It's a bad day to be a
The French "millionaire tax," which a constitutional court approved on Sunday, is really not that; instead it is a 50 percent tax paid by employers -- "about 470 companies and a dozen soccer teams" of course -- on wages above one million euros. "Including social contributions, the rate will effectively remain about 75 percent, though the tax will be capped at 5 percent of a company's turnover," which is a fascinating little tidbit. Like, for one thing, companies that pay out the majority of their revenue to high-earning employees seem less sympathetic than companies that spend most of their revenue on, I don't know, stuff or non-millionaire employees or whatever. But this measure penalizes the latter and rewards the former. Also it seems pretty easy to game; you put your highly-paid employees into their own separate consulting firms, pay multimillion-euro fees to those firms, and let the consulting firms pay the individuals' salaries. With the tax capped at 5 percent of the consulting fees.
It was a good year to be boring.
The Wall Street Journal has an amusing article about how the best investing strategies in 2013 were of the form "buy all the stocks, wait," rather than, like, time the market or pick the best stocks or mess around with gold. (Though here's another thing from the Journal about 2013's five best-performing stocks, all up more than 100 percent and all, um, stock-picker's stocks. Tesla, Netflix, Best Buy, Twitter, Herbalife.) Here is a man who is paid to invest other people's money:
"All of the sales we made this year have been mistakes," said David Rolfe, chief investment officer of St. Louis's Wedgewood Partners, which has $7 billion of assets under management. "If you could've just invested in one of the major indexes, and worked on your golf game the rest of the year, you would've hit a home run."
You could have! That is totally an opportunity that is available now, for investors anyway. "We throw your money in an index fund and play golf" is not a great ad for an asset management firm though.
Fannie Mae is done with bad mortgages .
"Wells Fargo & Co will pay a net $541 million to Fannie Mae to settle claims over defective home loans, completing the government-controlled mortgage company's efforts to have banks buy back troubled loans made before the financial crisis." Yaaaay. Fannie is now done with its mortgage putback claims -- pulling in $6.5 billion from eight big banks -- so the financial crisis is over. Or wait what? The Federal Housing Finance Agency, Fannie's regulator/conservator, "is also pursuing lawsuits against many banks over mortgage securities sold to Fannie Mae and Freddie Mac." Because you can sue for fraud and putbacks over the same mortgages, or different mortgages, or once as a buyer and once as a regulator, etc. etc. etc. Nothing will ever end.
Or something; the procedural history here is ancient and gnarled. But basically LightSquared is bankrupt, Dish Network and its chief executive officer Charlie Ergen own a lot of its secured debt and are in the driver's seat on buying its assets out of bankruptcy, but LightSquared has now announced that it will seek creditor approval of a competing plan that would be financed by Fortress Investment Group and others and that would preserve LightSquared as a going business. LightSquared's special committee favors this plan, in part because it doesn't think Ergen/Dish are allowed to own any LightSquared debt and it wants to preserve legal claims over that question. Which is an obvious source of value: Ergen owns over $800 million of LightSquared senior debt, and if you could just get rid of that debt then there'd be more money to go around to the other creditors.
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Matthew S Levine at firstname.lastname@example.org