TOP STORIES:
Hey,
You—Keep Your Hands Off My Loan – (www.businessweek.com)
What do money managers
Highland Capital Management, Fortress Investment Group (FIG), and Cerberus Capital Management have
in common? All three are on a list that bars them from buying any part of a
$155 million loan to Quadriga Art, a company that helps charities raise
money—even though the loan trades on U.S. markets. RBS Holding, which owns
Quadriga Art, last year banned those three companies and seven others from
investing in the loan, according to two people with knowledge of the matter who
asked not to be named because the decision was private. RBS deemed the
companies to be too demanding in debt restructurings that take place when a
borrower runs into financial trouble, the people say. Executives at RBS, which
has no connection to the Royal Bank of Scotland, took a potential restructuring
into consideration as Quadriga’s business faltered.
A New Year 'Bail-in' Resolution - [2015-01-12] -
``Depositors with large cash balances are the
worst positioned to face the next banking crisis due to their status as
unsecured ... G20 leaders asked the Financial Stability Board (FSB) to develop
a policy framework to address the systemic risks associated with large
financial institutions. The FSB developed a set of policy measures that
included, among other tools, mandatory creditor-funded recapitalizations (in
other words, “bail-ins”). This framework was endorsed at the Seoul Summit in
2010 and implementation of these measures has started in 2012, with full
implementation targeted for 2019. Unsurprisingly, the creditor-funded recapitalization
template laid out by the FSB has been endorsed by the Bank of International
Settlements (BIS) and the International Monetary Fund (IMF) who have also
released position papers in support of the bail-in framework. The below reports
released by powerful supranational institutions that are shaping our financial
system highlight this shift in policy: Financial Stability Board , 2011, Effective Resolution of Systemically
Important Financial Institutions
$50
Oil Kills Bonanza Dream Making Greenlanders Millionaires - (www.bloomberg.com) Greenland, an island that may be sitting on
trillions of dollars of oil, has had to acknowledge that its dream of tapping
into that wealth looks increasingly far-fetched. Back when oil was headed for
$150 a barrel, Greenlanders girded for a production boom after inviting in some
of the world’s biggest explorers, including Chevron Corp. and Exxon Mobil Corp. (XOM)Now, with Brent
crude dipping below $50 last week, Deputy Prime Minister Andreas Uldum says Greenland’s hope of
growing rich quickly on fossil fuels was “naïve.” “I myself believed back when
I was first elected” to parliament in 2009 “that billions from oil and minerals
would start flowing to us the next year or the year after that,” he said in an
interview in Copenhagen. “However, that’s just not the reality. I don’t know
any politician in Greenland today who won’t admit to having fueled the
hysteria.”
Billionaire
Paulson Hit by 2014 Losses; Advantage Plus Fund Declines 36% - (www.bloomberg.com) Billionaire John Paulson posted the second-worst
trading year of his career in 2014 as a wrong-way energy bet added to declines
tied to a failed merger and investments in Fannie Mae and Freddie Mac. The
worst performance was in the Advantage Plus fund, which plummeted 36 percent
last year, two people with knowledge of the returns said. The event-driven
strategy, which uses leverage to make bets on companies undergoing
transformations such as spinoffs and bankruptcies, lost 3.1 percent in
December, said the people, who asked not to be identified because the
information is private. The 59-year-old manager also lost money in a credit
pool, special situations fund, and barely broke even in a fund that bets on
company mergers. Paulson & Co.’s performance placed it near the bottom of
the hedge fund pack last year as the industry returned a meager 1.4 percent.
The manager, who shot to fame after making $15 billion on the housing crisis in
2007, has struggled to regain its footing since 2011 when bets on the U.S.
recovery went awry, losing money in all of its main strategies -- including a
51 percent tumble in the Advantage Plus fund. Paulson also lost money in
investments tied to gold and Europe’s economy, causing assets to dwindle to $19
billion, half the peak in 2011.
Gold
Hits $1235 As Commodities Crash To 12-Year Lows Amid $45 Oil - (www.zerohedge.com) The only other times that Bloomberg's
broad-based (i.e. not all OPEC's fault) Commodity Index has fallen so far so
fast was in 1999 (before stocks crashed) and 2008 (before stocks crashed). At
12-year lows, the raw material of the world's economies is flashing a big fat
red warning signal that all is not well (despite stocks being a 'smidge' off
record highs). WTI traded with a $45 handle...but apart from that,
everything's great (oh wait and the 230 pip USDJPY roundtrip). Amid all this
turmoil, gold just broke to $1235 - its highest in a month.
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