Archive for June, 2010

“Despite the happy talk coming out of the White House, there is overwhelming and terrifying evidence that we’re heading for an economic cliff next year. It’s going to happen. Make your plans accordingly.”
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Okay, so I figure it’s been a month plus since the last Mandelman’s Monthly Museletter, but the last one was so darn long, mostly because I had so much fun writing the piece about the homeowner meeting held in Phoenix, by the Arizona Housing Department, that I thought I’d bounce back with something much more, shall we say… pithy.

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“As a Congressional commission convenes hearings Wednesday exploring the A.I.G. bailout and Goldman’s relationship with the insurer, analysts say that the documents suggest that regulators were overly punitive toward A.I.G. and overly forgiving of banks during the bailout — signified, they say, by the fact that the legal waiver undermined A.I.G. and its shareholders’ ability to recover damages.”
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“This Sydney Morning Herald story (hat tip reader Gordon) highlights a Bank of England report that not only points out the magnitude of the financing needs of major banks over the next few years, a daunting $5 trillion, but also indicates that US and European bank refinancings are falling short of their rollover calendar. This suggests that we may witness a combination of balance sheet shrinkage and more covert and overt funding support.”
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“Rubin remained at Citigroup through January 2009, long enough to see the bank through the most difficult part of the crisis and bailout. He was aided by his dutiful minion Geithner, who was now at Treasury but operating under careful supervision of Summers and Rubin. Geithner also facilitated the bailout of American International Group, again to the advantage of Goldman Sachs and other Wall Street dealers. Rubin then departed from the board of the badly damaged banking group and ascended into heaven.”
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Comments on the renewed recession, the continuing financial crisis, and the housing market. Brief and high-level, with transcript.
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“Structural problems are immense and the sad fact of the matter is those problems cannot be cured by more deficit spending. Krugman is correct about a depression, just wrong about the cure. Logically the disease and the cure cannot be the same.”
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Q1 Hedge Fund Outflows

Hedge Fund Outflows Total $11 Billion in Q1 2010

Hedge funds recorded heavy outflows in the first quarter of 2010.  Investors pulled out $11 billion, mainly from smaller hedge funds.  The negative net flows for the first quarter of this year eroded the last quarter of 2009 inflows of $7.5 billion.

According to the report, Q1 2010 marked a polarization of money flows across hedge funds, with larger funds tending to post relatively larger and positive money flows, while smaller funds recorded relatively smaller and negative outflows.

On a four-quarter rolling-period basis, net money outflows from hedge funds amounted to $55.45 billion—an amount accounting for more than 15% of the sum of all negative quarterly money flows to the industry since first quarter 1994.

Despite the Q1 net outflows, global hedge fund assets are estimated to have increased quarter on quarter—from $1.34 trillion at the end of December 2009 to $1.39 trillion at the end of March 2010.

The bulk of net outflows in the first quarter were concentrated in strategies such as equity market-neutral, event-driven, managed futures, and multi-strategies.

Cumulative net inflows for the first quarter accounted for 0.91% of the beginning-of-quarter assets (it was 0.64% for the fourth quarter).  Source

Related to: Q1 Hedge Fund Outflows

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Tags: Q1 Hedge Fund Outflows, Hedge Fund Outflows, Hedge funds inflows, hedge funds, investors, capital

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New York State Tax

New York State May Tax Out of State Hedge Fund Managers 

New York state is considering a take hike on out of state hedge fund managers.  Many hedge fund managers work in New York state but live elsewhere, and New York is trying to take advantage of this to raise $50 million taxing carried interest.

A spokesman for Democratic Assembly Speaker Sheldon Silver said by telephone on Monday that it means hedge fund managers would be treated the same way as other commuters.

Congress also has considered taxing carried interest — profits gleaned by managing assets — at ordinary income rates — much to the dismay of hedge fund and private equity titans.
But last week, the federal proposal collapsed with a bill extending unemployment benefits. So for the moment, investment managers still pay only the 15 percent federal capital gains tax on their profits.

Democratic Governor David Paterson and New York lawmakers have balked at broad-based tax hikes after last year, when the top state income tax was raised to 8.97 percent for people whose annual earnings top $500,000.

Making hedge fund managers pay the state income tax is one of several options the Legislature devised after rejecting several of Paterson’s proposed revenue-raisers, from letting grocers sell wine to raising tuition at public universities.  Source

Related to: New York State Tax

• Hedge Fund Tracker Tool
• Fund Marketing and Sales Advice
• Top Hedge Fund Managers
• Free Online Hedge Fund Videos
• Careers & Employment Guide
• Hedge Fund Holdings & Securities Analysis
• Hedge Fund Terminology
• Geographical Guides
• Hedge Fund Startup Tools

Tags: New York State Tax, New York State Hedge Fund Tax, New York City hedge fund tax, hedge fund taxes, New York government, hedge funds regulation

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“For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg.”
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