistically proven that women make better alternative investment fund managers than men. A Hedge Fund Research study showed that female-run funds lost less money during the financial crisis (that can be attributed to women taking less risk). Portfolios overseen by a women also generated better returns over three to five year periods studied. In addition, the number of female traders is growing. Spread betting provider City Index (CI) says the men:women ratio of their clients is now 10:1. In 2001 it was only 56:1. That boost in female firepower at the trader level could mean more females entering the hedge fund industry or starting their own.

But, this is also an industry where it has basically been scientifically proven that men will raise more money to manage than women

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Gupta Insider Case Built on Circumstantial Proof Poses Challenge to U.S.

The insider-trading prosecution of former Goldman Sachs director Rajat Gupta is built on circumstantial evidence that may be less persuasive than the wiretaps that sealed the fate of his friend Raj Rajaratnam, Bloomberg reports

Unlike the case against the Galleon Group LLC co-founder and hedge fund tycoon, which included his own words in calls with leakers, prosecutors will seek to convict Gupta based on the timing of his phone calls and the Rajaratnam trades that immediately followed, said Peter Henning, a law professor at Wayne State University in Detroit. Wiretaps likely to be used at Gupta’s trial involve Rajaratnam boasting of a source he doesn’t name. The government said that source is Gupta.

Prosecutors “don’t have the wiretaps, the smoking gun evidence,” Henning said in an interview following Gupta’s surrender to the FBI yesterday in Manhattan. “I wouldn’t call it a weak case, but there are some challenges that weren’t featured in the Rajaratnam case.”

Who You Gonna Call? Europe Turns to China for Aid in Debt Crisis

French President Nicolas Sarkozy said he plans to call Chinese counterpart Hu Jintao today to discuss China contributing to Europe’s efforts to resolve the region’s debt crisis. According to the gurus at Bloomberg.

The European Financial Stability Facility will be worth about $1.4 trillion after European leaders agreed to leverage existing guarantees by as much as five times, Sarkozy said at a briefing in Brussels at 4 a.m. local time. The presidents will speak about noon Brussels time and Chinese support will be welcomed, he said.
Chinese Premier Wen Jiabao has signaled willingness to aid the European Union as financial turmoil within the region threatens to crush export demand in China’s biggest market.

The expansion of the rescue fund and a deal for bondholders to take 50 percent losses on Greek debt may help Sarkozy and German Chancellor Angela Merkel to convince the world that Europe is getting to grips with the crisis...

Fed Ties Banks’ Purse Strings

J.P. Morgan Chase & Co. recently approached U.S. regulators about potentially buying back more of its shares but the giant bank was told it might not get the answer it wanted, according to people familiar with the situation.

J.P. Morgan decided against submitting a formal application following the Fed's discouraging feedback. But it isn't the only big, healthy bank clashing with regulators over how it may spend its money. MetLife Inc., whose holding company operates under a banking charter, said this week that its request to raise its dividend for the first time in four years had been rejected by ...


Meet David Graeber, the Anti-Leader of Occupy Wall Street

David Graeber likes to say that he had three goals for the year: promote his book, learn to drive, and launch a worldwide revolution. According to Business
Week's report the first is going well, the second has proven challenging, and the third is looking up.

Graeber is a 50-year-old anthropologist—among the brightest, some argue, of his generation—who made his name with innovative theories on exchange and value, exploring phenomena such as Iroquois wampum and the Kwakiutl potlatch. An American, he teaches at Goldsmiths, University of London. He’s also an anarchist and radical organizer, a veteran of many of the major left-wing demonstrations of the past decade: Quebec City and Genoa, the Republican National Convention protests in Philadelphia and New York, the World Economic Forum in New York in 2002, the London tuition protests earlier this year. This summer, Graeber was a key member of a small band of activists who quietly planned, then noisily carried out, the occupation of Lower Manhattan’s Zuccotti Park, providing the focal point for what has grown into an amorphous global movement known as Occupy Wall Street.

It would be wrong to call Graeber a leader of the protesters, since their insistently nonhierarchical philosophy makes such a concept heretical. Nor is he a spokesman, since they have refused thus far to outline specific demands. Even in Zuccotti Park, his name isn’t widely known. But he has been one of the group’s most articulate voices …

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Wednesday, October 26, 2011

EU Forges Greek Bond Deal

Private Investors to Take 50% Haircut; Firepower of Bailout Fund Increased, the Wall St Journal reports.

European leaders said they secured a deal to reduce Greece's debt after they labored overnight and into Thursday morning to find agreement on what they had billed as a blockbuster package to stem the Continent's debt crisis.

French President Nicolas Sarkozy said after the marathon negotiating session that the leaders had reached agreement with private banks on a "voluntary" 50% reduction of Greece's debt in the hands of private investors.

He also said they had agreed to expand the firepower of the euro zone's bailout vehicle, known as the European Financial Stability Facility, by four- or five-fold—suggesting it could provide ...

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One Last Thing: Steve Jobs Documentary to air next week

PBS announced today that STEVE JOBS – ONE LAST THING has been added to the primetime lineup next Wednesday. Through interviews with colleagues and others who knew the creative genius whose innovations transformed the lives of millions, the progam provides an inside look at the man and the major influences that helped shape his life and career.

One Last Thing takes an unflinching look at Jobs’s difficult, controlling disposition, and offers unique insights into what made him tick. While there has been near-universal agreement that Steve Jobs was a great innovator in business and technology, the documentary looks into why he was so great. What were the influences that shaped his character? What drove him from such humble beginnings to the heights of success?

Featuring interviews with, among others, Ronald Wayne, co-founder of Apple with Jobs and Steve Wozniak; Ross Perot, who invested in NeXT Computer when Jobs was running out of money; Walt Mossberg, principal technology columnist for The Wall Street Journal, who interviewed Jobs every year from 2003-2010;, frontman and producer for The Black Eyed Peas, Dean Hovey, designer of the original mouse for Apple; Robert Cringely, writer and host of a PBS series ; Robert Palladino, calligraphy professor at Reed College, whose classes Jobs credited with inspiring his typography design for the Mac; and Bill Fernandez, who introduced Jobs and Wozniak in Sunnyvale, where the three hung out in his father’s garage and tinkered with electronics.

In a never-before-broadcast interview from 1994, Jobs expounds on his philosophy of life: “You tend to get told that the world is the way it is, but life can be much broader once you discover one simple fact; and that is that everything around you that you call life was made up by people no smarter than you … Once you learn that, you’ll never be the same again.”

Surprise::Bernie And Ruth Madoff Tried To Kill Themselves Together

Sunday's 60 Minutes will reveal that the Madoffs, overwhelmed with the fallout from Bernie's crimes, attempted coordinated suicide.
She's happy to still be alive.

From CBS News:
"So Ruth and Bernard Madoff took a bunch of pills, some of them Ambien and possibly some Klonopin, Ruth recalls. She did not drink alcohol with them for fear of vomiting. 'I took what we had, he took more,' says Ruth. It was Christmas Eve, she says, 'That added to the whole depression.' But the pills didn't work. 'We took pills and woke up the next day....It was very impulsive and I am glad we woke up,' she says."

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And Now For Something Different, Like Totally: A Ketchup for the 1%

Gawker writes: Since we live in the Golden Age of Artisanal Everything, it seems somehow fitting that Heinz Ketchup should get a white-person upgrade. Heinz Balsamic Ketchup will launch November 14th to zero fanfare, and be made available only through the brand's Facebook page.

You won't be able to buy it in anything besides glass bottles, which, for the original recipe, have become hard to find. (Hipster nostalgia, check.) It will cost $4.49 per shipped bottle, versus $1.89 for a squeeze container of the plain kind. (Premium pricing, also check.) It will eventually make its way to store shelves, and, if it sells well, will become a permanent addition to the Heinz family.

But how does it taste? For that, we look …

More? Check out

You Won't Believe This, But There's Another Report About China Saving Europe And Markets Are Rallying

There's an AFP headline floating around about China investing in the European Financial Stability Fund, and markets are rallying.

Of course, we've heard this a million times.

And already this morning there was a a report about the EFSF chief going to China to pay a visit.

But still, people like this news

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Meet George Soros Lite: A Hotel Dwelling Super-Networked Billionaire Who Is Trying To Save Europe

His name is Nicolas Berggruen, and he is the subject of a new profile in Bloomberg Markets magazine.

Berggruen's art-dealer dad gave him a $250,000 trust fund and he's multiplied that by 10,000—a $2.5 billion fortune. He hasn't had a home address since 2000; now he "constantly roams the world on his Gulfstream IV jet, living out of five-star hotels," reports the magazine.

Berggruen might not share Soros' poor-to-rich background, but he shares Soros' passion for politics and even some of his specific policy proposals, such as a more integrated Europe.

He put money where his mouth is, dropping $100 million to create the Nicolas Berggruen Institute to tackle what he calls the "deep governance crisis in the West."

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Atlanta police evict protesters, arrest 53

Atlanta police early on Wednesday evicted dozens of protesters from a downtown park and arrested 53 people who refused to leave the demonstration against economic inequality, Reuters reports.

Police entered Woodruff Park just after midnight following two warnings to demonstrators that they would have to leave, Mayor Kasim Reed said in a statement. He called the demonstrators "increasingly aggressive" but said the arrests were made without incident.

The action came as authorities around the country begin to lose patience with the protests, now in their second month. Demonstrators scuffled with police in Oakland on Tuesday evening after their camp near city hall was cleared out.

Atlanta demonstrators had been camping in the park for nearly three weeks. Reed last week said the protesters could stay in the park at least until November 7, but said he changed his mind last weekend after the protesters tried to hold a concert without plans for adequate security or crowd control. The mayor said he had other safety concerns as the number of tents in the park increased to more than 75….

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Billionaires feud over EMI label

The EMI sale is turning into a real New York street fight. The storied music label, home to David Bowie, Coldplay, Katy Perry and scores of other artists, is expected to be sold by owner Citigroup by the end of the week, with Access Industries’ billionaire Len Blavatnik, who recently purchased rival Warner Music Group, battling it out with Revlon magnate Ron Perelman.

It’s Blavatnik’s to lose,” said one source, who added that Citi is spending its energies on the Blavatnik camp, which would merge EMI’s label with Warner Music. Blavatnik will have to fend off a strong counterplay from Perelman, the 68-year-old New York City billionaire who is said to be desperate to own the recorded music business.

Grabbing hold of EMI’s recorded music business would place Perelman among the entertainment firmament. A win by the chairman of MacAndrews & Forbes Worldwide, Perelman’s holding company, would mean a second jump ball for the label, this time over who would snag distribution rights.

Meanwhile, the KKR-Bertelsmann-owned joint venture, BMG Rights Management, is widely expected to snag the publishing side of EMI….

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Europe Still Split On Crisis Package (No News Is Good News?).

According to the Wall St Journal European leaders meeting Wednesday are expected to address the banking sector's needs following an aggressive restructuring of Greece's debt as part of a broader package to stem the region's sovereign debt crisis that includes steps to enhance the firepower of the euro zone's bailout fund.

But European Union authorities couldn't confirm that a full set of measures, including the size of a haircut on Greek bonds held by private investors, would be announced Wednesday.

The euro zone and banks are working on a plan that will cut the Greek debt held by private investors by 50%, according to a plan ..

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MF Global Is Close To Becoming Penny Stock (Company Considers Selling Itself)

For second day MF Global Stock is tanking bigtime.

MF Global Holdings Ltd. hired investment bank Evercore Partners and at least one other bank to help it determine whether it should sell itself to another company, pursue mergers or other strategic options such as asset sales, according to a person familiar with the matter.

The New York commodities and futures brokerage firm led by former New Jersey Gov. Jon Corzine has been looking to stem a precipitous decline in the firm's shares over the past week following a downgrade of MF Global's debt by credit-rating …
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Big Hedge Funds to Open Secrets to Regulators in 2012

The U.S. Securities and Exchange Commission responded to objections from hedge funds and private- equity funds by dialing back demands in its new rule calling for fund advisers to report internal information to regulators, according to sources at Bloomberg.

Revising its proposal from January -- approved in a unanimous vote today -- the agency eased thresholds for defining which large funds will have to report the most information starting next year. It also allows private-equity funds to report less often than initially proposed.

In today’s rule, required by the Dodd-Frank regulatory overhaul, all funds with more than $150 million in assets will be required to report asset and operational information that has not been collected by regulators in the past….

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Occupy Oakland Demonstrators Gassed in Police Standoff

Police fired tear gas into a crowd of over 100 Occupy Oakland protesters who had marched to City Hall to reclaim the camp they’d been evicted from early Tuesday, ABCNews blogs report.

A haze of smoke from tear gas hung over the scene as bottles were reportedly thrown among the crowd of demonstrators who marched amidst heavy police presence to Oakland’s City Hall at approximately 10:30 p.m. Tuesday night.
Police fired the gas after a third order to disperse in an attempt to break up a group of demonstrators heading back toward the area where the Occupy Oakland camp was cleared out by authorities Tuesday morning.

The late night tear gassing by police was the fourth instance in three hours, according to The Associated Press. Despite police warnings to disperse, most of the protesters did not leave and several people were arrested….


The Highest Ranking Exec To Be Charged With Insider Trading In History Just Surrendered To Authorities

Rajat Gupta just surrendered, was arrested, and he will be charged with criminal insider trading charges, according to BusinessInsider.

Background: the former Mckinsey exec and Goldman board member was charged civilly with insider trading on March 1, 2011. The SEC later dismissed the case and word was that they would instead sue him in NY Federal Court.

The criminal charges are a much bigger deal. Gupta was accused of insider trading information gleaned in Goldman Sachs' board room (the indictment is forthcoming), and now everyone wants to know how the biggest insider trial in history (Gupta is the highest-ranking exec to testify) will proceed. What will his defense be? What will the prosecution argue?

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Nomura Whets Scalpel for Cutting; 400 to be canned

Scaling back its ambitions to become a full-service global investment bank, Nomura Holdings Inc. is planning a major cost-cutting drive that will likely land heaviest on its money-losing European operations, people familiar with the matter told the good people at the Wall St Journal.

Executives inside Nomura are debating the plan, with some calling for cutting as much as $1 billion a year while refocusing the bank on profitable businesses in the U.S., Japan and the rest of Asia. Others argue that the firm, Japan's biggest brokerage, will miss out on any rebound in the markets if it cuts too deeply.

"Nomura cannot be everything to everybody, but ...

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Wall Street ‘s Latest Fancy Food: Spray Your Food Gold (Seriously folks.....)

What, chicken for dinner? Again? Turn those blahs! into yays with Food Finish, an edible colorizer that you spray on your food to make it look like it's covered in gold.

It's basically spray-on food coloring with an extremely high luster. It's also available in silver, chrome blue, and magenta.

No one will that you're swapping out sirloin on the dinner table with hanger steak, or serving up haddock instead of cod, they'll be too busy oohing and ahhing over how all the meat looks like it was prepared by Midas himself. It's the perfect recessionary gastronomical pick-me-up!

Here is the ingredients list: Gold: ethyl alcohol, flavorings, additives: E943a,
Consumerist’s Ben Popkin reports: I have not personally tried this food spray because I am not fancy enough. Also, because it is sold only in Germany and shipping regulations currently prevent it from being imported over here..

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Netflix Investors Bail

According to the Wall St Journal shares of Netflix Inc. plunged 35% Tuesday amid worries about how the Internet video pioneer would pay for its aggressive expansion plans and stem a wave of subscriber losses.

Until recently known for posting staggering subscriber growth and healthy profits, Netflix on Monday reported a U.S. subscriber decline and projected that a move into the United Kingdom and Ireland—on the heels of a 43-country expansion in Latin America and the Caribbean in September—will trigger a few quarters of losses next year...

Can a monkey pick a hedge fund?

According to Marketwatch hedge funds are scary. They are complicated, confusing and risky. If you’re a rich investor — the member of a wealthy family, say, or someone running a big endowment — you need someone to help you pick the right ones and avoid the disasters. To help you out, we’ve assembled two teams. On the one side we have assembled a highly professional group of investment advisers running a “fund” of hedge funds.
The members of your team boasts MBAs from Harvard and Stanford, and resumes packed with blue-chip names from Wall Street. They have wonderful PowerPoint presentations to show you how they will help you manage your money. They will impress you with their strict, “disciplined” investment process. They are tough on “alpha,” “beta,” and risk-management controls. They check out each fund thoroughly.

On the other side we put together a group of monkeys kidnapped from the local zoo. They hang off a tree while we feed them peanuts and bananas. Then we make hedge-fund managers walk past the tree. The monkeys throw peanuts, bananas and anything else that comes to hand. If something sticks to a hedge-fund manager, we select him for the fund. If it doesn’t, we don’t.

Which investment approach does better? I believe in reason, logic and the human mind, so I wish I could say the first. Alas, I have just finished reading “Assessing the Performance of Funds of Hedge Funds,” a research paper produced by Benoit Dewaele and Hugues Pirotte of the Universite Libre de Bruxelles (the Brussels Free University in Belgium), and Nils Tuchschmid and Erik Wallerstein of the Geneva School of Business Administration in Switzerland.

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Tuesday, October 25, 2011

Steve Jobs bio tops every E-book chart

According to Reuters the Steve Jobs biography has debuted at the top of the charts, and you can expect it to stay there for a long time. Though official book sales figures from Nielsen will not be released for more than a week, "Steve Jobs" is already No. 1 on the Kindle bestseller list, the Nook bestseller list and the Apple iBookstore chart.

The authorized biography, written by Walter Isaacson, appeared in book stores yesterday, and the print and versions is already No. 1 on

Industry analysts expect it to stay there for some time, and Amazon spokesperson Brittany Turner already told Reuters it could be the top-selling book of the year...

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Here's Why We Keep Reading Stories About Suspicious Trading At SAC

A laundry list of referrals about trading at SAC Capital have shed new light on the firm's opportunistic bets but also illustrate why regulators are having a tough time making allegations of insider trading stick against one of the world's biggest hedge funds, the fine people at Reuters report.

In the last three years, Finra, Wall Street's self-regulatory body, has sent 903 referrals of possible insider trading to the Securities and Exchange Commission, a spokeswoman said.

Among them were dozens of cases of suspicious trading at SAC Capital Advisors, said people familiar with the matter who are not allowed to discuss it publicly. One of the referrals centers on trading …..

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Civil War Brewing At Occupy Wall Street

Dealbreaker writes: Time was, everyone occupying Zucotti Park in protest of the financial services industry got along (some extremely well). Now, times have changed and battle lines have been drawn. On one side you have those who are pro drum banging. On the other, you have those who want people to cool it with the drums, out of fear that the neighbors who previously supported the movement will go anti-OWS, over the racket.

A frustrated organizer writes:
Friends, mediation with the drummers has been called off. It has gone on for more than 2 weeks and it has reached a dead end. … We need to take this seriously, and be clear that if we can’t deal with conflict and self-organizing then we are facing eviction very soon (this week), and the allies that helped turn out mass numbers at the last one will not be around this time, nor will the press be supportive.
According to Slate, “the drummers have agreed to limit their banging to two daily sessions, between noon and 2 p.m. and between 4 and 6 p.m.” but it may do little to appease those who want the drums gone, now today and those who feel strongly that the bangings are “the heartbeat of this movement. Look around: This is dead, you need a pulse to keep something alive.”


Bombshell: Gupta to Face Criminal Charges!

Federal prosecutors are expected to file criminal charges on Wednesday against Rajat K. Gupta, the most prominent business executive ensnared in an aggressive insider trading investigation, according to people briefed on the case.

The case against Mr. Gupta, 62, who is expected to surrender to F.B.I. agents on Wednesday, would extend the reach of the government’s inquiry into America’s most prestigious corporate boardrooms. Most of the defendants charged with insider trading over the last two years have plied their trade exclusively on Wall Street.

The charges would also mean a stunning fall from grace of a trusted adviser to political leaders and chief executives of the world’s most celebrated companies…

Need A Sell Signal? Harvard Business School Market Indicator Flashes Huge Warning

Harvard Business School graduates are flocking to Wall Street in numbers not seen since 2008 — which could be a very bad sign for the markets, CNBC reports.

Around 38 percent of this year's HBS class took jobs in "market-sensitive" industries including investment banking, hedge funds, venture capital and private equity, up from just 31 percent last year.

For years, a consultant named Ray Soifer has analyzed the career paths of freshly minted Harvard MBAs looking for signs of the economy.
According to Soifer, when more than 30 percent of HBS grads take Wall Street jobs, it's a strong sell signal...

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UBS Clients Don’t Get Out Of Bed For Less Than $50 Billion In Losses

Dealbreaker’s Doyenne Bess Levin opines: “So far, the trading scandal doesn’t appear to have significantly hurt the confidence of UBS’s wealthy clients, who had pulled hundreds of millions of francs from the bank in 2008 and 2009 after Swiss authorities had to bail out UBS following about $50 billion in securities write-downs. A bruising tax evasion battle with the U.S. also drove clients away. UBS only managed to stem the exodus of clients late last year…

UBS AG's net profit fell 39% in the third quarter, as Switzerland's largest bank sustained losses from a trading scandal and was hit by a sharp global slowdown in client activity at its investment bank, the Wall St Journal writes.

UBS said net profit fell to 1.02 billion Swiss francs ($1.16 billion) in the third quarter, down from 1.67 billion francs a year earlier. The results included a large accounting gain as well as a solid performance by UBS's private bank, which helped offset losses at its investment bank.

UBS chalked up an accounting gain of 1.8 billion francs on a decline…