Hedgefinger

2009-12-24T10:27:00.002-08:00

That’s it for us. We hope you have a great break, celebrating the birth of Christ, or whatever you happen to be doing. Fairly abbreviated schedule next week, with exceptions made for Bernie dying or sex tapes of a much-loved hedge fund manager surfacing – or for that matter anything juicy.

A Goldman /AIG Crisis Cover-Up? You be the judge…..

2009-12-24T10:27:00.001-08:00

In December, the Wall Street Journal explained to the general public that Goldman fueled AIG's gambling and played a much bigger role in the mortgage bets that nearly felled American Insurance Group (AIG) than the Treasury, the Fed, or Goldman itself publicly disclosed.

The TARP Inspector General's November 17 report missed the most damaging facts. Intentionally or otherwise, it was evasive action or just plain whitewash. The report failed to clarify Goldman's role in AIG's near collapse, and that of all the settlement deals, the U.S. taxpayers' was by far the worst.

Goldman originated or bought protection from AIG on about $33 billion of the problematic $80 billion of U.S. mortgage assets that AIG "insured" with credit derivatives, about twice as much as the next two largest banks involved.

Goldman acted as middle-man on $14 billion of that amount, after it took the risk of mortgage assets originated by other banks and insured all of it with AIG. Goldman may wish to claim it "was only following orders," but since Goldman also originated many of the mortgage assets ultimately protected by AIG, it should have been well aware of the risk posed to itself and to AIG. The risk was then Goldman's. If AIG failed, Goldman Sachs would have had to make good on those trades. Goldman stuffed so much risk into A.I.G. that Goldman nearly killed its own "hedge."

In November 2008, the New York Fed paid 100 cents on the dollar for the $14 billion of mortgage assets related to Goldman's trades. Goldman estimated the assets had lost $9.6 billion, or around two-thirds of their market value. Overall, the government's bailout out of AIG allowed Goldman to avoid losses on its trades covering $22 billion in assets.

The U.S. taxpayer deserved a much better deal. In late July 2008, SCA, another bond insurer, settled similar contracts for only around thirteen cents on the dollar. In August 2008, Calyon, a French bank also involved in AIG's transactions, settled disputed financial guarantees with FGIC, a bond insurer facing bankruptcy, for only ten cents on the dollar. Ambac, another bond insurer in need of capital, recently canceled similar trades for ten cents on the dollar.

Defenders argue that circumstances surrounding AIG were different from the other bond insurers. They are correct; the circumstances were worse. The Fed should have made sure any payments that originated from AIG, before or after the bailout, were only temporary loans to be repaid as soon as possible…….

http://www.huffingtonpost.com/janet-tavakoli/treasury-cover-up-of-gold_b_400300.html

Money manager settles suit, but faces 14 more

2009-12-24T10:25:00.000-08:00

A New York billionaire recently imprisoned for soliciting underage prostitution in Florida has disposed of several lawsuits from girls claiming sexual abuse. However, 14 of 18 claims against Jeffrey Epstein remain. The most recent settlement was approved Sunday by a U.S. District Court judge.

The terms of each have been confidential, but an attorney representing two girls says the deep-pocketed money manager isn't making it easy. Spencer Kuvin says Epstein's investigators are digging up intimate details and interviewing ex-boyfriends, family members, employers and friends.

http://www.miamiherald.com/news/florida/AP/story/1395776.html

The Curious Passport Capital Experiment: Owning Physical Gold

2009-12-24T10:24:00.002-08:00

This summer, John Moran picked up 100 ounces of gold from a locker run by the Comex exchange in New York. The bars, which were light enough to carry in a backpack, marked the culmination of a $95,000 experiment by Passport Capital, a San Francisco-based hedge fund where Moran is director of business operations and strategy.

Passport, headed by John Burbank, wanted to find out how easy it would be to buy physical gold, rather than futures contracts or gold exchange-traded funds. The firm was also interested in testing conspiracy theories about the availability of the precious metal. Moran used his own money because Passport didn't want to run the test with its investors' cash. Everything went smoothly. In July, Moran bought a futures contract on 100 ounces of gold at roughly $950 per ounce for delivery in August. When the contract expired, Comex sent him a notice saying the gold was available for collection in New York at a specific time and date.

With gold prices down from a recent record, Passport is poised to repeat the process on a bigger scale for investors in its $1.2 billion Global Strategy hedge fund. Like several other hedge fund managers, Burbank sees inflation from trillions of dollars that have been pumped into the global economy by the Federal Reserve and other central banks in the wake of last year's financial crisis…...

http://online.wsj.com/article/BT-CO-20091223-708563.html

Trade like a SuperStar (Don’t try this at home…)

2009-12-24T10:24:00.001-08:00

Hedge funds are aggressive, leveraged, unregulated investment vehicles popular with high net-worth individuals. Or are they?

"That's the most ridiculous definition there is in the world," says Daniel Keegan, options instructor at TheChicagoSchoolofTrading.com. A true hedge fund is one that hedges its bets, not one that doubles down, he says, echoing the industry's origins. Keegan says some of the best hedging strategies are so simple that individual investors can carry them out from home and, if implemented correctly, they can protect a nest egg from suffering big losses.

Given his position at a school that's in the business of teaching people to trade, Keegan is obviously biased. Any discussion of hedging a stock portfolio should begin by noting that the cheapest and simplest way to protect yourself is simply to lighten up by, say, moving money you can't afford to lose into a money market fund. Over the past decade, the Vanguard Intermediate-Term Treasury fund returned 6.7% annually, vs. the S&P 500's -1%.

That said, if you are convinced that the best place for a chunk of your savings is in stocks, there is a way to leave it there while limiting your downside: by buying options. Given the tools and market access available online these days, you don't have to be a Goldman Sachs or Morgan Stanley to do it either.

Like anything of value on Wall Street, they'll cost you. But in some cases, less than you might think. Keegan says the price of hedging falls as the market rises, and some hedges are getting cheaper as the market recovers from last year's rout.

http://www.forbes.com/2009/12/23/stock-options-personal-finance-individual-trading.html

Dimon, Blankfein, Mack Face the Music

2009-12-24T10:23:00.000-08:00

JPMorgan’s Jamie Dimon, Goldman’s Lloyd Blankfein, and Morgan Stanley’s John Mack will testify next month in Washington, Financial Crisis Inquiry Commission Chairman Phil Angelides said in a telephone interview yesterday. Bank of America Corp.’s incoming CEO, Brian Moynihan, has been invited and is expected to appear as well, Angelides said.

The hearing on Jan. 13 and 14 will kick off the public work of the crisis commission, which was appointed by Congress in July. Privately, the 10-member panel has been meeting with administration officials including Treasury Secretary Timothy Geithner and Securities and Exchange Commission Chairwoman Mary Schapiro.

http://bloomberg.com/apps/news?pid=20601087&sid=aUeswVG5oxmI&pos=4

Madoiff Mania: Bernie Gets Sh*t Beat Out Of Him

2009-12-24T10:22:00.000-08:00

Bernie Madoff was treated for “facial fractures, broken ribs and a collapsed lung” earlier this week that prison officials will not confirm was the result of a brawl in the yard but that sources say were “consistent with an assault.” This comes as a shock as we were under the impression Berns could hold his own in a fight, and that his boys (the “homosexual posse”) had his back. Anyway, we need a few more answers namely:

* Who did this to him?

* What sparked the argument?

* Who threw the first punch?

*Were the phrases “I’ll eat your asshole,” “I’ll f*k you ‘til you love me,” “I’ll f*k your ass in front of everybody,” or “You wouldn’t last two minutes in my world, white boy” uttered?

http://dealbreaker.com/

Wealth Watch: Lonely hearts club only billionaires can join

2009-12-24T10:21:00.000-08:00

Money can't buy you love, but among China's new super-rich, it can certainly help narrow the field in the quest for affection. China's booming economy has produced 130 dollar billionaires, but it seems at least 21 men in that elite number are lonely, and find it hard to meet members of the opposite sex.

Forced to focus on building wealth during the early part of their careers, many billionaires in China simply haven't had the time to follow the advice of their parents in who to marry. Enter an enterprising dating organisation, Golden Bachelor, which has organised the Chinese capital's most expensive party ever – a match-making ball with tickets costing 100,000 yuan (£9,000) a head.

Attending the lavish affair at Beijing Jun Wang Fu, a luxury hotel near Chaoyang Park known for its Qing Dynasty-style décor, was a privileged group of 21 single billionaire men and 22 single women. The 22 women were chosen for the occasion in three different ways. Some were registered with the Golden Bachelor website, while others won a beauty pageant sponsored by the group. The remainder were scouted by Golden Bachelor employees, known as "love hunters"….

http://www.independent.co.uk/news/world/asia/lonely-hearts-club-only-billionaires-can-join-1849107.html

Hedgefinger's Lamest Insider Trading Idea Ever

2009-12-23T13:37:00.000-08:00

A judge has frozen the assets of two French citizens accused of insider trading. Nicolas Patrick Benoit Condroyer and Gilles Robert Roger, who reside in Belgium, allegedly used insider information to illegally trade stock in Chattem Inc. Chattem, a manufacturer of over-the-counter health care products, was recently acquired by Sanofi-Aventis, one of the world's largest health care products companies.

From the press release:

The SEC alleges that Nicolas Patrick Benoit Condroyer and Gilles Robert Roger, who reside in Brussels, Belgium, purchased hundreds of "out-of-the-money" call option contracts for stock in Chattem, Inc., which manufactures and markets over-the-counter health care products and whose shares are traded on the New York Stock Exchange. Condroyer and Roger purchased the contracts in newly-opened U.S. option brokerage accounts while in possession of material, nonpublic information regarding the impending acquisition of Chattem by Sanofi-Aventis, one of the world's largest health care products companies.

According to the SEC's complaint in the case, when the $1.9 billion acquisition was announced publicly on December 21, Condroyer and Roger immediately sold all of their options for illicit profits of approximately $4.2 million. The SEC filed insider trading charges against them the very next day.

"These two men tried to take advantage of the marketplace and cash in on millions of dollars in illegal trades," said William P. Hicks, Regional Trial Counsel in the SEC's Atlanta Regional Office. "Fortunately they were caught in the act and the money was successfully frozen." The court order has frozen the $4.2 million and prohibited the two traders from destroying evidence.

Their fatal mistake? They used newly opened brokerage accounts and made no other trades. That obviously set off the automated alerts at the exchanges and the SEC.

http://www.businessinsider.com/two-traders-caught-in-the-act-of-illegally-trading-on-insider-information-2009-12

Madoff Watch: What’s Wrong With Bernie?

2009-12-23T13:05:00.000-08:00

Berns “F*ck My Victims” Madoff has been moved to a medical facility at the Butner prison he’s been shacking up in since his sentencing. Apparently the Ponz Master has been there for a while, but this is the first anyone’s hearing of the transfer. It’s also unclear as why The Don was relocated, and what ailment he’s suffering from. Surely though, with our collective resources, intimate knowledge of the Master, and time on our hands, we can figure it out. A few ideas include:

* An erection lasting more 4 hours (he should only be so lucky.)

* Non life-threatening cancer

* Faked sick to get moved closer to a nurse he’s had his eye on

* Substance abuse problem

* YOU TELL US

http://dealbreaker.com

What’s on the new King of Wall Street’s Gift list?

2009-12-23T07:57:00.000-08:00

David Tepper, the new hedge fund king in town, netted roughly $7 billion this year, making big bets on battered bank shares. That makes his fund Appaloosa Management, one of the biggest winners of the financial crisis. It is a heart-warming holiday story about a hedge fund that profited because the nation prospered, as opposed to the hedge funds that profited in 2007 and 2008 on the collapse of the subprime mortgage market.

If you are lucky enough to be on Tepper’s holiday list, here is what a man who made roughly as much as the annual gross domestic product of the nation of Montenegro can afford to buy:…..

Power tools are always popular at Christmas. Tepper could have snapped up the entire power tool company, Black & Decker, which sold last month for $4.6 billion to Stanley Works. As a stock stuffer, how about throwing in Chattem Inc, the maker of Gold Bond foot powder and dandruff shampoo, Chattem Inc, which cost about $1.9 billion?

For that really special person with an outsize ego, Tepper could build them a matching set of the world’s tallest building. The 2,684 feet, 160-story Burj Dubai cost an estimated $4.1 billion to construct. Tepper might need to put some of the construction bill on credit, but what’s to worry? Those condos will sell out in no time. Just ask Dubai’s real-estate developers.

If Tepper is feeling in a charitable mood, Third World debt is a trendy gift. He could wipe out the African nation Tanzania’s $6.1 billion debt or Somalia’s $5.5 billion and have enough left over to clean out Namibia’s $800 million of loans.

Every hedge fund should own a bank. Tepper profited by betting that Bank of America and Citigroup would survive the dark days of February and March. For an encore…..

http://blogs.wsj.com/deals/2009/12/22/what-is-on-david-teppers-holiday-gift-list-this-year/

Why Goldman Employees Think There's a Conspiracy

2009-12-23T07:55:00.000-08:00

Instead of everybody else thinking Goldman is conspiring to run the entire world, workers at Goldman Sachs' buildings across New York and New Jersey are grumbling about a conspiracy. A conspiracy by the company to squeeze profit even from its own staff.

According to a mole, Goldman apparently stocks the cheapest, worst generic coffee imaginable in its staff kitchens - despite protests from the caffeine-deficient. "It's beyond horrible," explained our source. "You work a lot of hours so you have to go down to the cafeteria and spend money on Starbucks or Dunkin' Donuts." There is talk within the ranks that this is a ploy to boost cafeteria takings, as any imprecations to improve the standard of free coffee fall on deaf ears.

This could, of course, be a complete accident. Or Lloyd Blankfein himself might be overseeing a monetizing of employee caffeine addiction. In either case — if even your own employees are accusing you of being a petty, money-sucking greedmachine, it might be time to change something.

http://gawker.com/5431990/the-goldman-sachs-coffee-conspiracy

How to Spot a Star Fund Manager

2009-12-23T07:54:00.000-08:00

Felix Salmon writes: you’ve heard by now about Steve Cohen’s appearance on a UK daytime talk show in 1992. The Post seems to think that the story is that he was sleeping with both of his wives at the same time; the first reaction from the rest of us was sheer astonishment that he went on a talk show at all. But buried in the story is another interesting nugget: 1992 was the year that Cohen launched SAC Capital, and began a hedge-fund career that would rank among the greatest of all time.

Now, if you had the opportunity to invest with Cohen in 1992, then clearly, with hindsight, you should have put every last penny into his fund. But at the time he was being excoriated by his wife on a show called “Cristina”, after its eponymous bleach-blonde host. The obvious thing to do would be to run very far in the opposite direction. Which just goes to show the advantages of being contrarian — and the difficulties of picking a fund manager.

That said, I’m pretty sure that at this point a strategy of “invest with any hedge fund manager who appears on a daytime talk show while raising money for his first fund” has performed extremely well. Maybe other hopefuls should try to go down the same route, to see if they can capitalize on the momentum trade.

http://seekingalpha.com/article/179477-how-to-choose-a-hedge-fund-manager?source=feed

Ex-Bonus bankers warned not to plead human rights violation (!?!)

2009-12-23T07:52:00.000-08:00

Bankers smarting from the government’s new super-tax on bonuses were yesterday warned by MPs that attempts to use human rights law to challenge the levy are likely to fall flat. Those searching for ways to get around the tax are unlikely to be able to “demonstrate hardship amounting to an excessive individual burden”, the parliamentary joint committee on human rights said in a report.

The committee added it was “difficult to conclude that the measure is devoid of reasonable foundation”, given that it is expected to raise £550m in revenue, is directed at banks rather than individuals, and is intended as a one-off measure to combat excessive risk-taking in banks.

Lawyers had cautioned that the levy, requiring banks to cough up 50 per cent in tax on bonuses over £25,000 until next April, might constitute a breach of human rights, which stipulates that individuals and companies should be treated equally.

http://www.cityam.com/news-and-analysis/bonus-tax-no-breach-rights

Why Hedgies are avoiding King Steve Cohen like the plague

2009-12-22T10:45:00.002-08:00

Of course no one wants to be associated with SAC Capital. The fund has at least these three strikes against it:

1.The s*x and cross-dressing lawsuit, 2. CEO Steve Cohen's ex-wife suing her ex-husband and claiming he confessed to insider trading in the 1980s, 3. Steve Cohen suspiciously got a Reuters story killed

Now, according to Teri Buhl at hedgeimplode:

Blue Ridge, Greenlight, Third Point, Glenview, and Maverick are cutting back on any contact with King Stevie. When we asked major players such as Jim Chanos and others if they’ve been pinging Stevie about a trade lately, you’ll get a very defensive `no.'

They are using a new buzz-word to direct their legions: being "SAC-re…..

http://www.businessinsider.com/hedge-funds-avoid-contact-with-steve-cohen-sec-2009-12

Short Selling Hedge Fund Kicked Out Of Investor Meeting

2009-12-22T10:45:00.001-08:00

Last week Harvest Capital Strategies manager Andrew Kaplan tried to attend an analyst meeting for First Solar, which he says he was invited to. Upon arriving at the Westin in New York, where the event was taking place, Kaplan received a badge, grabbed himself a Diet Coke, and waited for the conference to begin. Unfortunately, Andy never got to find out what the company had to say for itself, because he was approached by an IR person who informed him he need to leaving the building ASAP.

First Solar claims Kaplan, who is short the stock, was never invited. He begs to differ, and doesn’t understand why there’d be any reason to throw him out, since a) he was asked to come b) it’s not like he looked like some hobo off the street. But whatever! He’s not going to raise too big a stink about the whole thing. He just wants his damn money. The money it cost him to get himself back to the office after being asked to get off the property.

Kaplan e-mailed First Solar officials to ask why he was barred and request that the company pay his $9 taxi fare from the hotel back to his office on Park Avenue, where he listened to the analyst conference on the Internet. Kaplan said he runs one of five funds at Harvest Capital. First Solar is the world’s largest maker of thin-film solar-power modules.

http://dealbreaker.com/

Wanted: 200 “skinny” bankers

2009-12-22T10:40:00.002-08:00

Banco Santander SA plans to hire 200 bankers at its global wholesale banking and markets division after taking business from rivals hurt by the financial crisis.

“Many of our competitors are obsessed by cost and we are also obsessed by cost, but in the opposite direction,” said Adolfo Lagos, head of Santander’s global banking and markets unit, in an interview in Madrid. “We’re too skinny; we could become anorexic, so I believe we should spend a bit more.”

Profit at the unit, which provides loans, risk-management products and investment-banking services to large companies, rose 81 percent to 2.19 billion euros ($3.15 billion) in the first nine months of the year, accounting for about 30 percent of group earnings. Lagos is expanding even as Santander trims costs in the face of recessions in Spain, Mexico and Britain, its biggest markets.

Santander, Spain’s largest bank, expects stiffer competition in wholesale banking next year as rivals regain their footing. Profit margins have already narrowed, forcing the bank to seek higher business volumes and new customers such as institutional clients, Lagos said. The financial crisis destroyed demand for complex products, such as structured investment vehicles, he said.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aZpsjgvkgMSk

Billionaire Slug-Fest

2009-12-22T10:40:00.001-08:00

Most Atlantic City smackdowns involve professional wrestlers, not billionaires with legal papers, but a steel-cage match is shaping up between Carl Icahn and Donald Trump over the bankrupt Trump Entertainment casinos.

The two Queens natives, just days after the battle took shape, are already trading barbs, with Trump saying Icahn "runs companies so badly that I think it'd be really bad for the company if he took over."

The developer said Icahn has been involved "in many bankruptcies," and then ticked off TWA, WCI and Sands Casino.

Icahn, the pride of Far Rockaway, countered that "we run companies successfully in many areas, but on point, let's talk about casinos -- Donald's favorite business."
While Atlantic City casino revenue tumbles, the battle for the bankrupt Trump Entertainment could prove to be the most exciting event in New Jersey since MTV’s “Jersey Shore” series hit the small screen.

http://thereformedbroker.com/2009/12/21/carl-icahn-drinks-trumps-milkshake-in-ac/

Ch-Ch-Changes: Fund Star turns contrarian

2009-12-22T10:39:00.001-08:00

Fidelity Special Situations' fund manager Sanjeev Shah has begun selling out of the companies that raced ahead during the market recovery in favour of more defensive names. Mr Shah, the protégé of famed investor Anthony Bolton is backing the view, also expressed by his mentor, that it is time to buy companies that offer growth at a reasonable price.

Shah still holds cyclical stocks – that is, those that race ahead during market recoveries – such as ITV and advertising giant WPP in his £1.7bn fund, but he has also begun looking for lower-risk names. Shah says that, while the economic recovery is under way, times will be tough for the foreseeable future: "We have averted a crisis, but I suspect the overall growth and the economic environment will be fairly muted.

"Any company that can generate decent underlying organic growth will benefit and I think growth at a reasonable price-type of stocks will do well in that environment. I have started putting part of the fund in those types of stocks."

http://www.telegraph.co.uk/finance/personalfinance/investing/6832464/Fidelity-star-goes-contrarian.html

Fund Manager Tepper Has a Pair of Brass Balls (No, really….)

2009-12-22T10:34:00.000-08:00

Remember this past March, when we were all sitting at our desks — those of us that still had desks, anyway — gripped with fear as shares of once-robust financial institutions like Citigroup and Bank of America* rapidly sank to unprecedented lows of 99 cents, our minds filled with apocalyptic visions: rioting, breadlines, using our grandmother's jewelry to bribe unsavory characters to smuggle us off the island? Even as we indulged in the panic, there was a part of us whispering: "There's no way that things are really going to get that bad. Maybe I should buy this stuff." But most of us were too nervous, unlike David Tepper, a New Jersey–based trader who made $7 billion doing precisely that. Per The Wall Street Journal:

What gave him such confidence? Faith in the United States government and the markets, of course. Also, his brass balls.

No really, he has brass balls. From time to time, when things get rough, he strokes them. WSJ:

Mr. Tepper keeps a brass replica of a pair of testicles in a prominent spot on his desk, a present from former employees. He rubs the gift for luck during the trading day to get a laugh out of colleagues.

http://nymag.com/daily/intel/2009/12/david_tepper_made_7_billion_do.html

Wealth Watch: Private-jet travel is b-a-a-c-k

2009-12-22T10:08:00.001-08:00

According to an article on gather.com, some of the nation’s private-jet caterers are seeing a noticeable uptick in flights. Kristen Wasyliszyn, owner of Atikis Flight Catering, which serves jets in Minnesota, said her business was down 40% amid the recession. She says business is creeping back and she expects to be “back to full force” in 2010.

That is in line with other industry research that shows flights up more than 20% in November and December compared with last year.

Yet according to Ms. Wasyliszn, today’s private-jetters aren’t splurging for the caviar and champagne. “I’m here to tell you no one is eating lobster,” she said. “A quick turkey box lunch to slam down while flying to meetings is the order of the day.”

http://blogs.wsj.com/wealth/2009/12/21/caviar-replaced-by-turkey-sandwiches-on-private-jets/

Hedgefinger’s Con of the Week

2009-12-21T20:55:00.001-08:00

ECONOMIC COMMUNITY OF WEST AFRICAN STATES{ECOWAS77}
{OFFICE OF THE EXECUTIVE SECRETARY}
ABUJA-NIGERIA.

ATTENTION: BENEFICIARY

RE: CONFIRMATION OF YOUR PAYMENT OF USD9.6MILLION

Be informed that after our crucial meeting today with the the Presidency, we write to inform you that your payment has been approved for immediate release through our Foreign Credit Commission into your account.

Our Foreign Credit Commission in Europe will release your payment within 72 hours of your accreditation. You are advised to get back to me urgently with your Telephone and your full name and address for more briefing.Email Me.. danecowas25@bol.com.br

Yours faithfully.
Mr Daniel Johnson Jr.

Deep Thoughts by Hedgefinger: Why Is the Dollar Too Big to Fail?

2009-12-21T13:00:00.000-08:00

There is an interesting article in this month’s Financial Planning Magazine that questions how realistic it is for the dollar to “fail” on a global scale. The article’s main contributor, Frank Wei of FundQuest, argues that the dollar is too important to both the global economy and the financial system for it to experience a sudden collapse. Any further declines, he argues, will be gradual.

Among the major causes for concern by investors right now is the long and continuous period of low interest rates which encourages the printing of new dollars. Because of how many global products are priced in dollars (i.e. oil) a collapse would instantly shock the world in a similar fashion to how systemic risk fears plagued the global equity markets and forced emergency policy action during 2008 and early 2009.

A weaker dollar means inflation, right? Not necessarily. The way Americans measure inflation is primarily through CPI, a measure of the prices of goods and services commonly consumed in our economy. As it currently stands, housing prices comprise roughly 40% of the CPI basket. Unless you believe housing prices will rise sharply during 2010, rampant inflation is unlikely, at least during 2010. Along those lines, the number of Americans struggling to make their ballooning mortgage payments will more than likely curb spending in other parts of the economy during 2010. If consumer spending remains flat, it becomes much less likely we’ll experience runaway inflation….

http://seekingalpha.com/article/178897-is-the-dollar-too-big-to-fail?source=article_sb_picks

What panic? This Fund Boss Raked In $7 Billion

2009-12-21T12:52:00.001-08:00

In this comeback year for investors, David Tepper may have scored one of the biggest paydays of all. Mr. Tepper's hedge-fund firm has racked up about $7 billion of profit so far this year—with Mr. Tepper on track to earn more than $2.5 billion for himself, according to people familiar with the matter. That is among the largest one-year takes in recent years.

Behind the wins: a bet worth billions of dollars that America would avoid a repeat of the Great Depression.

Through February and March, Mr. Tepper scooped up beaten-down bank shares as many investors were running for the exits. Day after day, Mr. Tepper bought Bank of America Corp. shares, then trading below $3, and Citigroup Inc. preferred shares, when that stock was under $1. One of his investors insisted more carnage loomed. Friends who shared his bullish beliefs were wary of aping his moves amid speculation that the government was about to nationalize the big banks. The bets paid off. A resurgent market has helped Mr. Tepper's firm, Appaloosa Management, gain about 120% after the firm's fees, through early December.

http://online.wsj.com/article/SB126135805328299533.html

Smart,smart Harvard stumbles and scrambles for $2.5B

2009-12-21T12:51:00.001-08:00

Harvard University scrambled to borrow up to $2.5 billion last year during the height of the credit crisis in an effort to pay off interest-rate swaps that had turned toxic, Bloomberg News reported Friday.

Bloomberg reported that Harvard was so strapped for available cash that it asked Massachusetts for fast-track approval to borrow $2.5 billion. Almost $500 million was used within days to exit interest-rate swaps that Harvard entered as part of a financing deal to fund its expansion, Bloomberg reported.

The swaps assumed interest rates would rise, but when that didn’t happen the wrong-way bets presented a huge problem for Harvard. Most of the bets, Bloomberg said, were made in 2004 when Larry Summers ran Harvard.

http://boston.bizjournals.com/boston/stories/2009/12/14/daily65.html