The “confusing” AIJ situation is still developing. Don’t forget doing that due diligence when investing. From Bloomberg Business week.
The suspension of AIJ Investment Advisors Co.’s operations amid concerns hedge funds it manages had lost pension money may undermine plans by Japan’s retirement funds to boost returns to meet demand in an aging society.
The Financial Services Agency on Feb. 24 ordered the Tokyo- based firm with 183.2 billion yen ($2.3 billion) of client money to stop business for a month as the regulator investigates “possible losses” at AIJ’s hedge funds. The FSA also will undertake a nationwide probe of 263 asset managers.
“If the funds actually suffered losses, this could potentially have a massive impact on pension plans that actually invested with them,” said Taro Ogai, who oversees consulting for pension fund investments at Towers Watson in Tokyo. “Pensions already face difficulties. At a time when they are trying to boost returns and cut risks, investing in hedge funds may become difficult for them.”
(Full article here).
If you are going to read one piece this weekend, read this (somewhat old) article. Must read from nymag;
On Wall Street, bonus season is a sacred ritual. It is the annual rite where net worth and self-worth get elegantly reduced to a single number. During the 25-year boom that abruptly ended in 2008, the only principle that really mattered come bonus time was how you ranked against the guys to your right and left. The system was governed by a kind of atavistic justice: You eat what you kill. From the outside, the seven- and eight-figure payouts that star bankers earned could seem obscene, immoral even. But on the inside, the outlandish compensation reflected a strict, almost moral logic. “Wall Street is a meritocracy, for the most part,” as a senior Citigroup executive put it to me recently. “If someone has a bonus, it’s because they created value for their institution.” The sanctity of the bonus was built on the idea that Wall Street pay was simply the natural order of capitalism.
Timmy praises the European leaders for “fixing” the Economy, but more needs to be done. Maybe, if they start some serious printing, the DAX could hit 13k as well, and all will be fine. Maybe it’s time for Timmy to turn to Apple’s Tim for explanation of how you build reserves, instead of spending money you don’t have. By Reuters;
U.S. Treasury Secretary Tim Geithner on Saturday (February 25) praised European leaders for the steps they have taken to tackle the debt crisis in the euro zone, but warned that there was still much left to do. “I hope that we are going to see, and I expect we will see, continued efforts by the Europeans not just to deliver on the reform commitments they have made to economic policy but to the institutions of Europe and to put in place a, to use the European phrase, to put in place a stronger and more credible firewall,” Geithner told a lunch hosted by the International Institute of Finance (IIF) on the sidelines of the G20meeting in Mexico City.
Every time we read about Buffet’s Derivatives prop book, we can’t but put on a humble smile. The Guru, that is not buying gold, because you can’t watch it grow, is keen on selling put on S&P, that are most likely to expire after Buffet’s “personal” expiry. We are not saying it is wrong writing puts, but hearing the man speak about positions, after his probable death sure is amusing. The S&P “downside” has produced some nice (paper) gains, but the question is how much collateral Buffet actually needs to deposit. We would love to see where Buffet and the counter parties in these trades have these derivatives marked, especially when closing them out is “impossible”. Meanwhile, Berskhire’s profit decreases. From Bloomberg;
Another great weekend reading by things that make you go hmmm. Courtesy Grant Williams.
“There are no guarantees that the chosen path will lead to success. It is also possibly not the last time that the German parliament will have to consider financial aid to Greece”
– WOLFGaNG SCHaeubLe, Feb 24, 2012
“You cannot really exclude [the possibility of a third bailout], although we should not have as a starting assumption that a third program will be (needed)”
– Jean-Claude Juncker, Feb 24, 2012