KeNo's Housing and Economic Portal: Thursday January 1 Housing and Economic stories

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Oil Crash Wipes $11.7 Billion From Buyout Firms’ Holdings - (www.bloomberg.com) Oil’s plunge makes energy a great investment for the coming years, according to Blackstone Group LP (BX)’s Stephen Schwarzman and Carlyle (CG) Group LP’s David Rubenstein. For private equity firms, it’s also been painful. More than a dozen firms -- including Apollo Global Management LLC (APO), Carlyle, Warburg Pincus and Blackstone -- have lost a combined $11.7 billion in 27 publicly traded oil producers since June, when crude prices reached this year’s peak before beginning their six-month slide, according to data compiled by Bloomberg. Stocks of buyout firms with exposure to energy have slumped, and bond prices suggest some closely held oil producers may struggle to pay for their debt. “It’s been a really volatile period, and frankly that’s how Saudi Arabia wants it,” said Francisco Blanch, head of global commodity research at Bank of America Corp. “This is a battle of endurance.” Brent crude oil slumped 47 percent to about $61 late last week from its high this year of $115 a barrel, dragging down energy stocks, as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale expansion that’s adding to a global glut. The group, responsible for 40 percent of the world’s supply, will refrain from curbing output, U.A.E. Energy Minister Suhail al-Mazrouei said on Dec. 14.

Whitney’s Fund Said to Drop 11% as Office Put on Market - (www.bloomberg.com) Meredith Whitney, who started a hedge fund after becoming one of Wall Street’s most famous analysts, has found it harder to bet on stocks than scrutinize them. Her fund is down 11 percent this year through last month, its main investor has demanded money back, top executives have left and her full-floor Madison Avenue office is now on the market. Her American Revival Fund LP fell in eight of the past 11 months and was up less than 1 percent in two others, returns reviewed by Bloomberg News show. The Standard & Poor’s 500 Index was up about 12 percent over that span. Soured investments include a loss of more than $2 million on Conn’s Inc. (CONN), an electronics retailer that dropped 56 percent in that period, according to a person with knowledge of her fund who asked for anonymity to describe its performance.

Medicare Patient Skips Mortgage to Cope With $20,000 Bill - (www.bloomberg.com) Each month, William Piorun has to choose between paying his mortgage or buying medicine that keeps his pituitary-gland tumor in check. This month and last, the 65-year-old Medicare patient paid the mortgage, and stopped taking a drug that his doctor says he needs to ward off the risk of premature death. Once, hard choices like these were commonly forced only on those without health insurance. Now more patients who have insurance or Medicare must confront them as drug bills for those with chronic and life-threatening decisions soar. Earlier this year, Piorun faced out-of-pocket bills of $1,000 a month for medicines. That -- together with $2,000 in monthly mortgage and home-equity payments, other bills and living expenses -- was too much for him.

Ukraine Central Bank Conned Into Swapping Its Gold For Lead Bricks - (www.zerohedge.com) Just when one thought the story of Ukraine and its (now non-existant) gold could not get any more surreal, it did. As a reminder, it was about a month ago when we learned courtesy of an interview on Ukraine TV with the country's central bank head Valeriya Gontareva, that Ukraine's gold was virtually all gone, when she made the stunning admission that "in the vaults of the central bank there is almost no gold left. There is a small amount of gold bullion left, but it's just 1% of reserves." That in itself would have been sufficient to explain why just a few short days later, the Netherlands shocked the world when it announced it had secretly repatriated 122 tonnes of gold from the NY Fed, and had the story of Ukraine's missing gold ended there (or even with the criminal probe launched by Ukraine whether the central bank head had abused her power and misused her office when she "intentionally committed an extremely unfavorable transaction for the gold and forex reserves of Ukraine"), it still would have been one of the most bizarre, surreal stories of 2014. Luckily, the story just got far better, and far, far more bizarre and surreal. As Bloomberg reports, Ukraine opened a criminal probe after several gold bars at the central bank’s storage in the southern city of Odessa turned to be painted lead.

[Washington Post] Oil scandal in Brazil just keeps growing; optimists see chance for change - (www.washingtonpost.com) On the surface it could not be much worse for Brazil. With the economy faltering, its cherished government-controlled oil company Petrobras spiraled into a $3.8 billion corruption scandal just as it was finally ramping up production in its vast deep water reserves. Since the unfolding corruption investigation became public in March, charges have been filed against 91 people, including executives from Petrobras and some of Brazil’s biggest construction and engineering companies. And it’s not over. On Friday the Estado de S. Paulo newspaper was the latest publication to name politicians it said were linked to the scheme. Prosecutors say that Petrobras executives, including Paulo Costa, the former director of the supply department who has turned state’s evidence, collected 1 to 5 percent bribes on fattened contracts and that contractors from six companies formed a “club” to fix Petrobras bids. The newspaper’s Web site named 28 politicians, mostly from the ruling Workers Party and its coalition allies, who, according to Costa, benefited from the scheme — accusations that were denied.

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