Goldman loses another bet, an Olympic one.

The investment bank Goldman Sachs will financially support the city of Fukuoka's bid to host the 2016 Summer Olympic Games, the Financial Times reported Saturday.

The report said Goldman Sachs is now advising Fukuoka on the commercial viability of hosting the Games and is prepared to help pay for the southwestern Japanese city's infrastructure development.

"Based on our analysis, we are prepared to commit capital to this project," Masanori Mochida, president of Goldman Sachs Japan, was quoted as telling the paper.

"This project will have very sizeable returns, so Goldman Sachs is confident we can get interest from real estate investors, institutional investors and real estate investment funds," he said.

The report came a day after the Japanese Olympic Committee made public a report believed to work in favor of Tokyo over Fukuoka in the bidding race between the two domestic candidates for the 2016 Games.

We can’t win them all, can we? Not even the mighty Goldman.

http://asia.news.yahoo.com/060826/kyodo/d8jo6b1g0.html

Where are the Swaps Cops when you need them?

Unusual trading in a relatively new corner of the bond market illustrates how the rise of increasingly sophisticated financial instruments is potentially outpacing the ability of regulators to police them.

In recent months, there have been spikes in the prices of so-called credit-default swaps, which are a kind of default insurance on debt, popular among banks, hedge funds and other big investors. In some prominent cases recently -- including deals involving hospital operator HCA Inc. and energy company Anadarko Petroleum Corp. -- prices of the swaps climbed in the weeks before news of major acquisitions became public.

That raises the possibility that some traders might have acted on inside information. There is no evidence at this point that improper inside information was leaked. Proving insider trading has always been a challenge for regulators, even in traditional securities. But the recent activities raise questions as to which regulator, if any, is policing the market, and how they will go about it as these exotic instruments spread.

Copy this link onto your browser lick and read on. Trust us, this is just getting good..

http://online.wsj.com/article/SB115698777269950171.html?mod=mkts_main_todays_mkts_tac

Steel Partners proposes New Frontier buyout (and brother, what a buyout!)

Is that a roll of bills in your pocket or are you glad to see me? The worlds of marital aids and hedge funds combined this month when activist-investment firm Steel Partners proposed a management buyout of New Frontier Media Inc., an adult-entertainment company.

During a recent New Frontier board meeting, Steel Partners manager Warren Lichtenstein told directors he was interested in leading a management buyout of the company and was willing to pay a premium, according to a Tuesday regulatory filing.

Lichtenstein declined to state a price or a specific premium that he was prepared to offer for the business, and executives at New Frontier haven't received any more "substantive" information about a possible bid other than what the Steel Partners manager presented to the board, the company said in the filing.

New Frontier jumped 8.3% to $8.54 during afternoon trading on Wednesday. More than 750,000 shares traded -- more than nine times the average daily volume during the past 10 days.

"We view the news of Steel Partners finally stating its intentions as an indication that New Frontier Media will likely be put into play (at least in investors' minds), and we could therefore see a ramp in the shares," wrote Eric Wold, an analyst at Merriman Curhan Ford & Co., in a note to clients on Wednesday. "We would be an aggressive buyer of New Frontier below $10 on any run-up."

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BF59E229D%2DE1BD%2D4569%2DA97E%2D0CD31F84A7DF%7D&siteid=myyahoo&dist=myyahoo

Today’s CraigsList Spotter

Bi Curious Banker New In Town - 28 (Midtown)

Reply to: pers-199706048@craigslist.org

Date: 2006-08-27, 9:09PM EDT

Mostly straight banker new to the city. Masculine, inshape, vgl

Looking for other closeted investment bankers/lawyer, professional types to grab a drink tonight and maybe some safe experimentation

Please be in shape, masculine, and preferably closeted as well.

Stats and pic would be cool for exchange

Safety and discretion a must

* no -- it's NOT ok to contact this poster with services or other commercial interests

http://newyork.craigslist.org/mnh/m4m/199706048.html

If at First You Don't Succeed, Sue Soros

Even in New York there is nothing funnier - or crazier - than a bunch of rich developers crying over the spilt milk that is a building that slipped through their hands. And the building in at the center of what could be many lawsuits is the GM Building at Fifth Avenue and 58th Street, beloved to many as "where the Fifth Avenue Apple Store is." The NY Times has a feature about two lawsuits from two developers whose bids weren't accepted during a 2003 sale of the GM Building.

Leslie Dick and Sheldon Solow separately claim that Conseco sold the GM Building to Harry Macklowe when their bidders were actually higher, so now they are suing Macklowe. Dick insists his bid was $1.5 billion (and claiming that George Soros was pulling various strings behind the scenes to spoil his bid) and Solow saying his was the "highest credible bid" at $1.4 billion. And it gets better more people may be suing, including Larry Silverstein's partner, Lloyd Goldman. Which is fascinating - it seems like when you don't have the winning bid, you've gotta sue to show you do have money and are a credible developer.

http://www.gothamist.com/archives/2006/08/29/if_at_first_you_1.php

Emerging-Market Funds Draw Most Money in 6 Weeks, Led by BRICs

Go figure. Emerging-market stock funds attracted the most buying in six weeks in the past week as investors poured more money into those that invest in Brazil, Russia, India and China. U.S. and European equity funds suffered outflows.

Funds investing in shares of developing countries drew a combined $875 million on a net basis for the week ended Aug. 23, Brad Durham, a managing director at Boston-based Emerging Portfolio Fund Research, wrote in an e-mail today.

The net inflows were the most since the weekly period ended July 12, when the funds attracted $1.05 billion. It was also the fourth straight week that investors added more money than they pulled from emerging-market equity funds.

Funds that invest in the so-called BRIC markets of Brazil, Russia, India and China have been the overwhelming favorites.

Combined, BRIC funds and those investing in each of the four markets on an individual basis accounted for 26 percent of all net inflows to emerging markets in the past week, figures from a release from Emerging Portfolio dated Aug. 25 showed.

This year, BRIC-related funds have garnered $12.4 billion on a net basis, or almost 70 percent of all the money that emerging- market stock funds have taken in, according to Emerging Portfolio, which tracks 15,000 funds with $7 trillion in assets.

http://www.bloomberg.com/apps/news?pid=20601086&sid=aomPPWQC73wo&refer=news

Hedges flex their muscle

Hedge funds are flexing their financial muscles, demanding companies that do not file quarterly reports on time to immediately repay all their debts.

Technically, companies do default on their outstanding bonds when they fail to punctually file quarterly reports with the Securities and Exchange Commission. However, investors have traditionally turned a blind eye to the missed deadline, allowing the company time to finish its report.

However, hedge funds -- hungry for profits -- are not being so nice. The widening scandal of companies that have been caught backdating stock option grants to executives is adding tension to the mix, because many firms have had to more closely scrutinize their filings -- causing deadlines to be missed, in some cases -- to ensure compliance.

"Bondholders used to be extremely lazy," Andrew Redleaf, chief executive at Whitebox Advisors LLC, a $2 billion hedge fund, told the Wall Street Journal."Part and parcel of what investors do is assert their rights, whether they're shareholders, bondholders or otherwise."

http://www.banknet360.com/news/NewsAbstract.do?na_id=5077

Spammers manipulate markets

Spam messages that tout stocks and shares can have real effects on the markets, a study suggests.E-mails typically promote penny shares in the hope of convincing people to buy into a company to raise its price. People who respond to the "pump and dump" scam can lose 8% of their investment in two days.

Conversely, the spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell.

The study recently published on the Social Science Research Network say their conclusions prove the hypothesis that spammers "buy low and spam high".

The researchers say that approximately 730 million spam e-mails are sent every week, 15% of which tout stocks. Other estimates of spam volumes are far higher.

The study, by Professor Laura Frieder of Purdue University in the US and Professor Jonathan Zittrain from Oxford University's Internet Institute in the UK, analysed more than 75,000 unsolicited e-mails. sent between January 2004 and July 2005.

http://news.bbc.co.uk/2/hi/technology/5284618.stm

Type A personality? That might not be bad for your health

To work on Wall Street, you generally have to be a Type A personality, be able to withstand high stress and be prepared to work long hours. And at least two out of three of those traits are risky to your health.

Earlier this month, we noted a study determined that if you have a high stress job that you have a greater risk of high blood pressure. And just yesterday, another study claimed that if you work long hours, you're also increasing your risk of high blood pressure. Well here's at least one piece of good news: If you're a Type A personality you may be happy to know that contrary to popular belief, yet another new study has determined that there's "absolutely no connection between the hard-driving personality and heart disease".....

Although human genes contribute significantly to a person's health and behavior, these two kinds of traits aren't closely linked at all.

In fact, a study appearing this month in the Public Library of Science found absolutely no connection between the hard-driving personality and heart disease, contrary to previous studies and conventional wisdom.

This is among the first findings of a massive, 10-year effort to measure the genes and traits of a single population of closely related people. Conducted jointly by Italian and Sardinian researchers, the U.S. National Institute on Aging, and bio-statisticians at the University of Michigan, the project recruited 6,148 people aged 14 to 102 in four clustered villages on the island of Sardinia in the Mediterranean Sea. The sample represents 62 percent of the population of the Lanusei Valley surrounding the four villages....

http://www.umich.edu/news/?Releases/2006/Aug06/r082806

Merger Whispers, Suspicious Trades and Lies

The boom in corporate mergers is creating concern that illicit trading ahead of deal announcements is becoming a systemic problem.

An analysis of the nation’s biggest mergers over the last 12 months indicates that the securities of 41 percent of the companies receiving buyout bids showed abnormal and suspicious trading in the days and weeks before those deals became public.

There can be many reasons for unusual trading in advance of a deal, many of them perfectly innocuous. But the study, conducted for The New York Times by Measuredmarkets Inc., an analytical research firm in Toronto, identified companies from a wide range of industries whose pre-merger trading activity was not easily explained by corporate announcements or mentions in the media.

Among the companies identified as having abnormal trading activity were Amegy Bancorp, the subject of a $1.7 billion takeover announced last September by Zions Bancorp, the large Utah bank; CarrAmerica Realty, a real estate investment trust acquired for $5.6 billion by the private investment company Blackstone Group after a March announcement, and Dex Media, a directory publisher whose $9.5 billion purchase by the R. H. Donnelley Corporation was disclosed in October.

http://dealbook.blogs.nytimes.com/?p=6762

Saudi’s Warren Buffett opens Kingdom to the public

Introducing Arabia’s Warren Buffett, 51-year-old Prince Alwaleed Bin Talal Bin AbdulAziz Alsaud. According to The Business Online, this shrewd Saudi investor has the largest United States portfolio held by any foreign individual. As a 31-year-old stock market novice, he turned his £800m investment in Citigroup into a holding worth $10bn within a couple of years. For many that wad would have been large enough to say: “Sod it, I’m off to play golf for the rest of my life and live in the Cote d’Azur.” But not this young man.

He went on to rescue Euro Disney in Paris from almost certain bankruptcy. He’s since bought London’s Savoy Hotel, Fairmont Hotels, the Four Seasons, and the George V Hotel in Paris which he has restored to its former glory. He has also invested heavily in Apple Computer and has sizeable stakes in News Corporation, Pepsi, Procter & Gamble, Amazon.com, eBay, Saks Fifth Avenue, Ford, Motorola and Canary Wharf.

In fact, his $23bn investment portfolio reads like a list from the FORTUNE 100. Today, he is the largest individual foreign investor in the United States. He is reckoned to be the world’s second largest richest man.

For the second time this year Prince Alwaleed is planning to go public – this time through a listing of his main investment company, Kingdom Holding Company (KHC). The listing, being planned by US investment bank Citigroup and Samba, a Saudi Arabian company, is expected to take place within the next month or two. About 30% of KHC will be floated raising around $7bn.

Earlier this year he floated his hospitality company, Kingdom Hotels Corporation, in London and Dubai, so he’s not short of a riyal or two.

While many members of the Arab superrich club get their excitement from horse racing or gambling at the world’s top casinos, Prince Alwaleed gets his from dealmaking.

He has come to be admired internationally not only for his investment acumen, but equally for his hard working lifestyle – he sleeps only five hours a night – and for his probity. Unlike most Saudi royals, his wealth has not been gained from oil or inheritance. Prince Alwaleed is a self-made billionaire.

Imitating Goldman, Deutsche finds it’s harder than it looks

Deutsche Bank AG is finding out just how hard it is to be more like Goldman Sachs Group Inc. A decade after Germany's largest bank set out to reinvent itself as a Wall Street-styled securities firm, only New York- based Goldman earns more money from trading stocks, bonds, currencies and derivatives. And, there's little prospect that the gap between them will narrow anytime soon because Frankfurt-based Deutsche Bank eludes the risk-taking that characterizes Goldman.

While Goldman's sales and trading revenue almost doubled to $12.9 billion in the first half on big bets in the oil and stock markets, No. 2 Deutsche Bank could only manage a 38 percent increase to $9.7 billion during the same period with a trading strategy that's deliberately risk-averse.

``Deutsche Bank has made a lot of progress, but it will be a big task for them to take on the top tier of Wall Street,'' said Dale Robertson, who helps manage $1 billion in stocks at Edinburgh Partners in the Scottish capital, including shares of Deutsche Bank. ``They still have a ways to go.''

Wall Street's traders have been the engine behind more than three years of rising profits at securities firms, including Goldman, Deutsche Bank, UBS AG, Citigroup Inc. and Morgan Stanley. They typically account for about three quarters of investment-banking revenue, with the rest coming from underwriting securities and advising on mergers.

fter all, to make the most of trading opportunities for themselves and clients, firms have increased their so-called value at risk, a measure of how much they could lose in a day if the markets turned against them. While Goldman's value at risk was 40 percent higher in the second quarter than at the end of last year, Deutsche Bank's risk was almost unchanged.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aXHCIHcFACkU&refer=us

Housing Bubble Horror: Market Has Makings for a Gory Story

Investment crazes come and go, invariably bloodying the eager buyers who are 100% convinced they've latched on to a sure-fire winner. The Dutch tulip bulb mania in the 1630s, Britain's South Seas bubble in the early 1700s, the Florida land boom in the 1920s, the stock market frenzy that led to the 1929 crash and the Internet craze of the late 1990s are just several that come to mind.

The latest is the housing boom, which some Wall Street professionals insist has already evolved into a housing bust, as evidenced by shrinking sales, falling home prices, burgeoning inventories and tumbling stock prices for housing-related companies.

Addressing himself to the latest delirium — the biggest real estate bubble in history — the chief investment strategist of Raymond James Financial, Jeffrey Saut, is warning clients that the ongoing collapse of residential real estate has far-reaching implications for both the economy and the stock market.

As evident, though, by last week's rosy showing in which some stock indices rose 3% to 6% and turned more positive on the year, the market is essentially saying it doesn't give a hoot.

But Mr. Saut certainly does, noting that real estate has been chiefly responsible for much of the nation's economic and job growth. Taking note of significant year-over-year price breaks in his home base of Florida, which has been slammed with doubledigit declines in 12 of its 20 metropolitan areas, in one instance (Punta Gorda), as high as 97%, he thinks what's happening there is a pretty good prism of what's occurring on the "coasts," as well as in some previous hot real estate markets like Las Vegas, Phoenix and Washington, D.C.

Regrettably, our housing worry-wart says, he expects the "homesick" environment to get worse, amplified by the $2.7 trillion worth of adjustable rate mortgages that will reset at a higher interest rate in 2006 and 2007. These higher rates, he notes, come on top of the fact that 10% of all home owners with mortgages have no equity in their houses, while 15% of the 2005 home buyers owe at least 10% more than their home is worth.

http://www.nysun.com/article/38605

Making Money The Slow-Fashioned Way

We never thought it would, certainly not so soon, but it has come to this: with a slowing housing market and an economy weighing on stock prices, many Wall Street strategists favor a traditional strategy to get cash regardless of the stock market's direction: dividends.

Stocks with dividends usually distribute cash to investors once a quarter. In a market that seems to be going nowhere but sideways, the steady income is one way investors can try to get ahead of the pack.

Moreover, in the event of a bear market, dividends may serve to cushion a portfolio. "Stocks paying significant dividends should provide some protection during an overall market decline," says Ken Tower, chief market strategist at CyberTrader, an online-trading unit of Charles Schwab. "They'll still fall, but not as much" as the rest of the market, because they are typically in defensive sectors, such as pharmaceuticals.

Dividend stocks haven't blown the doors off the market in recent years. Despite the 2003 reduction in the top tax rate on most dividends to 15%, dividend stocks haven't surged as many people expected. Small companies -- which usually shun dividends in order to allocate their cash to new equipment and employees -- have been Wall Street's darlings, helped by the expanding economy.

When stocks surged in 2003, in particular, the dividend-paying stocks within the Standard & Poor's 500-stock index were trounced by the nondividend components, including technology stocks that were rebounding from a bear-market beating.

But since then, stocks with dividends have delivered somewhat higher returns for investors. Last year, the dividend stocks in the S&P 500 posted a total return, from price change and dividends, of 9.3% -- beating the 8.2% return of the nondividend stocks.

This year, the spread has widened. The dividend stocks in the S&P 500 gained 5.1% through Thursday, compared with a 0.9% advance for stocks with no dividend. Concerns that more than two years of interest-rate increases by the Federal Reserve are slowing the economy have drawn investors to defensive, dividend-heavy sectors such as health care and utilities.

"Investors are turning more conservative," says Howard Silverblatt, senior index analyst at Standard & Poor's in New York. "They're looking for some stability, and while dividend stocks don't move as high in the good years, they don't go down as much during bad years."

http://online.wsj.com/article/SB115663197848246567.html?mod=hps_us_at_glance_most_pop

The Dirty Little Secret Seduction Society

Behind the discreet facades of some of the most fashionable addresses in London, a game of seduction is being played. This is the infidelity of the boardroom, not the bedroom. The offices dotted among the fine-art dealers and designer-label boutiques of Mayfair are home to City headhunters. They prefer to be called executive-search consultants and their practice is one of Britain’s fastest-growing and most lavishly rewarded businesses.

Star flesh-peddlers earn hundreds of thousands of pounds a year by placing executives on company boards or into key roles in banks and public bodies. The cocktail of money and power has lured several politically well-connected people into the business, including Baroness (Virginia) Bottomley, a partner at Odgers, Ray & Berndtson; Ffion Hague, wife of William Hague and now with Hanson Green; and Carolyn Eadie, spouse of Michael Portillo, who works at Spencer Stuart.

The doyenne of the executive recruitment business is Anna Mann, who was asked by BP to advise on candidates to succeed chief executive Lord Browne when he leaves the oil company at the end of 2008. Mann, who had previously found bigwigs for such prominent firms as Marks & Spencer and BT, was engaged to identify external candidates who would be measured against BP’s existing executives. She was once believed to number among her clients 60 of the FTSE 100 companies.

The expansion of the headhunting business is no flash-in-the-pan. It has happened steadily over 25 years and particularly the past 10. Though executive-search revenues sank in the 2001-3 downturn, they have grown by an estimated 20% a year, taking them to double their 1996 levels.

Search firms make money by charging clients 25% to 33% of the first-year salary of the person recruited — so someone hired on a salary of £100,000 might generate a fee of £30,000, and a chief executive hired on a salary of £500,000 might produce a fee of £150,000. In many firms, the individual consultant responsible for each placing will earn a large bonus of up to one-third of the fee.

http://business.timesonline.co.uk/article/0,,8209-2330100,00.html

Thought for the weekend: Scientists Prove Taller people are smarter

While researchers have long shown that tall people earn more than their shorter counterparts, it's not only social discrimination that accounts for this inequality -- tall people are just smarter than their height-challenged peers, a new study finds.

"As early as age three -- before schooling has had a chance to play a role -- and throughout childhood, taller children perform significantly better on cognitive tests," wrote Anne Case and Christina Paxson of Princeton University in a paper published by the National Bureau of Economic Research.

The findings were based primarily on two British studies that followed children born in 1958 and 1970, respectively, through adulthood and a U.S. study on height and occupational choice. Other studies have pointed to low self-esteem, better health that accompanies greater height, and social discrimination as culprits for lower pay for shorter people. But researchers Case and Paxson believe the height advantage in the job world is more than just a question of image.

"As adults, taller individuals are more likely to select into higher paying occupations that require more advanced verbal and numerical skills and greater intelligence, for which they earn handsome returns," they wrote.

For both men and women in the United States and the United Kingdom, a height advantage of four inches equated with a 10 percent increase in wages on average.

But the researchers said the differences in performance crop up long before the tall people enter the job force. Prenatal care and the time between birth and the age of 3 are critical periods for determining future cognitive ability and height.

http://today.reuters.co.uk/news/articlenews.aspx?type=oddlyEnoughNews&storyID=2006-08-25T215258Z_01_N25238726_RTRIDST_0_OUKOE-UK-ECONOMY-HEIGHT.XML

Harvard's Economist: U.S. Economy Likely to Dodge Recession

The U.S. economy should dodge recession, said Harvard Professor Martin Feldstein, who heads the panel of economists which dates U.S. business cycles.

``If I had to make a likely guess, I would say slow growth, but not recession,'' Feldstein said in an interview in Jackson Hole, Wyoming, where he's attending the Federal Reserve's annual economic symposium.

A slump in housing, near-record oil prices and the highest Fed interest rates since 2001 have prompted some economists to speculate the world's largest economy may slip into recession next year as the economy slows after five years of expansion. David Rosenberg, chief North American economist at Merrill Lynch & Co., has said there is a 40 percent change of such a downturn.

Feldstein, who chairs the National Bureau of Economic Research, said a recession could occur if households made a ``decision to start saving again'' rather than keep spending as the housing market fades. New-home sales in the U.S. fell more than economists forecast in July and the number of unsold houses climbed to a record, the Commerce Department reported today.

``Household savings is now negative and that was driven by the fact that house wealth was up and that mortgage refinancing was very, very appealing,'' Feldstein said. ``People took that money and they went and spent a lot of it. So if that goes into reverse, that could tip the economy.''

Could? What is this guy smoking?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQsXCvBzopNo&refer=home

Buffett hands over the first installment to Gates Foundation

Afer all the talk and the publicity etc., Warren Buffett donated $1.6 billion of Berkshire Hathaway Inc. stock to the Bill & Melinda Gates Foundation, the first major installment in Buffett's plan to give away much of his fortune.

According to a U.S. Securities and Exchange Commission filing, Buffett donated 500,000 Berkshire Class B shares, valued at $3,208 each based on Thursday's closing price. The shares rose $35 on Thursday.

Buffett, who turns 76 next week, announced plans in June to donate 85 percent of his fortune, then estimated at $44 billion, in the largest single act of U.S. charitable giving ever. About 70 percent of his net worth was to go to the Gates Foundation, uniting the world's two richest people in a bid to fight disease, reduce poverty and improve education.

Gates, the world's richest dork, co-founded and remains chairman of software company Microsoft Corp. He is also a director of Omaha, Nebraska-based Berkshire, the insurance and investment company Buffett has run since 1965, when it was a struggling textile maker. Gates and his Cascade Investment LLC investment company together own Berkshire stock worth about $419 million, the filing shows.

Buffett in June pledged a total of 10 million Berkshire Class B shares to the Gates Foundation, conditioned that money be distributed the year it is donated.

http://today.reuters.com/news/articlenews.aspx?type=businessNews&storyid=2006-08-24T225007Z_01_N24283046_RTRUKOC_0_US-LIFE-BUFFETT-GATES.xml&src=rss

Backing Cruise Could Be a Risky Business (No Schiesse, Sherlock)

During an internal presentation on film financing last year, Merrill Lynch & Co. executives entertained employees with the famous video of actor Tom Cruise manically bouncing on Oprah Winfrey's couch as he sang the praises of his new girlfriend.

Amid the laughter, recalls someone who was in the room, Michael Blum, Merrill's head of structured finance, asked: "How does one hedge that risk?"

It's a question many hedge-fund managers may be asking now that Cruise's rich production deal from Paramount Pictures has been abruptly severed by Sumner Redstone, chairman of Paramount's parent company, Viacom Inc. In the wake of the move this week, Mr. Cruise and his production partner, Paula Wagner, say they will finance future films with money raised from unnamed hedge funds.

That's a rich vein to tap into: More than $4 billion in new movie financing has poured into Hollywood from hedge funds and other institutions recently. Outside financiers ranging from hedge fund Stark Investments to the private-equity arm of Bank of America Corp. have put large sums of money into movie slates at studios including Time Warner Inc.'s Warner Bros. and News Corp.'s Twentieth Century Fox.

But even as Cruise and others talk of winning some of that money, there are signs the trend is cooling, as Hollywood's newest investors learn about the risks that for decades have dealt hard lessons to other would-be movie moguls.

Earlier this year, Stark Investments, a St. Francis, Wis., hedge fund that manages about $9 billion, parted ways with the executive who ran its film-financing vehicle after several movies it had backed, including "Poseidon" and "V for Vendetta," failed to generate attractive box-office returns.

Another newcomer, Legendary Pictures LLC, backed among other sources by private-equity money, has drawn scrutiny early in its effort to produce 25 movies in five years given disappointing performances for investments including "Lady in the Water" and "The Ant Bully." Earlier this year, meanwhile, an ambitious effort known as Hemisphere, which sought to raise roughly $800 million for a pair of producers for big-budget movies, failed to come together.

Given such difficulties, the question is: Will investors be willing to back a single -- and sometimes volatile -- producer like Mr. Cruise? From "Risky Business" to "War of the Worlds," the actor's movies have generated billions of dollars of revenue over his 25-year career. But Mr. Redstone told The Wall Street Journal this week that the star was dumped because his sometimes outlandish behavior -- including publicly campaigning for the Church of Scientology, of which he is a member, and against psychiatry and antidepressant drugs -- was believed to have cut into his last film's box-office performance.

http://online.wsj.com/article/SB115638559115844146.html?mod=mm_media_marketing_hs_left

America’s #1 Fund Private Eye

Randy Shain, an investigator who specializes in looking at hedge funds, has seen more business as the number of funds increase. He says most managers he screens have clean records. Shain, a private investigator who specializes in looking at hedge funds, was examining the public records of the manager of Wood River Capital Management, a hedge fund that at its peak held $265 million under management.

Shain found records of four state tax liens, ranging from about $45,000 to more than $86,000, against the manager, John H. Whittier, a former analyst with Donaldson Lufkin & Jenrette.

“At the time, I thought either he’s sloppy or he’s always losing money,” Mr. Shain recalled later in an interview.

Shain presented his findings to his client, who took a pass on Wood River. And a good thing, too. Last October, Wood River disclosed that it had placed a disastrous bet on a single speculative stock with no recent history of profitability. The Securities and Exchange Commission sued the fund and Mr. Whittier, accusing him of deceiving investors. Among other troubling details, the commission said that the firm that the fund had described as its auditor did not, in fact, perform audits.

Wood River is but one example of a hedge fund flameout that large investors — funds of funds, pensions and family offices — hire investigators like Mr. Shain to help them avoid.

He runs the investigative unit at First Advantage, a group of nearly 50 investigators clad in T-shirts and jeans who work out of a cubicle-less office in the Flatiron district in Manhattan..

His group pores over court filings and news clippings, checks out criminal records and interviews former business associates. It can produce a comprehensive report on a given individual in about five weeks. By Mr. Shain’s estimates, the group has examined more than 3,000 funds and 4,500 hedge fund managers.

http://www.nytimes.com/2006/08/25/business/25hedge.html?ex=1157083200&en=ba1c7a14642c7b50&ei=5099&partner=TOPIXNEWS

Fund-Raiser Nets Nearly $100,000 for crippled trader

A fund-raiser for the Charlotte man injured during a mock bull fight in Spain raised more than $90,000, organizers said.

Ray Ducharme, a bond trader for Bank of America, was left partially paralyzed after an accident during an event related to the running of the bulls in Pamplona last month.

His friends organized the Sharin' Sugar Auction and Benefit Concert to raise money for the Ray Ducharme Healing Fund. They only hoped to raise about $40,000, but the Aug. 17 event at the Hearst Tower attracted more than 400 people.

The $90,000 will help pay for Ducharme's medical and rehabilitation expenses. He is currently in a rehabilitation program at The Shepherd Clinic in Atlanta.

Friends have also organized a charity golf tournament for Aug. 27 at the Waterford Club in Rock Hill, S.C. Well-wishers can check for updates on www.pray4ray.com.

http://www.wsoctv.com/news/9725280/detail.html

From our Yahgottabekiddin Dept.:Companies try to help workers sleep more

Shannon Hill is feeling a bit sleep deprived these days. The 30-year-old publicist is restoring her first home, and that means she is up until 1 a.m. and wakes at 6:15 a.m. for work. One day, on her lunch break, she was so tired she sought out a couch and napped.

"When I'm tired, I can't keep my eye on the ball. I'm a driven person, but it's even starting to affect me physically. I tripped at work," says Hill, of Dover, N.H. "When I'm sluggish and tired, I can't focus."

American workers are hungry for sleep. A 2005 survey by the National Sleep Foundation, a Washington D.C., non-profit that focuses on sleep and public health, found that 26% of adults get a good night's sleep only a few nights a month or less. Another 24% say they get a good night's sleep only a few nights a week.

Adults who say they don't get enough sleep are more likely to experience daytime sleepiness, miss work or make errors on the job. That means many workers are groggy at their desks or on the factory floor. Research shows that drowsy workers are more likely to have accidents, that many suffer from sleep-related health problems, and that lack of sleep means they can feel unfulfilled on the job. Sleep deprivation can also be triggered by depression, anxiety and other mental health issues.

Employers are waking up to the fact that sleep deprivation can have a bottom-line impact.

http://www.usatoday.com/money/workplace/2006-08-21-sleep-usat_x.htm?csp=N008

Mosaid to Hedges: Drop Dead!

Memory-chip maker Mosaid Technologies Inc.has rejected a dissenting U.S. shareholder's demand that it immediately put itself on the auction block and warned Wednesday it's ready for a fight if that's what Loeb Partners Corp. wants.

In a letter to Loeb Partners, a New York City hedge fund that owns about eight per cent of Mosaid's stock, the company's board said a "prompt sale of the company ... forced by a publicly dissenting shareholder demand and in a publicly disclosed process, is not in the best interest of our shareholders."

The letter was in response to a Loeb Partners letter last week asserting that Mosaid's senior management has resisted its plan to maximize share value and calling on the current board to put the company up for speedy sale or face a shareholder revolt.

While Mosaid is open to a possible sale, that is only one of a number of options being evaluated by a special committee of its board, wrote director Thomas Csathy, and the Ottawa-based firm is "prepared, if necessary, to engage in a proxy contest to confirm the support of our shareholders."

Michael Emanuel, a spokesman for Loeb Partners, declined comment.

http://www.canada.com/topics/technology/news/gizmos/story.html?id=0d3a18b3-44f1-4059-a227-b2735bf94868&k=48066

Naked Short Sellers are eating US entrepreneurs for lunch!

Movie Gallery Inc. shares fell 20 percent on Feb. 3, their biggest nosedive in almost a decade. At the time, there didn't seem to be a reason for the jaw-dropping rout. Analysts who follow Dothan, Alabama-based Movie Gallery, the second-largest video rental chain in the U.S., speculated that investors were spooked after a large money manager cut its stake or that they were worried sales wouldn't meet expectations.

Another possible factor surfaced two weeks later, and it had nothing to do with financial performance. On Feb. 17, the Nasdaq Stock Market added Movie Gallery to a list of stocks considered, under a new U.S. Securities and Exchange Commission regulation, to be at risk for manipulation by naked short sellers.

``These people are lying, they're cheating and they're stealing,'' says Wes Christian, a Houston lawyer who represents Internet discount retailer Overstock.com Inc. and more than a dozen other companies that say their stocks were pummeled by naked shorting. ``This is, in our opinion, the biggest commercial fraud in U.S. history.''

Movie Gallery Chief Financial Officer Thomas Johnson says he has asked the SEC to investigate whether naked short sellers helped undercut the stock.

``I'm throwing out the towel, saying `Help me,''' Johnson, 43, says. ``There are rules designed to deal with this, and people are still managing to do these naked short sales. It's extremely frustrating. It's like being on the front line and people are shooting you from every direction.''

http://www.bloomberg.com/apps/news?pid=20601109&sid=a387ALHm8OlU&refer=exclusive

Billionaire’s AutoFest (Don't call them, they'll call you)

Jon Shirley pushed his 1934 Alfa Romeo P3 to 120 miles per hour (193 kilometers per hour), closing to within feet of S. Robson Walton's 1940 Maserati 8CL. Shirley, former president of Microsoft Corp., stayed glued to the more powerful car driven by Walton, the Wal-Mart Stores Inc. chairman, through a quick left before plunging into the heart-thumping right-hand sweep of Turn 8 at Mazda Raceway Laguna Seca.

It's moments like that one from 2000, when Shirley finished fourth against faster and newer cars, that call him to the Monterey Classic Car weekend. Every August, the world's richest enthusiasts, billionaires among them, bring their cars to the coastal city 110 miles south of San Francisco for the biggest celebration on the planet of the vintage automobile.

``I haven't missed one Classic Car weekend in the past 25 years,'' said Chip Connor, chief executive officer of William E. Connor & Associates Ltd., a Hong Kong-based apparel exporter.

Connor will bring three cars to this year's rendezvous, which runs Aug. 17 to Aug. 20. One is a factory-built Hot Rod version of a 1961 Ferrari 250 GT SWB Competizione, which he plans to race. Its estimated value: $3.5 million to $4 million.

Ferraris figure prominently among the cars brought to the gathering, along with Alfa Romeos, Maseratis, Duesenbergs, Rolls Royces, Aston Martins, Bugattis and almost every other marque, or brand, built from 1890 to about 1980. During the weekend, multimillion-dollar automobiles can be seen crawling through traffic or parked along the tree-lined streets of Monterey and nearby Carmel-by-the-Sea.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aarVOhYa0I4Y&refer=exclusive

Bank On, Dudes!

Has anyone thought to ask how some of the youngest Wall Streeters in New York have enjoyed their summer?

“Basically, I—banking has a reputation for being a glamorous career, but I don’t think it is,” said a young fellow at J.P. Morgan. Oh, pshaw! One interning analyst with Lehman Bros. had quite a time.

“On my floor, there were two interns,” he said. “So the V.P. proposed a hot-dog-eating contest. So the challenge was to eat 15 dirty-water dogs in 20 minutes and to hold it down for an hour. There were lots of bets placed and taken. We stood to make about $200 each if we succeeded. After about 10 hot dogs, the other intern started looking sick and ran off to the bathroom. I managed to finish and regretted it for the rest of the day. So disgusting. But at least I got the cash.”

This kind of excess is the traditional reward for the long hours. “My boss worked as a salesperson on the trading floor for government bonds,” said the young Lehmanite. “As part of entertaining clients, she told me they would take them out to dinner and then clubs.”

“There was always plenty of coke waiting,” he said. “At the end of one of these entertaining evenings, all the guys would head downtown to a massage parlor that gave happy endings.”

“There’s a reason why American banks have drug tests. Where there’s money, there’s drugs,” said a Morgan Stanley trader.

Oh, it’s all fun and games to begin with! A Bank of America fellow remembered a junior trader who suffered the ultimate in insult clichés. “He lost a substantial amount of money, only to have his boss cut off his tie below the knot and send him home. Humiliation does not fall under health and safety.” Time for a new shtick, Hedge Funds!

http://observer.com/20060828/20060828___thecity_thetransom.asp#Bank

Who Pays for Hedge Fund Fiascos?

There is a fascinating article in today's WSJ pointing to a developing issue in hedge funds. When such funds fail over fraud it is increasingly common for current investors to sue to obtain monies distributed to earlier investors who, not knowing of the fraud, withdrew money when the fund was still liquid.

As you can imagine, early investors have a very hard time with this. To their way of thinking, they knew of no fraud, took their gains, and moved on. The idea that they should be punished ex post strikes them as indefensible and revisionist. On the other hand, current investors argue that excess payouts to early investors is central to the fraud perpetrated by such hedge funds, so the gains were never real in the first place, and therefore they should be paid back.

We lean slightly toward the latter view, but we’re happy to be convinced otherwise. Thoughts out there on this issue?

http://paul.kedrosky.com/archives/2006/08/22/who_pays_for_fa.html

Driver Wanted: Buffett Takes Bids For His Old Car

Warren Buffett, the world's nonpareil philanthropist, redefines eBay's definition of a "powerseller". The Nabob of Nebraska, the Oracle of Omaha--who has auctioned annual power lunches to benefit the Glide Foundation, a San Francisco nonprofit that offers programs for the hungry and homeless, is to take bids for his old car.

The frugal Nebraskan, who now owns a Cadillac, has decided upon a starting bid of $25,000 for the four-door, 2001 Signature Series Lincoln Town Car, which has fewer than 14,000 miles on the odometer and boasts a light-parchment gold exterior, a light beige interior, an etched brass plaque bearing the investor's signature and a personalized "Thrifty" number plate.

The proceeds of the auction will benefit the programs of Girls Inc., an New York-based nonprofit which focuses on science, math, and technology, health and sexuality, economic and financial literacy, sports skills, leadership and advocacy and media literacy for girls ages 6 to 18 throughout the U.S. and Canada.

http://www.forbes.com/2006/08/22/buffett-car-ebay-cx_cn_0822autofacescan02.html

Hedges Drive Bond SuperStar to the Edge

Bill Gross is Wall Street's long-reigning bond king, but he is struggling to adapt to a new world. For more than three decades, Mr. Gross, the 62-year-old chief investment officer at Pacific Investment Management Co., which has $617 billion in assets, has run the world's largest bond mutual fund. In that time, the $95 billion Pimco Total Return Fund has handily outpaced both the bond market and almost all of its competitors. In 2000, when Germany's Allianz AG bought Pimco, based in Newport Beach, Calif., it was so eager to keep Mr. Gross at the helm that it agreed to a pay package valued at about $200 million to keep him around through next year.

As hedge funds and other investors have been scooping up riskier bonds with the highest yields, however, it has been harder for Mr. Gross to beat the market by buying this kind of debt. Eager to keep returns up but wary of focusing on riskier bonds, Mr. Gross has chosen to make Pimco's portfolio more volatile by focusing on short-term Treasurys and currency bets, among other things.

Mr. Gross and his team have been focusing on short-term Treasury bonds, currencies and other moves that tend to make results jump around more rapidly in an effort to try to generate better returns. The fund now averages a daily volatility of about 0.05 percentage point above the volatility of the overall bond market -- not especially volatile compared with many stock portfolios, but about twice the fund's volatility in the past.

"Our approach is to accept more volatility in areas we don't consider to be risky and we are more confident of," he says. "It's getting harder because risk takers" like hedge funds are driving yields on many bonds lower.

http://online.wsj.com/article/SB115629642251942913.html?mod=hps_us_at_glance_markets

How do the very wealthy spend their money? (You may not want to know)

Private jet owners have an average annual income of $9.2 million and a net worth of $89.3 million. They are 57 years old. And 70% of them are men. Hannah Shaw Grove and Russ Alan Prince, two researchers, surveyed the group to find out who they are, what makes them tick, and perhaps most interestingly, what they spend their money on.

The average jet setter spends nearly $30,000 per year on alcohol (wines & spirits). Grove and Prince note that this amount is about two-thirds of the median household income in the U.S. And that's the smallest category of spending they surveyed.

The next smallest was "experiential travel," which includes guided tours, such as photographic safaris, or hikes to Machu Picchu, or eco-tours to the Brazilian rainforest, or kayaking in Baja California during the gray whale migration. For these experiences, jet setters spend an average of $98,000 per year.

But these journeys are small potatoes when compared to how much these wealthy individuals spend on hotels and resorts ($157,000 a year), or events at hotels and resorts ($224,000 a year). Spa treatments even fetch more jet-set dollars than wilderness tours. The average jet setter spends $107,000 a year at spas around the world.

Not that many of these "global citizens," as they like to be called, would know: Just 34% of jet owners open their own mail and only 19% pay their own bills, Grove and Prince found. This results in a sort of detachment from the world and creates "the low level of awareness that most jet owners have about their finances," they say.

Indeed, it would take a curious psychological composition to comprehend spending $147,000 a year on watches, as the jet set do. Or $117,000 on clothes. Or a whopping $248,000 a year on jewelry.

http://cbs.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=mktw&guid=%7BA8DDD7DF%2D53F9%2D45FF%2DAD86%2DFE711B415FEC%7D&symbol

Credit Suisse trader kills himself

A trader at Credit Suisse in Zurich has committed suicide on the Swiss bank’s premises, apparently after being made redundant. The unnamed dealer shot himself late last week after leaving the trading floor.

The bank is not releasing his name out of respect for his family, but a spokesman said: “I can confirm a suicide took place. We are really shocked.”

Zurich police were informed but they are also not releasing the man’s name. The suicide was the subject of low-key reports in several local newspapers.

The tragedy mirrors the death at Canary Wharf last month of Dmitry Smoliyaninov, 31, a principal trader with Citigroup. He fell from the 16th floor of the bank’s Canary Wharf offices after climbing over a barrier. Police said that they had no motive for his apparent suicide and there was no evidence of trading irregularities or substantial losses.

Rumours about the Zurich death swept financial circles. The bank refused to say in which area he traded or why he had shot himself. The rumours suggested that he may have been working in foreign exchange and, having been made redundant, walked to another part of the building before committing suicide.

http://business.timesonline.co.uk/article/0,,13130-2324913,00.html

Hedge Flop Haunts Celebs

In the annals of hedge-fund collapses, Sylvester Stallone is among lucky investors who walked away unscathed -- or so it seemed. In 1997, the actor invested $2.5 million in a private investment partnership called Lipper Convertibles. Four years later, with his statements showing the investment had swelled to about $3.8 million, he cashed out. Fellow actor John Cusack also walked away with big gains, as did former New York City Mayor Ed Koch and a trust fund for the children of investor Henry Kravis.

Now, they are all being sued to give money back.

What nobody realized, according to their lawyers, was that Lipper never made all that money. A portfolio manager had inflated profits by at least 40%, Lipper discovered in 2002. "We want all the money to be put back in the pool, so we can divvy it up equitably among all the partners," says Thomas Dubbs, an attorney representing the federal trustee overseeing Lipper. (The hedge fund is unrelated to Lipper Inc., the mutual-fund data firm, which is part of Reuters Group PLC.)

In lawsuits filed in recent months in New York state court in Manhattan, the trustee, Richard Williamson, charges the investors who got out with "unjust enrichment." He wants them to return more than $100 million, including $1.3 million plus interest from Mr. Stallone alone.

http://online.wsj.com/article/SB115621127427241839.html?mod=mkts_main_todays_mkts_tac

Football League seeks dismissal of Hedge Fund suit

The NFL and its union say a lawsuit filed by six current and former players seeking to recoup $20 million they lost in an alleged fraud scheme should be dismissed, arguing in part that league players are solely responsible for their own finances.

The league and players association filed papers Friday in federal court in Atlanta seeking to dismiss the lawsuit, which was initially filed in June.

Lawyers for the NFL wrote that the players' collective bargaining agreement "established that players shall bear all responsibility for their personal finances." They also said that the agreement requires arbitration, not litigation, of disputes such as the ones raised in the lawsuit.

"That agreement provides an exclusive remedy - arbitration - for any and all claims, such as those presented here, that involve interpretation or application of any element of the agreement," league attorneys Gregg Levy and Earl Gunn wrote.

The papers filed by the players association seek to dismiss the lawsuit on similar grounds.
The lawsuit claims the union endorsed the services of an investment firm even though its manager had liens against him.

http://www.macon.com/mld/macon/news/local/15327047.htm

Booming market for Dr. Doom lot

Vacant E. 62nd St. lot where Dr. Nicholas Bartha's townhouse stood has $8 million price tag. Potential buyers have been flooding the phone lines of the broker hired to sell the site of the upper East Side townhouse blown up by the late Dr. Nicholas Bartha.

"We really have had a great deal of interest," said Florrie Milan, a broker with Brown Harris Stevens who has listed the 20-by-100-foot lot on E. 62nd St. for a cool $8 million.

"Where else can anyone buy a piece of land today on Manhattan's Gold Coast on the upper East Side? This is such an opportunity, even though it's so sad," Milan said yesterday.

Bartha, 66, died July 15, five days after he rigged his gas meter and set off a massive explosion that leveled the townhouse, which authorities say he wanted to destroy to spite his former wife, denying her the profits from its sale.

The father of two owed just over $4 million to his ex-wife, Cordula, from their divorce settlement and was being forced to sell his beloved 124-year-old home to pay the bills.

With the rubble gone, the listing for the now-vacant lot reads: "Seize this opportunity to build your dream house!" and touts its location on "a quiet, lovely treelined street in New York City's upper East Side Historic District." You gotta love those copywriters!

http://www.nydailynews.com/news/local/story/445250p-374958c.html

DE Shaw, J.P.Morgan Chase Pretty in Pink?

Seriously folks. Flirty Purty Pink could be the new fall color for J.P. Morgan Chase and a couple of dozen of its hedge-fund friends. On May 10, Owens Corning, the maker of pink fuzzy insulation that is operating under bankruptcy-court protection, announced a new restructuring plan that included a $2.2 billion rights offering for its bondholders. Since then, some bondholders have become bearish on the deal, and that could leave J.P. Morgan Chase and a few hedge-fund investors with a bunch of the Pink Panther on their balance sheets.

J.P. Morgan agreed to guarantee Owens Corning's offering and shared the commitment with a syndicate of investors led by hedge fund D.E. Shaw. Owens Corning will pay J.P. Morgan $100 million for the favor. The firm is taking orders until next month.

That is a big fee for a backstop -- the commitment to buy any shares that aren't sold. Even Warren Buffett's Berkshire Hathaway had to cut its backstop fee to $67 million from $100 million when it guaranteed a $1.8 billion rights offering in July for USG, the wallboard maker. Confident that USG shares would be profitable, a few hedge funds had unsuccessfully tried to wrest the backstop deal away from Berkshire, offering the cut-rate price of $65 million.

These days, however, few believe the Owens Corning rights offering will be as successful as USG's. An Owens Corning spokesman declined to comment. Probably too busy squeezing into those hot pants and strapping those haut pink heels on.

http://online.wsj.com/article/SB115612192786740681.html?mod=mkts_main_featured_stories_hs

Does Goldman rule DC?

Not as much of a smart-ass question as it seems. When US President George W. Bush stepped forward to announce his new treasury secretary on May 30, a few Goldman Sachs friends likely knew Henry Paulson had the job. After all, Paulson was not the first Goldman executive to join the Bush administration from the 137-year-old investment bank described by the president as one of America's "most respected firms". In fact, he was following in the well-heeled footsteps of three other former Goldman alumni who answered Bush's call, although Stephen Friedman who briefly headed the White House National Economic Council, has since returned to "the firm" as it is known on Wall Street.

Aside from running a billion-dollar bank, it is also likely that Paulson's political donations of tens of thousands of dollars to Republican senators added to his luster.

The "revolving door" between the corporate world and government is nothing new, but Goldman leads the way by far in terms of its managers infiltrating the White House and other top government posts.

"It appears to be, for whatever reason, that Goldman Sachs sometimes has a disproportionate share of former employees in and out of government at any one time," said former White House spokesman Trent Duffy, who observed personnel decisions.

"Some companies are more welcoming of government officials and maybe that's how Goldman has been a little more successful in putting its people in there," Duffy said.

Others said Goldman's blue-chip reputation also helps.

"There is a bias in favor of people who have risen to the top at places like Goldman because it is seen as giving that person more to offer in that type of post, like the treasury," said Beth Young, an analyst at The Corporate Library, an independent corporate governance consultancy. Young said Goldman benefits when executives return to the firm, as they would be expected to bring back a BlackBerry bursting with influential contacts.

http://www.turkishpress.com/news.asp?id=138331

Sweet Sweetback Baadasss Quattrone could be B-a-a-a-c-k!

Former star investment banker Frank Quattrone could be returning to Wall Street after successfully fighting a lifetime ban, newspaper reports say on Saturday.

Quattrone, who has been tried twice on charges of obstruction of justice, has reached a tentative deal with prosecutors that would enable him to avoid a third trial and, more importantly, let him resume his career in finance interrupted three years ago, the reports said.

Quattrone reached a tentative agreement with the U.S. Attorney's office that could be approved by a federal judge on Tuesday, the Wall Street Journal and New York Times reported on Saturday.

The Times said the deal does not require Quattrone to admit any wrongdoing. The agreement is expected to be presented to U.S. District Judge George B. Daniels for his approval at a hearing on Tuesday.

Speculation in Silicon Valley has Quattrone ready to start a boutique advisory and private equity firm focused on technology companies, the Times reported.

The Times said Heather Tasker, a spokeswoman for the U.S. Attorney's Office for the Southern District of New York, declined comment on the reports.

http://cbs.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=mktw&guid=%7B7AAA2B54%2DEDFC%2D4E6E%2D961C%2D11CE254D2A6E%7D&symbol

Enron decision shakes up Wall Street

An earthquake or a comet headed straight for Earth couldn’t have rattled people more. A decision by the judge overseeing Enron Corp.'s bankruptcy has generated alarm across Wall Street, prompting warnings from investment banks, bond traders and stock investors that it could do broad harm to U.S. capital markets.

The Bond Market Association, the International Swaps & Derivatives Association, the Loan Syndications & Trading Association, and the Securities Industry Association have already filed court papers criticizing the judge's ruling. Merrill Lynch & Co., Citibank and Barclays Bank PLC joined a growing list of objectors.

The ruling, by U.S. Bankruptcy Judge Arthur Gonzalez, held that holders of claims against a bankrupt company could see those claims wiped out even if they did nothing wrong in their relationship with the company. Under the ruling, holders of bankruptcy claims could be at risk if they merely bought a claim from another creditor who may have engaged in "inequitable conduct."

In papers filed with the U.S. Bankruptcy Court in Manhattan, Merrill and other investment banks said the ruling would not only "devastate" the country's $500-billion distressed-debt market but also "spill over into the regular capital markets." They said a federal district judge should review the bankruptcy judge's ruling.

The judge's interpretation had an immediate effect on the trading of bankruptcy claims, a market of at least $300 billion in which hedge funds and other sophisticated investors buy the right to pursue claims on behalf of creditors. Such creditors typically sell their claims against bankrupt companies either because they want an immediate payoff or because they don't have the time to recover the money themselves.

http://www.chron.com/disp/story.mpl/ap/fn/4124562.html

We Interrupt this Blog to Remember the Titanic

We're not sure we go along with this 100%, but remind us again, what was the band playing on deck?

"It's been a bitter month or so. Mighty Israel, the redeemer of faith in what free men and women can do with arid desert if they are motivated, redeemer of faith that maybe there is a place for the Jews as a sovereign people and technological superpower, has been fought to a standstill by Hezbollah.

Can it possibly be that Hezbollah is better motivated, better led, better dug in and better armed than the Israeli army, which is supposed to be the best army, pound for pound, in the world? Can it be that Israel, which used to beat whole armies of countries like Egypt and Syria, has been humbled by a few thousand very well-motivated and well-armed men firing from between apartment buildings?

Or could it be that what’s different this time is the trumpet and, specifically, its uncertain sound? Israel geared up for a huge offensive, then called it off, then huffed and puffed, then called it off again, then said, “Watch out, this time we’re really going to blow your house down,” and then called it off again.

Now, Israel’s very survival is on the line, and it is a tiny state, about the size of New Jersey. If Israel cannot get it together to fight a serious war against a group, Hezbollah, that the State Department identifies as a terrorist organization, who will?

So, Israel, which was supposed to be the shining light of how peace is won, is not shining as bright — despite President Bush’s extreme support for a good long time.

Terrorists are still hatching plots against the air traffic system of the West, and this time bigger and worse than before. Obviously, Al Qaeda is far from dead. We have much to fear from it still. The fact that the suspects were almost all home-grown Britons makes the situation that much more frightening and unpredictable. How long will it be until American-born terrorists strike against American targets? We are a big country and we have a lot of unhappy people. How long until they organize themselves to kill? Not long, I am afraid.

While we’re at it, yes, it’s miraculous and wonderful that the plot was foiled, if it was. But now the whole Western world will be seriously inconvenienced in its travel for years, maybe decades. Isn’t this already a victory for our enemies? Isn’t this already a blow against world business? Might it be enough to push our already slowed growth into a recession?

But the worst is what is to come: I got a jolting hint of this when I read the obituary for John L. Weinberg, who ran Goldman Sachs from 1976 to 1990. Mr. Weinberg was 81 when he died this month in Greenwich, Conn., after a lifetime of major achievement. I had the pleasure of dealing with him when he and I were a lot younger and I was in law school, also studying finance, at Yale.

My dear old father was a friend of his father, the venerable Sidney J. Weinberg, who ran Goldman Sachs from 1930 to 1969. My dad wangled a job interview for me with John Weinberg, an unprepossessing figure but obviously a smart guy. After some talk, he offered me a job. I would start by spending two years sitting at a desk until late at night going over spreadsheets. “Really?” I asked. That did not seem to be so glamorous. “Yes, really,” he said. “That’s how we all start.”

I turned it down and became a poverty lawyer instead. But what I did not know about John Weinberg was that even though he was rich and well connected, as a young man he joined the Marines to fight the Japanese in the Pacific, then fought again in Korea. That was America’s ruling class then. The scions of the rich went off to fight.

My longtime pal and idol, Peter M. Flanigan — a former high honcho of Dillon, Read; a high aide to my ex-boss, Richard M. Nixon; and heir to a large brewing fortune — was once a naval aviator. My father left a comfortable job in Washington to join the Navy. The father of my pal Phil DeMuth left a successful career to be an Army Air Corps pilot, flying death-defying missions over Burma. Congressmen resigned to serve. Senators resigned to serve. Professional athletes resigned to serve in the uniform.

Now, who’s fighting for us in the fight of our lives? Brave, idealistic Southerners. Hispanics from New Mexico. Rural men and women from upstate New York. Small-town boys and girls from the Midwest. Do the children of the powers on Wall Street resign to go off and fight? Fight for the system that made them rich? Fight for the way of life that made them princes? Surely, you jest.

And that’s the essence. The other side considers it a privilege to fight and die for its beliefs. Those on the other side cannot wait to line up to blow themselves up for their vision of heaven. On our side, it’s: “Let the other poor sap do it. I’ve got to make money.” How can we fight this fight with the brightest and best educated rushing off and working night and day to do private equity deals and derivatives trading? How can we fight this fight with the ruling class absent by its own sweet leave?

I keep thinking, again, that if Israel, with its back to the sea, cannot muster the will to fight in a big way, then the fat, faraway U.S.A. will never be able to do it. I keep saying this and it terrifies me.

We’re in a war with people who want to kill us all and wreck our civilization. They’re taking it very seriously. We, on the other hand, are worrying about leveraged buyouts and special dividends and how much junk debt the newly formed private entity can support before we sell it to the ultimate sucker, the public shareholder.

We’re worrying whether Hollywood will forgive Mel Gibson and what the next move is for big homes in East Hampton. We’re rearranging the deck chairs on the Titanic. The terrorists are the iceberg.

WHAT stands between us and the iceberg are the miraculously brave men and women of the armed forces. They’re heroes and saints as far as I’m concerned. But can they do it without the rest of us? Can they do it while we’re all working on our tans and trying to have our taxes lowered again? How can we leave them out there all alone to die for us when we treat the war to save civilization as something we can just wish away?

If we don’t win this war against the terrorists, there’s not going to be business as usual ever again. If the terrorists get to their goal, there’s not going to be a stock exchange or hedge funds or Bain Capital or the Carlyle Group or even Goldman Sachs. If the terrorists get their way — and so far, they’re getting their way — there’s not going to be business, period.

Everyone with the really big money at stake is — again — bidding for the best deck chairs as the iceberg looms, not so far, any longer, under the surface, and very large and very cold and very solid.

Ben Stein is a lawyer, writer, actor and economist. E-mail: ebiz@nytimes.com.

http://www.nytimes.com/2006/08/20/business/yourmoney/20every.html?ref=business

Boldly Going, Going: With 'Star Trek' sale, auctions enter new frontier

This fall, more than a thousand people are expected to attend a Christie's auction in New York for a chance to bid on metal serving trays, plastic drinking glasses and decorative lighting fixtures. The pieces have an unusual provenance: They were all background props on the TV series "Star Trek: Deep Space Nine."

With an auction of 1,000 items of "Star Trek" memorabilia -- about three times the volume of one of its typical sales -- Christie's is generating tremendous publicity for the auction house and for the "Star Trek" franchise of CBS Paramount Television. Fans are salivating over key "Star Trek" icons, like a model of the starship Enterprise (estimate: $15,000 to $25,000). But what's unusual about the sale is the amount of detritus being sold off -- much of which had only a few seconds of screen time in a "Star Trek" TV episode or movie.

There are pieces that even dedicated "Star Trek" viewers would have been hard-pressed to notice on screen, like a set of four imitation-leather-covered office chairs sometimes used as set dressing in the engine room of the Enterprise-E in "Star Trek: First Contact," estimated at $400 to $600. There's an aluminum tool case that Capt. Jean-Luc Picard once used in a scene where he worked on the Borg circuit module in the observation lounge in "Star Trek: Generations" (also $400 to $600). And then there are the Starfleet Command security badges that crewmates flashed in episodes "Demons" and "Terra Prime" of "Star Trek: Enterprise."

But there's a gap between the publicity the auction is generating and the money it's expected to make. The auction's total estimate is $1.2 to $1.8 million -- a small figure for CBS Paramount by Hollywood box-office standards, though a tidy sum for what amounts to a giant garage sale of unused props. Christie's could make less from the "Star Trek" auction than it does from the sale of a single painting at a major contemporary-art sale. Though neither Christie's nor CBS Paramount would discuss details of their agreement, Christie's will receive at least a standard buyer's premium of 20% added to the sale price of most items -- in this case about $360,000 if the sale hits its high estimate. With large crowds and more items for sale than usual, it's also likely to be an unusually complex undertaking.

Christie's has a plan for the sale, however. Of course, it's partly a strategy for generating publicity and attracting a new clientele. But the house is banking on huge sales of its auction catalog -- generating its own collectible from the collectibles sale. And if the sale is successful, it could point the way to auction houses dipping further into the collectibles market dominated by Web sites like eBay, without sacrificing the cachet of a high-end auction.

http://online.wsj.com/article/SB115594036291439827.html?mod=hps_us_editors_picks

So, where are the shareholders yachts?

Bill Miller has compiled an astonishing long-term record as manager of the Legg Mason Value Trust. He is one of the only big-time mutual-fund managers to have beaten the S&P 500 for 15 years running. But as Barron's reported on Saturday, his streak is in danger. Through yesterday, according to Morningstar, the fund was down 10.14 percent, compared with a 2.78 percent gain for the S&P 500. Miller has clearly been the victim of some bad luck and poor stock selection. But Barron's offered an alternative theory why Miller is flagging: This summer he bought a humongous yacht.

When someone who's supposed to be looking out for public shareholders is instead mulling over wallpaper samples for staterooms, it's time to sell. The yacht has long been the classic indicator of someone who has so much money that he doesn't need to make any more. Unlike a jet, which can speed busy executives to their offices efficiently, a yacht has no useful purpose. And who has time to play with such an over-the-top toy? Someone who doesn't work weekends figuring out how to make money for other people. A classic 1940 investment book, aimed at debunking the practices of Wall Street, was called Where Are the Customers' Yachts? Today, you should ask: Where are the shareholders' yachts? If you look at the recent record of CEOs who have become yachtsmen, it's clear that when they buy a boat, it's the shareholders who usually get soaked.

Check out Power & Motoryacht's list of the 100 largest U.S. yachts, connect them to the CEOs or chairmen of publicly held companies or mutual-fund managers who own them, and then see how their companies and funds have performed since the vessel was acquired. (For the consumer-porn voyeurs out there, the magazine also compiles a list of the largest yachts in the world.)

The largest boat in the United States, Rising Sun, belongs to Oracle founder and CEO Larry Ellison. It was completed in 2004, and it is 452 feet long. Here's a chart of Oracle's stock against the S&P 500 since January 2004—a slight underperformance.

The second-largest American yacht, Octopus, completed in 2003, belongs to Paul Allen, the co-founder of Microsoft who left the company in the early 1980s and has acquired an eclectic group of assets, including the Seattle Seahawks and the Portland Trail Blazers. Allen also owns the fourth-largest American yacht, the 300-foot Tatoosh, built in 2000. Since 1998, Allen has been chairman of the board of publicly held cable company Charter Communications. During Allen's boat-buying spree, Charter's stock has been a disaster: It has lost about 90 percent of its value since January 2000. Since the beginning of 2003, the stock has basically remained flat, in large part because, at about $1.40, it literally can't fall much more.

Ron Perelman, the financier who has long headed the publicly held cosmetics giant Revlon, checks in at No. 26 on the list, with the 188-foot Ultima III, which he bought in 1998. Alas, Revlon since 1998 has been a Titanic (the boat, not the movie). It has lost more than 90 percent of its value since its corporate chieftain became a maritime captain. And it's hard not to reach the conclusion that Allen and Perelman regard both yachting and running public companies as expensive hobbies, not as their life's work. That may be very entertaining for them, but it's costly for their shareholders.

(This year's list doesn't include one former fixture on the list. In 2000, hard-charging Tyco CEO Dennis Kozlowski bought a 130-foot sailing yacht, Endeavor. In June 2002, Kozlowski was forced to step down amid charges of corruption; he was convicted last year. As this chart shows, from the beginning of 2000 until Kozlowski's resignation, Tyco's stock fell nearly 70 percent.)

http://online.wsj.com/article/SB115533583867233703-search.html?KEYWORDS=yachts&COLLECTION=wsjie/6month

Hedge fund Invasion? Expert sez No way, Jose

Despite the recent fluctuations in the exchange rate of the Renminbi (RMB), China's currency, international hedge funds are unable to flood the country and profit from the future appreciation of the RMB. Mei Xinyu, a senior researcher with the Chinese Ministry of Commerce, made the remark in an interview with Xinhua.

Strict management of capital account inflows and outflows prevents hedge fund and other speculative money from invading China to bet on the RMB's value, he said.

Although overseas hedge fund managers wish to buy more RMB, they can't do it because the country does not provide corresponding financial derivatives, he said.

"If these hedge funds want to bet on an appreciating RMB, they will have to choose nearby markets in Singapore and the Republic of Korea," he said.

Speculation about the future value of China's currency, the yuan, has hotted up since February, an official research report said last month.

Hot money inflow reached 1.02 billion, 4.45 billion, 5.31 billion and 12.5 billion U.S. dollars in February, March, April and May, respectively, said the report from the international center of the National Bureau of Statistics.

There is no clear definition of hot money. The figures were calculated by deducting foreign direct investment and trade surplus from the increase in the country's foreign exchange reserves, a standard calculation method, the report said.

http://english.people.com.cn/200608/17/eng20060817_294152.html

Merton's Firm Shuts Down Credit Hedge Fund After Three Months

Schadenfreud City: Robert Merton, the Nobel Prize- winning economist and co-founder of defunct hedge fund Long-Term Capital Management, shut down his new firm's latest fund after three months because it didn't raise enough money.

Merton's Integrated Finance Ltd. closed the IFL Continuum Fund in June, said Beth Burrus, a managing director of the New York-based firm. The fund, which concentrated on credit securities, had collected $30 million since its start in March.

``There has been a huge volume of credit-oriented hedge funds launched in the last 18 months, some raising more than a billion dollars, and the market seems to be saturated,'' said Tim Jackson, a partner at Rocaton Investment Advisors LLC in Norwalk, Connecticut, which helps clients choose hedge funds. ``By this year, a lot of people had already made allocations.''

IFL Continuum struggled as hedge funds attracted $42.1 billion from April through June, the most in one quarter since at least 2003, according to Hedge Fund Research Inc., a Chicago-based firm that tracks the $1.2 trillion industry. The influx was led by funds that invest in equities and in companies involved in acquisitions and other corporate events.

http://www.bloomberg.com/apps/news?pid=20601087&sid=api7F5j8W_nY&refer=home