Where Do You Want to be a Billionaire? | The Financialist
To read the entire article, go to http://bloom.bg/17YGEMe
|English.news.cn 2013-10-13 09:57:25|
For most emerging-market countries...nominal GDP growth in the 2003-2011 period was caused by terms-of-trade improvements, capital inflows, and real appreciation. These mean-reverting processes are, well, reverting,
it is questionable how many more benefits can accrue to the Chinese people by foregoing the benefits that using their own resources might bring and shipping more to the rest of the world in return for bits of paper than they are getting back in terms of real goods and services.
Reflecting this perspective, there is an interesting interview with former German Chancellor Helmut Schmidt in a recent Monthly Bulletin of the Official Monetary and Financial Institutions Forum (OMFIF). The interview was conducted by Dave Marsh (co-chairman of OMFIF) on behalf of the Handelsblatt. Although it deals specifically with Germany, it does have implications for China as well:
Handelsblatt: I remember you saying many times, if the Germans keep the D-Mark we will make ourselves unpopular with the rest of the world; our banks and our currency would be the Number 1, all the other countries would be against us and that was why we should have the euro to embed us in a larger European undertaking. It’s all rather ironic, because people are saying that Germany has profited a great deal from the euro because the D-Mark has been kept down and this helps German exports …
Schmidt: I ask myself whether this profit really is a profit? I wonder whether running perpetual current account surpluses really amounts to a profit. In the long run it is not a profit.
Handelsblatt: Because in the long run these assets will have to be written down because people won’t pay them back …
Schmidt: Yes – it means that you sell goods and what you get back is just paper money and later on it will be devalued and you will have to write it off. So you are withholding from your own nation goods that otherwise they would like to consume.
Schmidt’s insight is key: production of goods for export reduces the portion of output available for domestic consumption – generating incomes that raise demand but without satisfying this demand through increased supply available for consumption. Additionally, competition in export markets often leads to domestic policy to keep wages and other costs low – both to fight the domestic inflation pressures (fuelled in part by the processes just outlined) but, more importantly, to compete with other low wage developing nations.
some people are taking advantage of arbitrage opportunities by bringing dollars from Uruguay into Argentina, selling them on the black market for pesos, and either spending the pesos in Argentina or converting the pesos back into dollars in Uruguay at the official rate and pocketing the difference
Top executives and board members of the Providence, R.I., company tell a story of a man whose mastery as a crisis manager turned vicious as Sunbeam’s success diminished the need for his furious management style. Mr. Kazarian’s main management tactic, executives claim, was to create crisis. Top managers, speaking not for attribution, say they were pitted against one another, publicly hazed, humiliated and even physically intimidated.In the article, Kazarian said he received no complaints about his management style before his ouster. His style appeared to be colorful:
Thus, there was tension with Mr. Kazarian, whose 1991 compensation was $1.84 million (10 times that of either of his Japonica partners) and who had become frustrated at his loss of control. In one incident, he took a BB gun — a sample the company was examining as a possible product — and shot it at the vacant chairs of executives, shouting “Die! Die!” according to a witness. Mr. Kazarian says he shot the BBs at targets in the office to test the gun, but doesn’t recall where he put the targets. He adds that no one was in the office at the time, and denies saying, “Die! Die!”Kazarian’s firing spawned a furious legal fight with Sunbeam investors and some of Kazarian’s former colleagues. He won a $160 million settlement. He took a run at Borden the next year, but KKR ultimately won out. A 1994 Journal article said it wasn’t clear where Kazarian would get the $1.27 billion needed for the Borden bid.
A major weakness in his approach at this stage is that he hasn’t given details of how he could finance such a purchase. Mr. Kazarian’s Providence, R.I., Japonica Partners has about $180 million in gains from Sunbeam and other investments.It also isn’t clear today precisely how Kazarian would finance the purchase of Greek bonds. Japonica has offered to buy as much as €2.9 billion of bonds for a minimum price of 45 cents on the euro. That means Japonica would need at least €1.31 billion to acquire all it wants. The procedure outlined in Japonica’s Monday press release doesn’t oblige Japonica to buy all €2.9 billion, and existing bondholders are free to offer to sell at prices higher than 45 cents. Japonica can choose whether to accept them.
But he should be able to gain the ear of some major Borden shareholders, who have complained openly about the terms of the KKR offer. Mr. Kazarian noted in his letter that he has assembled financing for past takeover bids, including Sunbeam.
Yesterday's Bloomberg article has got a lot of brokerage firms nervous about their trading volumes if #SAC downsizes.
CNBC.com Article: Wall Street Is Transfixed by SAC Capital Deadline
A quarterly deadline for investors to withdraw money from the troubled hedge fund SAC Capital Advisors was the talk of Wall Street. The New York Times reports.