Bad
Real-Estate Deals Return to Haunt Detroit’s Pensions - (www.bloomberg.com) In
2006, businessman Robert Shumake asked trustees of Detroit’s two pensions to hand him $27 million to
invest in real estate. George Orzech, a fire battalion chief who still
represents uniformed workers on their fund’s board, found one thing odd: “Anybody
who knows the first names of trustees in a first meeting has already had
meetings with people,” said Orzech, who unsuccessfully opposed the plan. “It
was a political deal.” Shumake, whose real-estate broker’s license had expired
four years earlier, became embroiled in a federal case that led to indictments
of a former city treasurer and pension officials on charges of bribery,
extortion and kickbacks that cost the systems more than $84 million, the U.S.
Justice Department said. A litany of such deals gone wrong shows how a
municipal retirement system for 30,000 employees and retirees -- propped up by
$1.4 billion in borrowed money -- became a cash cow for a select few. Now,
these bad investments are coming back to haunt workers and pensioners as the
city proposed slashing their benefits in its filing last week of the biggest
municipal bankruptcy in U.S. history.
Worthless
land could prolong Spanish banks' property woes - (www.reuters.com) Spanish banks may
have to swallow more losses to shake off the legacy of a property crash, real
estate experts warn, as they struggle to sell plots of land that have ended up
on their books and which are now worth less than many have accounted for. Lenders
were forced by the government to take billions of euros in provisions against
losses last year after property values collapsed in 2008, with the steepest
write-downs destined to cover land they were saddled with as developers went
bust. The weakest lenders were bailed out with European money and others posted
steep losses as the result of the clean-up, which was supposed to draw a line
under the property problem, as banks try
and cope with a deep recession also dragging on earnings.
China capitulates - (www.telegraph.co.uk) Once
again, China has concluded that it is too dangerous to let the Ponzi Scheme
collapse. First we had an article in Xinhua saying that growth below 7pc would
“not be tolerated”. Now we have a clear statement from Premier Li Keqiang that
growth must not fall below the government’s “lower limit” of 7.5pc for 2013,
and 7pc thereafter. Already we hear talk of more investment on railway
projects, social housing, infrastructure, green energy, sewage, broadband and
G4, the tried and tested levers of fiscal stimulus. Ting Lu from Bank of
America calls it the “Li Keqiang Put”. That is certainly what it looks like. Moves
last week to liberalise interest rates were seen by many in China – though not
all – as a disguised way to lower borrowing costs and avert a wave of
bankruptcies.
Swisscom
chief dies in suspected suicide - (www.ft.com) Carsten
Schloter, the chief executive of Swisscom,
has been found dead at his home, in what police suspect was a case of suicide. Switzerland’s
biggest telecoms group said Schloter, 49, had been found on Tuesday morning at
his residence in Freiburg in western Switzerland, and that an investigation
into the exact circumstances surrounding his death was under way. Urs Schäppi,
Schloter’s deputy and head of the company’s Swiss operations, will take over
management of the company on an interim basis. Hansueli Loosli, Swisscom’s
chairman, said the company and its “entire workforce are deeply saddened and
pass on their condolences to the family and relatives”. Out of consideration
for Schloter’s family, Swisscom will not release any further information
surrounding his death.
Currency
Volatility Slides to 10-Week Low as Fed Bets Stabilize - (www.bloomberg.com)
Wall Street Commodity Trading in Jeopardy Amid Fed Review - (www.bloomberg.com)
Wall Street Commodity Trading in Jeopardy Amid Fed Review - (www.bloomberg.com)
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