Opening Bell: 09.09.13
China's Credit Levels Echo U.S. Crisis (WSJ)
"The similarities to the U.S. are wanton use of the credit system to substitute for better sources of economic growth with a background of rising income inequality," says George Magnus, a senior independent economic adviser to Swiss bank UBS AG, who has written extensively on financial crises. "These are all telltale signs of a country at a relatively advanced stage of financial instability." One key difference: "In the Western case, the official response was denial or complete ignorance," says Mr. Magnus. In China, where the central government controls the economy and policy makers witnessed the U.S. bust, Beijing "will be able to respond in ways we [in the West] weren't capable of. But it doesn't mean it won't be painless," he says.
Hedge Funds Cut Fees (WSJ)
Today, the average hedge fund charges an annual management fee of about 1.6% of assets, while claiming around 18% of investment gains, according to industry surveys and interviews with industry executives. Investors willing to lock their money up for several years, write a big check or bet on a new fund can get even lower fees and other concessions, investors say...The pressure to cut fees is felt most acutely by managers focusing on stocks and commodities, rather than bonds, because equity and commodity funds generally haven't posted outsize returns recently. Some debt strategies are more complex and expensive to implement, which tends to keep those fees higher. New funds that trade stocks generally charge management fees of 1.5%, while funds that can have higher overhead still charge fees closer to 2%, said Steven Nadel, an attorney at Seward & Kissel LLP, which does an annual study of new funds. Another reason fees are coming down: Investors increasingly choose to place money with large hedge funds, making midsize and smaller funds more eager to trim fees to attract money.
Sam Adams Creator Becomes Billionaire as Craft Beer Rises (Bloomberg)
Consumers have flocked to Boston Beer’s 70-plus offerings, including its most popular seller, Boston Lager, to small batch specialty brews, such as Norse Legend, a Finnish-style sahti that Vikings drank. The demand has sent Boston Beer shares up ten-fold since mid-2009, propelling Koch’s net worth above $1 billion, according to the Bloomberg Billionaires Index. He has never appeared on an international wealth ranking. “Having watched my stock price go up and down and up, it seems almost whimsical,” Koch, 64, said in a telephone interview. “I remind people getting rich is life’s great booby prize. Any normal person would much rather be happy than rich.”
Exclusive: Japan regulator probing Deutsche Bank entertainment of pension clients (Reuters)
The Securities and Exchange Surveillance Commission (SESC) found evidence of potential infractions during a regular audit of Deutsche Securities Inc, the German bank's investment banking arm in Tokyo, said the sources, who spoke on condition they not be identified because the investigation is ongoing. The employees had booked large expenses for entertainment involving pension fund executives, they said. This raised red flags for the regulators because the pension fund executives involved are legally considered public employees, subject to anti-bribery statutes, since they handle part of the national pension scheme.
Fed Critics Demand Change With Bernanke Exit (NYP)
...many point to former Fed Chairman Alan Greenspan’s easymoney policy as the trigger of the subprime crisis that precipitated the cratering of the economy in 2007. “It’s been an unmitigated disaster. The history of the Fed is the history of the decline of the United States,” says Peter Schiff, chief executive of Euro Pacific Capital. “I am not going to blame it all on the Fed; there are other factors. But the Fed had an integral role in the gradual decline of American civilization.” Schiff cites the devaluation of the dollar as evidence of the Fed’s duplicitous actions. “If you look at the value of the dollar today to where it was 100 years ago, the dollar has lost 98 percent of its purchasing power since the Federal Reserve was put in charge,” Schiff asserts. “And if you look at the dollar’s purchasing power 100 years prior to the Fed, the dollar gained — maybe doubled. The dollar was more valuable in 1913 than it was 1813.” “If you say the goal of the Fed was to prevent calamities, then you have to say that it has been a failure,” says William A. Fleckenstein, a hedge-fund manager and the author of “Greenspan’s Bubbles.”
Drunk and boarish: swigging pig hogs 18 beers at campsite (Guardian)
A rampage by a feral pig that consumed 18 beers has prompted warnings for people at campsites to properly secure their food and alcohol. The pig struck at the DeGrey River rest area, east of the remote Western Australian town of Port Hedland in the Pilbara, according to the ABC. The animal was seen stealing three six-packs of beer from campers before ransacking rubbish bags for food. One camper reported seeing the pig guzzling the beer before getting involved in an altercation with a cow. "In the middle of the night these people camping opposite us heard a noise, so they got their torch out and shone it on the pig and there he was, scrunching away at their cans," said the visitor, who estimated that the pig had consumed 18 beers. "Then he went and raided all the rubbish bags. There were some other people camped right on the river and they saw him being chased around their vehicle by a cow." The pig was reportedly last seen resting under a tree, possibly nursing a hangover.
Red Flags Over Madrid a Sign Spanish Crisis Easing (Bloomberg)
In the upmarket Madrid neighborhood of Arroyo del Fresno, red flags bearing the insignia of Banco Santander SA flutter atop a building site nestled between a medical center and a metro station. Instead of caution, they may signal that Spain’s six-year property crisis is receding....Lenders including Santander and Banco Sabadell SA, which is also developing 59 plots, are looking to accelerate efforts to sell real estate that piled up on their balance sheets during Spain’s crash. It demonstrates the country’s slump may be easing in some areas as banks press on with the task of finding buyers for their property, said Ricardo Wehrhahn, a Madrid-based partner at Roland Berger Strategy Consultants, which carried out stress tests on Spanish banks last year.
Loan Size To Be Cut For Fannie, Freddie (WSJ)
The proposed move is designed to wean the mortgage market off government support and allow the market for non-government-guaranteed mortgages to take a bigger role. But critics argue that any such move will shrink the pool of eligible home buyers, stunting the nation's housing recovery.
KPN Finance Chief Resigns (WSJ)
Dutch telecom firm Royal KPN NV said Monday that its finance chief would leave the company with immediate effect because of personal circumstances, while uncertainty over the proposed takeover offer from America Movil persists.
Facebook co-founder Moskowitz gushes over Winklevoss twins (NYP)
Moskowitz is a frequent attendee of Burning Man, a yearly orgiastic — often drug-fueled — desert festival. The Facebook billionaire chronicled his emotions after this year’s event in a blog post that recalled his first encounter with Tyler and CameronWinklevoss, who were there also. “I happened to run into Tyler and Cameron Winklevoss near the Temple crew camp on Esplanade. In spite of our tangled history, I had never actually met them; we only communicated through lawyers,” Moskowitz wrote. “These guys are among the only people on earth I might describe as real antagonists in my life or even enemies, but on playa my first instinct was that I quite obviously needed to introduce myself and start with hugs.” Moskowitz is now even Facebook buds with the twins. “Almost immediately when I got back, I had a friend request from Tyler, and we started a thread extolling the virtues of the festival,” he wrote. “In no uncertain terms, he described a spiritual experience.”
