Showing posts from June 21, 2015

'It's time to hold physical cash,' says one of Britain's most senior fund managers

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[Super-bearish fund managers push for high liquidity, arguing that today's sky-high levels of debt fuelled by cheap credit cannot last and constitutes a systemic risk that is bound to implode. It may be time to hide money under the mattress. How to prepare for a 'systemic event.' *RON*]
 By Andrew Oxlade, Telegraph, 20 Jun 2015

The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress.

Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock.

“Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money.

The best strategy to deal with this, he said, was for investors to spread their m…

Greek banks: Athens’ Achilles heel

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[Which will it be first, the debt or the banks? I'm betting on the banks. *RON*]

Ferdinando Giugliano, Financial Times, 19 June 2015

Until this week, the big suspense surrounding Greece was whether Athens would be able to meet a €1.6bn debt repayment to the International Monetary Fund due at the end of June or go bankrupt.

But the fear of default is rapidly being overtaken by a separate — and possibly more dangerous — ticking time bomb: the solvency of Greece’s banks.

As anxious savers withdraw deposits, economists warn that Greece’s precarious lenders could collapse. During a meeting of eurogroup finance ministers on Thursday, Benoît Cœuré, a member of the European Central Bank’s board, speculated that Greek banks might not be able to open for business on Monday.

The European Central Bank has provided crucial, emergency funding to Greek banks that has sustained them in recent months. Yet as Greece’s finances continue to deteriorate, the ECB’s o…

Zombie update: the silent hedge fund apocalypse

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[Behind the farcical world of hedge funds. It's these same people who now tell governments how they should run the world. *RON*]
Dan McCrum, FTAlpha, Financial Times, 19 June 2015


More hedge funds have closed in the last decade than were open for business at the start of it, according to industry numbers from HFR.

A total of 9,000 hedge funds and fund of funds have liquidated since the start of 2005, almost as many as HFR estimates exist now: 10,150. At the end of 2004 there were around 7,500 funds offering to manage cash.

The figures are a reminder of the transient nature of such high fee investment vehicles, which on average survive for only five years. The rapid turnover adds to questions about how such vehicles can be suitable stewards of capital for large long term investors such as pension funds.

According to HFR numbers, the constant launch of new funds has helped to swe…

Tech Companies Fly High on Fantasy Accounting

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[Caveat emptor. The high-flying Brave New World rhetoric of 1999 isn't there ("throw out the old accounting rules and metrics; it's a whole new economy!"), but the same style of funny money book-cooking is going on; all of it serving to pump up CEO paychecks and make corporate performance look better than it really is. *RON*]

By GRETCHEN MORGENSON, New York Times, 21 June 2015

MoreTechnology shares have been powering the stock market recently, outperforming the broader stock indexes by wide margins. The tech-heavy Nasdaq 100, for example, is up 19 percent over the last 12 months, almost twice as much as the Standard & Poor’s 500-stock index, which has risen 10 percent.
Investor enthusiasm for all things tech is understandable, given the disruptions the industry is bringing to so many businesses and the potential profits associated with that upheaval.
But there’s a more troubling aspect of the current exuberance for technology…

Why the Liberal Party Defence of Its Support for Bill C-51 Falls Flat

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[Good brief analysis of why Trudeau's explanation for why he supported C-51 doesn't fly. *RON*]

Michael Geist, 19 June 2015

Bill C-51, the anti-terrorism bill, became law yesterday as it received royal assent. As polls continue to suggest that the Liberal support for the bill is shifting potential voters to the NDP, Liberal leader Justin Trudeau has conducted severalinterviewsdefending his position as the “right move for Canadians.” Trudeau’s arguments, which have been echoed by other Liberal MPs such as Marc Garneau, boils down to three key claims: he doesn’t want to play politics with security, there are elements in Bill C-51 he likes including greater information sharing, and he will fix the problems with the bill if elected.

For those Canadians looking for an alternative to the Conservative position on Bill C-51, Trudeau’s defence falls flat.

First, the claim that the Liberals do not want to play politics with Bill C-51 is simply not…