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The art of capital flight
Lifestyle, 4:01
<p>CAMBRIDGE – What impact will China’s slowdown have on the red-hot contemporary art market? That might not seem like an obvious question, until one considers that, for emerging-market investors, art has become a critical tool for facilitating capital flight and hiding wealth. These investors have become a major factor in the art market’s spectacular price bubble of the last several years. So, with emerging market economies from Russia to Brazil mired in recession, will the bubble burst?</p> <p>Just five months ago, Larry Fink, Chairman and CEO of BlackRock, the world’s largest asset manager, told an audience in Singapore that contemporary art has become one of the two most important stores of wealth internationally, along with apartments in major cities such as New York, London, and Vancouver. Forget gold as an inflation hedge; buy paintings.</p> <p>What made Fink’s elevation of art to investment-grade status so surprising is that no one of his stature had been brave enough to say it before. I am certainly not celebrating the trend. I tend to agree with the philosopher Peter Singer that the obscene sums being spent on premier pieces of modern art are disquieting.</p> <p>We can all agree that these sums are staggering. In May, Pablo Picasso’s “Women of Algiers” sold for $179 million at a Christie’s auction in New York, up from $32 million in 1997. Okay, it’s a Picasso. Yet it is not even the highest sale price paid this year. A Swiss collector reportedly paid close to $300 million in a private sale for Paul Gauguin’s 1892 “When Will You Marry?”</p> <p>Picasso and Gauguin are deceased. The supply of their paintings is known and limited. Nevertheless, the recent price frenzy extends to a significant number of living artists, led by the American Jeff Koons and the German Gerhard Richter, and extending well down the food chain.</p> <p>For economists, the art bubble raises many fascinating questions, but an especially interesting one is exactly who would pay so much for high-end art. The answer is hard to know, because the art world is extremely opaque. Indeed, art is the last great unregulated investment opportunity.</p> <p>Much has been written about the painting collections of hedge fund managers and private equity art funds (where one essentially buys shares in portfolios of art without actually ever taking possession of anything). In fact, emerging-market buyers, including Chinese, have become the swing buyers in many instances, often making purchases anonymously.</p> <p>But doesn’t China have a regime of strict capital controls that limits citizens from taking more than $50,000 per year out of the country? Yes, but there are many ways of moving money in and out of China, including the time-honored method of “under and over invoicing.”</p> <p>For example, to get money out of China, a Chinese seller might report a dollar value far below what she was actually paid by a cooperating Western importer, with the difference being deposited into an overseas bank account. It is extremely difficult to estimate capital flight, both because the data are insufficient and because it is tough to distinguish capital flight from normal diversification. As the late MIT economist Rüdiger Dornbusch liked to quip, identifying capital flight is akin to the old adage about blind men touching an elephant: It is difficult to describe, but you will recognize it when you see it.</p> <p>Many estimates put capital flight from China at about $300 billion annually in recent years, with a marked increase in 2015 as the economy continues to weaken. The ever-vigilant Chinese authorities are cracking down on money laundering; but, given the huge incentives on the other side, this is like playing whack-a-mole.</p> <p>Presumably, the anonymous Chinese buyers at recent Sotheby’s and Christie’s auctions had spirited their money out of the country before bidding, and the pai</p>
How UBS’s Suki Mann went from top banking strategist to blogger
Lifestyle, 4:01
<p>Last February Suki Mann was the ‘star credit strategist’ at UBS, and now, instead of sending notes to clients, he blogs his financial musings to the entire cyber-world, reports Finbuzz.</p> <p>The blog so far includes three posts that read like very colorful and well-written research notes and a ticker that flashes global indexes and has up to date FOREX trading quotes.</p> <p>Mann’s LinkedIn profile states that he left his position at UBS Investment Bank in February of 2015, just after six months. UBS has not commented on Mr. Mann’s departure or whether he was fired, laid off, or left on his own accord. Before that, he had worked as the Head of European Credit Strategy for Societe Generale for nearly 14 years.</p> <p>So far Mann’s Twitter handle only has 20 followers, but given his robust experience and insights into European debt markets, that number is likely to take off once the City gets wind of his blog. His inaugural tweet was sent into the Twittersphere on August 26, 2015.</p> <p>Several ex-analysts have made careers out of journalism. Joe Weisenthal, now the host of his own TV show at Bloomberg, followed a similar path. After working as an analyst for the money management firm Prentiss Smith &amp; Co., he left finance as Wall Street was crashing into recession and joined Business Insider, just financial news was abundant and in demand.</p> <p>Photo:</p>
Chinese team to debut on the Rolex Sydney Hobart race
Lifestyle, 4:01
<p>Much like Gianni Agnelli, Ted Turner, Larry Ellison, and several other gazillionaires before them, a group of Chinese businessmen have taken a liking to the world of high-performance sailing and are now set to flex their muscles in the 71st edition of the Cruising Yacht Club of Australia’s Rolex Sydney Hobart Yacht Race.</p> <p>Taking a page off Larry Ellison, the group has hired a Kiwi to help the team take the glorious-looking, Botin &amp; Carkeek-designed Ark323 to victory. But aside from him, Sail Word reports that it’s a wholly Chinese team – a first, they point out – as Serena Cai, the team’s manager, told the magazine:<br /> “Ark323 is a purely Chinese entry; a Chinese owner, crew and administrators. The yacht is representing Noah Sailing Club in Shanghai, but we do have a coach from New Zealand. The boat is owned by Noah’s Group, which is led by Wilson Lee and sponsored by E-commerce company”<br /> Their entry appears to be a source of great pride for Mr. Lee, who told Sail World:<br /> “We made a decision to enter the Rolex Sydney Hobart because of the nature of the prestigious event, the challenge it presents. It is also one of the ultimate platforms to showcase the Chinese team and the Club’s passion to increase a Chinese presence at international yachting events.”<br /> I wish them all the best, though it does appear to be a tough race; Harburg Investments’ Peter Harburg and his champion crew are also in, while Colin Buffin – who may or may not be a senior MD at Candover Partners – has brought along Sydney Hobart vets to help him win the race.<br /> Photo: davekeane</p>
Minecraft’s Markus Persson moans about being a billionaire. Yes, really.
Lifestyle, 4:01
<p>For mere mortals the idea of reaching billionaire status by creating a product adored by millions is the stuff dreams are made of. Not for Minecraft creator Markus Persson who sold his insanely popular game platform to Microsoft last year for $2.5 billion - giving him a next worth of $1.3 billion, according to Forbes.</p> <p>He is miserable. For Markus, being in the three comma club is not all that it’s cracked up to be.</p> <p>Channeling the spirit of the term “first world problems”, the self-made swede recently took to twitter for a spate of poor-me postings about how lonely it is at the top.</p> <p>Here are some of his top moans:</p> <p>The problem with getting everything is you run out of reasons to keep trying, and human interaction becomes impossible due to imbalance.<br /> — Markus Persson (@notch) August 29, 2015</p> <p>&nbsp;</p> <p>Found a great girl, but she's afraid of me and my life style and went with a normal person instead.<br /> — Markus Persson (@notch) August 29, 2015</p> <p>&nbsp;<br /> When we sold the company, the biggest effort went into making sure the employees got taken care of, and they all hate me now. — Markus Persson (@notch) August 29, 2015<br /> &nbsp;</p> <p>Needless to say there were a lot replies showing a mixture of sympathy from fans and friends, and bewilderment from others. But my personal favorite is this....<br /> @notch Why are you feeling sorry for yourself? Sell the $75M mansion, stop all the partying. Do what matters to you. Be a real person. — D Webster (@DWebster2008) August 29, 2015</p> <p>Not so much for comment itself but for the reply it got:</p> <p>@DWebster2008 Nah, the mansion has a pool.</p> <p>— Markus Persson (@notch) August 29, 2015</p> <p>Yeah, it is difficult to feel sympathy for a billionaire - really difficult. But then again Persson is not the only example of a brooding billionaire. If it teaches us anything, its that the pursuit of success can often be more enjoyable than lifting up the actual prize.<br /> Photo: MarLeah Cole</p>
Weekend Reads: Star Wars, Tianjin, and brunch with the former ‘King of mining M&A’
Lifestyle, 4:01
<p>From Tianjin conspiracies to the dark side of licensing, here are some great reads for you this weekend:</p> <p>With the release of “Straight to Hell” and “Why I left Goldman Sachs,” is the Michael Lewis classic “Liar’s Poker” still the best trading floor memoir? Gary Sernovitz sure thinks so. The New Yorker</p> <p>Are the top-ranked sell-side analysts all they’re cracked up to be? Yes and no. Social Science Research Network </p> <p>Just three weeks before his glorious Vday parade, President Xi Jinping saw 158 of his countrymen die from the Tianjin Blasts. Were they accidents, or was there something else behind it? The Jamestown Foundation</p> <p>He was JP Morgan’s chairman of global capital markets, and he also killed five people trying to demolish the center of Kano, Nigeria. Meet Ian Hannam, friend to mercenaries, persona non grata to the City, and quite possibly the most interesting man in finance. Financial Times</p> <p>Are the Paul Tudor Jones and the Stanley Druckenmiller’s of the world created in a bull market? No, they cut their teeth in the ridiculous volatility of the 80’s. Here’s a discussion on how to gain a similar edge in this current environment. Medium</p> <p>The upcoming Star Wars movie looks just as awesome as the first three. But what about its merchandise? Here are a few Star Wars products that are as ugly as Jabba crossed with a Sarlacc pit. Gizmodo</p> <p>Can China sustain its current FX policy? All signs have been pointing to no. FT Alphaville<br /> Photo: Marketa</p>
Fiat scion Lapo Elkann shows off his new custom speedboat
Lifestyle, 4:01
<p>Flashy Fiat heir Lapo Elkann has just unveiled his latest toy - a new camouflage speedboat designed by his own design and fabrication venture Garage Italia Customs.</p> <p>According to Forbes, Garage Italia had partnered with Italian craftsmen at Baglietto Yachts to create the speedboat. The vessel - imaginatively named Lap1 - is based on Bagiletto's MV13 design and customized with a digital camouflage body work designed by Italia Independent.</p> <p>The boat was hand-painted in five different shade of paint and matte transparent lacquer in the shade of blue Baglietto-built navy craft are known for. Apparently, this will not be the last collaboration between Baglietto and Garage Italia - watch this space.<br /> Photo: Garage Italia Customs via Instagram</p> <p>&nbsp;</p>
Weekend reading from a Wharton professor
Lifestyle, 4:01
<p>It's the last weekend of summer, the perfect time to wrap up summer reading and get in school-mode. Adam Grant, professor of management and psychology at the Wharton School, shares seven new books to read about work and psychology.</p> <p> "Presence" by Amy Cuddy: Cuddy writes about how we can achieve success by changing how we carry ourselves.<br /> "Unfinished Business" by Anne-Marie Slaughter: The CEO of the New America Foundation talks about how individuals and policy makers can push for more gender equality.<br /> "Superforecasting" by Philip Tetlock and Dan Gardner: This behavior science approach examines how we can better predict major events.<br /> "Friend and Foe" by Adam Galinsky and Maurice Schweitzer: This book breaks down cooperation and competition, from social media to gender differences.<br /> "Leadership BS" by Jeff Pfeffer: Leadership advice is generally as good as dirty dishwater, and the wrong people are in power.<br /> "Rising Strong" by Brene Brown: Looking at the concept of bravery, how can we start our own personal revolutions?<br /> "Broadcasting Happiness" by Michele Gielan: Happiness isn't just about individuals, it's about sharing with others.</p> <p>Photo: Ginny<br /> &nbsp;</p>
Slamming Bill Gross in the Twitter-sphere
Lifestyle, 4:01
<p>The Internet has no love lost for Bond King Bill Gross. Gross is known for his, ahem, colorful commentary. His latest blog post was critical of the Fed, and not everyone agreed with Gross. Here are some of the grossest tweets about the King in recent weeks:</p> <p>&nbsp;</p> <p>"That's what [Bill] Gross talks. His own book." -fmr Dallas Fed President Richard Fisher @CNBC<br /> — Kelly Evans (@Kelly_Evans) September 3, 2015</p> <p>Re: Bill Gross: "I don’t think I have ever seen a bond fund drop almost 3% in one day.” @GZuckerman @kirstengrind</p> <p>— Greg Ip (@greg_ip) August 25, 2015</p> <p>@IvanTheK And that for everything he says, there is an equal and opposite Bill Gross statement some time in the last 3 years<br /> — Mark Dow (@mark_dow) September 2, 2015</p> <p>Is it just me or are these monthly updates by Bill Gross getting more and more awkward?</p> <p>— Cullen Roche (@cullenroche) September 2, 2015</p> <p>"Skin in the game" talk is silly. Why would Bill Gross care if he lost $10 million? Will change nothing in his lifestyle.<br /> — grodaeu (@grodaeu) August 26, 2015</p>
Ladies, say hello to one of the world’s most expensive necklaces
<p>There are a lot of things you can do with $200 million. You can buy Jack Ma’s new pad and maybe this yacht, or you can buy Demi Moore’s Central Park West triplex and have this East Hampton home to go with it.</p> <p>If you’re a little more adventurous, you can take 100 of your closest friends on a week-long Kenyan safari, and have enough change to buy a Eurofighter for the trip back home.</p> <p>For the ladies however, this might be a little more appropriate:</p> <p>Made by world-renowned jeweler Wallace Chan for Chow Tai Fook, “A Heritage in Bloom” would set you back 200 million big ones if you were to recreate it.</p> <p>Beginning with the raw, 507.55 carat Cullinan Heritage diamond Chow Tai Fook purchased for $35 million back in 2010, Chan put in 47,000 man hours of cutting, polishing, and adding hundreds more stones to create the necklace that you see here today. It’s apparently centered on 24 flawless diamonds, with largest coming in at 104 carats, and Barron’s says that it can be worn in 27 different ways.</p> <p>It isn’t for sale though, as Adrian Cheng, Chow Tai Fook chairman Henry Cheng’s son told Barron’s:<br /> “This is jewelry of the company, Chow Tai Fook, but it represents the idea of family for generations as well. It represents a sense of heritage as well.”<br /> Photo: Judy van der Velden</p>
Funniest Tom Brady tweets
Lifestyle, 4:01
<p>Patriots quarterback Tom Brady may be cleared in the eyes of the law, but he certainly isn't for thousands of football fans in the U.S. Here are some of the best tweets about Brady:</p> <p>&nbsp;</p> <p>...And let the Tom Brady Internet reaction fun begin!<br /> — SundayNight Football (@SNFonNBC) September 3, 2015<br /> Some are witty zingers. </p> <p>Aside from Malcolm Butler, Judge Richard Berman has now forced the most significant turnover in Patriots franchise history.</p> <p>— Field Yates (@FieldYates) September 3, 2015</p> <p>#tombrady didnt see his shadow (may not even have 1) either way, 4 more weeks of coworkers hacky, deflated balls, jokes<br /> — Dolph Ziggler (@HEELZiggler) September 3, 2015</p> <p>Tom Brady is a hall of fame quarterback, but when someone asks to see his phones he's like</p> <p>— Eric Rosenthal (@ericsports) September 3, 2015</p> <p>Celebs have reacted to:</p> <p>A stoned Snoop Dogg is not thrilled about Tom Brady's overturned suspension:<br /> — SB Nation (@SBNation) September 3, 2015<br /> But Pats fans, of course, couldn't be happier. </p> <p>This is all I have to say. #TomBrady</p> <p>— Mary Georgantopoulos (@marygeorgant) September 3, 2015</p> <p>Tom Brady out here like<br /> — FutureHendrixs (@AINTTHATSHAWN) September 3, 2015</p> <p>God bless the American Justice System #PatsNation</p> <p>— JTE (@SchmoesJTE) September 3, 2015</p>