Dead, detained or missing: China’s businessmen and officials are disappearing

“The one-and-half-day disappearance of Shanghai tycoon Guo Guangchang, chairman of Fosun Group, who is sometimes referred to as China’s Warren Buffet, comes at a particularly disturbing time for the mainland’s richest business figures.  Earlier this month,  tycoon Xu Ming was reported dead of a heart attack while in jail, despite being reported as enjoying an ‘excellent health and mental condition‘ just two months before his imprisonment.  Xu Xiang, an aggressive private fund manager regarded as China’s George Soros, was arrested last month for alleged inside trading, while six of the top eight executives at CITIC Securities are being held for questioning over possible wrongdoing.”

Highway bill revives the Export-Import Bank after only five months

“A measure extending the bank through 2019 was included in a massive transportation bill that cleared the House and Senate Thursday and is expected to be signed by President Barack Obama. The small federal agency makes and guarantees loans to help foreign customers buy U.S. exports. Business groups like the U.S. Chamber of Commerce say it’s necessary for U.S. competitiveness, since most overseas competitors rely on similar government help.  But conservatives decry the bank as corporate welfare and government interference in the free market.  A rarely used procedure in the House forced a floor vote on the bank over the objections of top GOP leaders.”

Highway Bill Compromise Funded By Expropriating Big U.S. Banks

“The highway measure would be financed in part by a one-time use of Federal Reserve surplus funds and by a reduction in the 6 percent dividend that national banks receive from the Fed. The dividend would be reduced by an amount tied to yields on 10-year U.S. Treasuries, currently about 2.2 percent. If Treasury yields rose higher than 6 percent, the Fed wouldn’t pay the banks more. Banks with $10 billion or less in assets would be exempt from the cut.  The Fed’s surplus capital comes from the 12 reserve banks. The highway bill would allow for a one-time draw of $19 billion from the surplus, which totaled $29.3 billion as of Nov. 25.”

The End of Tax Havens?

“One of [the OECD’s] foremost successes has been the Isle of Jersey. By forcing tax equalisation on Jersey, Jersey has had to decide whether to increase taxation for offshore depositors, or decrease taxes for locals. It chose the latter and, as a result, has experienced a shortfall in the government kitty, resulting in layoffs for public service workers, cuts in funding for road repair, sewage services, education, etc. Jersey appears to be on the ropes as a result. In five or ten years’ time, will the only tax havens be in places like Delaware, where the government-sanctioned tax haven follows the ‘bad practices’ that the OECD has called ‘criminal’?”

France Doubles Down On Cash Ban: No Transactions Over 1,000 Euros

On September 1st France announced new regulations that ban cash transactions of  1,000 euros. This comes as a surprise since France originally set the threshold at 3,000 euros.  A second measure, which comes into force on 1 st  January 2016 For individuals who perform foreign exchange transactions of their currency against euros. From next year, they will have to provide an ID from 1000 euros. Also as part of the fight against money laundering, banking institutions will, as from 1 st  January 2016, report to Tracfin anyone carrying deposits or withdrawals of cash superiors to 10 000 per month.”

Norway’s Biggest Bank Demands Cash Ban


“Norway – suffering from its own economic collapse as oil revenues crash – has joined its Scandi peers Denmark and Sweden in a call to ‘ban cash.’  Privacy advocates in Norway have expressed worries for years that, without cash, there would be no way for an individual to purchase something without being tracked. In 2014, Finans Norge, a financial industry organization in Norway, said the country was on pace to be a cashless society by 2020, Ice News reported. While DNB said its proposal will take time to complete, executives suggested the country start phasing out cash by discontinuing the 1,000 kroner note so it could focus on updating its banking system.”

Italy bank runs: the ‘Northern Rock’ signal of global financial meltdown?

“On Jan. 21, the oldest surviving bank in the world, Banca Monte dei Paschi di Siena SpA, reported that depositors have been initiating a series of bank runs which have put the financial institution on the precipice of collapse, with all attempts to calm account holders having so far failed.  Since last Monday the share price of Banca Monte dei Paschi di Siena SpA has fallen over 46%.  Back in 2007, bank runs on the British financial institution known as Northern Rock ushered in the start of the global financial crisis that culminated in a collapse that would require taxpayer bailouts, and tens of trillions in central bank liquidity.”

Hedge Funds Suffer First Quarterly Net Outflows in 4 Years

“Investors pulled a net $1.52 billion from the $2.9 trillion industry in the fourth quarter of last year, Chicago-based Hedge Fund Research said Wednesday. The typical hedge fund lost 1 percent in 2015, even after rising 0.8 percent in the fourth quarter, according to the firm’s HFRI Fund Weighted Composite Index.  Investors are ‘looking for strategies that will help preserve capital’ in a volatile market environment, Hedge Fund Research president Ken Heinz said at a press briefing in London. ‘They are positioning for anything but the S&P 500 Index making 30 percent in 2016.'”

Corporate-Credit Outlook at Worst Since Crisis, S&P Says

“Potential downgrades at the ratings company exceed possible upgrades by the most since 2009, in percentage terms, according to a Jan. 11 report. The difference widened the most since the financial crisis in the past six months, S&P said.  The corporate-debt outlook has darkened, particularly in Latin America, because of slower growth in China and a commodity rout that’s cut prices to the lowest since at least 1991. Company defaults have already risen to the highest since 2009 and investors are demanding the biggest yield in four years to hold junk bonds. On a regional basis, Latin America had the biggest gap, with possible downgrades exceeding potential upgrades by about 35%.”

AB InBev’s Mega Bonds Just the Start of a Corporate-Debt Deluge

“Companies will probably sell $280 billion of investment-grade corporate debt in 2016 to fund acquisitions globally, up from a record $258 billion last year, according to an estimate from Barclays Plc which excludes financial companies. After the beer deal, some of the year’s biggest debt offerings could come from Dell Inc., Anthem Inc. or Newell Rubbermaid Inc. to fund recently announced buyouts.  The flood of issuance could push up borrowing costs for companies that are issuing debt to finance takeovers. Other companies could also see their borrowing costs rise, as investors sell their current holdings to make room for new, higher-yielding bonds that are hitting the market.”