Biggest Holders of US Government Debt

Biggest Holders of US Government Debt
Switzerland		113.9B
Taiwan		149.6B
Caribbean Banking Centers		185.3B
Brazil		206.4B
Oil Exporters		232.0B
Insurance Companies		250.1B
Depository Institutions		284.5B
The United Kingdom		429.4B
State and Local Governments		484.4B
Mutual Funds		653.5B
Pension Funds		852.2B
Japan		1.038T
Other Investors / Savings Bond		1.107T
China		1.132T
Federal Reserve and Intragovernmental Holdings		6.328T
SOURCE: cnbc.com (Jan 31, 2012)

Private-Equity Payday: Carlyle Founders Get $402 Million

By GREGORY ZUCKERMAN And RYAN DEZEMBER

Amid a swirl of controversy about the private-equity business, industry powerhouse Carlyle Group revealed that its three founders together earned more than $400 million last year. 

News of the payday comes as Republican presidential candidate Mitt Romney has been bombarded with criticism for the work of his former firm, private-equity giant Bain Capital, including from fellow Republican Newt Gingrich. Mr. Romney's campaign has indicated it is prepared to defend his work as a part of free-market capitalism. Bain has said the company's focus is on working with management teams "to build great companies and improve their operations."

At Carlyle, the earnings for David Rubenstein, William Conway and Daniel D'Aniello amounted to salary of $275,000, a bonus of $3.5 million, and a $134 million share of the firm's investment profits apiece, according to a document filed with the Securities and Exchange Commission late Tuesday. 

The filing is ahead of Carlyle's anticipated initial public offering later this year, likely in the second quarter, according to someone close to the matter. A representative for the firm declined to comment.

Washington D.C.-based Carlyle, like other buyout firms, claims 20% of the profits of the firm's investments. The $402 million the three executives shared—in addition to their salaries and bonuses—represented more than half of the 20% fees that Carlyle claimed on the firm's investment gains in 2011.

The three also saw hefty returns on their personal investments in the firm's funds, separate from their take of the profits. Carlyle reported distributions to Messrs. D'Aniello, Conway, and Rubenstein of $77.6 million, $70.9 million and $56.8 million, respectively. The filing doesn't specify what portion of those distributions consisted of their original investments.

The founders continue to plow money back into their funds. Last year, Mr. Conway, a co-chief executive, invested $164 million, Mr. D'Aniello, Carlyle's chairman, put in $98 million, and Mr. Rubenstein, the other co-CEO, invested $97 million, the filing says. They have made outstanding commitments to invest an additional $490.7 million to the funds, the filing says.

Within Carlyle, the compensation didn't cause many ripples. Some executives were unaware of pay details of the three founders, one person at the firm said, adding that the three top partners were generally assumed to have been making more than half of the firm's profits.

"It's certainly a sizable payday and yet in this sector, it's not unusual," said David Wise, senior principal at management consulting firm Hay Group. "People go into private equity because at the end of the rainbow, they can have a payout like this." 

When Blackstone Group LP was preparing its own public offering in 2007, it reported that in 2006 its top five executives shared in $771.5 million in cash distributions, their full compensation at the time. Chairman and Chief Executive Officer Stephen Schwarzman was paid $398.3 million, senior chairman Peter Peterson's share was $212.9 million and Hamilton James, Blackstone's president and chief operating officer, collected $97.3 million, according to a securities filing. 

The Carlyle payday resulted from an especially active and successful period last year. The buyout firm has reported economic net income, the industry's preferred measure of earnings, of $579 million through the first nine months of last year, the most recent data available from the company. It handed back $15 billion to its investors during those nine months, representing profits from the firm's buyout deals as well as original money invested by clients. That was a record for any nine-month period for Carlyle and almost double the previous best period.

The firm, founded in 1987, originally forged close ties within political circles, hiring former senior politicians such as former Defense Secretary Frank Carlucci, who served as chairman of Carlyle from 1992 to 2003. Former President George H.W. Bush and former Secretary of State James A. Baker III also served as advisers. Early on, some of Carlyle's deals were in the defense industry.

But in recent years Carlyle has cut ties with former politicians, emerging as a more-global buyout player than some of its peers, with early deals in China. Carlyle has launched many more, smaller buyout funds than rivals, sometimes with a narrow focus, and executives receive more of their compensation from the profits they specifically generate, rather than the overall firm's gains.

Though the Carlyle pay may cause a backlash, some clients said they had little to criticize after a year of big gains from the sale of interests in companies including China Pacific Insurance Group Co., Kinder Morgan Inc. and Dunkin' Brands Group Inc. "They obviously had a very good year and are incentivized to create gains for investors and are entitled to 20% of those gains," says an executive with an investment in Carlyle funds. "Investors had to have made a lot of money" for the trio to make more than $400 million last year.

Write to Gregory Zuckerman at gregory.zuckerman@wsj.com

SOURCE: http://online.wsj.com/article/SB10001424052970204124204577154553703228504.html?mod=WSJ_hp_LEFTWhatsNewsCollection 

 

Is Gold Rally Finally Over? What History Tells Investors

Published: Monday, 26 Sep 2011 | 12:25 PM ET

Gold's toppling from record highs, culminating in Monday's huge price plunge, has investors asking whether a decade-long bull run is over. History would suggest that while gold has taken a beating, it is far from down and out.

Monday's tumble to around $1,535 an ounce dragged prices 20 percent below the record $1,920 reached this month. But since its rise from just over $250 in early 2001, gold [XAU=  1623.89    -2.96  (-0.18%)   ] has bounced back from bigger drops, having fallen 25 percent between May and June 2006, and 27 percent in October 2008. 

The 2008 episode saw gold treated like any other high risk asset when the collapse of Lehman Brothers sparked heavy selling across financial markets in a widely-documented "dash for cash"—after which it bounced back hard to record highs. 

"Gold and other real assets are not immune from global sell-offs, and this is a textbook example we are seeing now," said Bayram Dincer, an analyst at LGT Capital Management. 

"If you want to draw an analogy, look at 2008, when the Lehman fall saw gold collapsing around $250. The markets are in this 2008, global post-Lehman sell-off mode." 

In the short term, the sharply higher volatility in gold typified by Monday's trade will have battered its already tarnished reputation as a haven. Prices could have further to correct, given their hefty run-up of recent months. 

But expectations that, longer term, other asset classes could prove still more of a risk, coupled with the low interest rate environment, are likely to push prices higher when selling peters out. 

While gold may be seen as less of a haven than in the days before $50 daily price moves became a regular feature of the market, it is hardly alone in seeing heightened volatility. 

"Clearly any move like this is going to make people at least question the assumptions they had that any euro zone stress might be positive for gold," said David Jollie, an analyst at Mitsui Precious Metals. "General financial market volatility is a threat to any asset." 

Riskier assets

 

The euro, stock markets and raw materials such as oil and copper have all posted losses this month as investors sold these nominally riskier assets in response to growing concerns over the euro zone debt crisis. 

Gold seemed to have reached a tipping point as worsening financial market conditions forced some investors to realise fat profits in the metal to cover losses elsewhere, and on a rush to the greater liquidity of the dollar and Treasurys. 

"For now, investors are only finding comfort in the relative safety of cash," said UBS analyst Edel Tully. 

These kinds of fears usually benefit gold, so its switch in role from haven to source of funds shows not only how much stress the financial markets are under, but also how overstretched the metal had become. 

Signs that gold was ripe for a correction were rife after its sharp rally to record highs in early September—which saw it surge by 28 percent in just over two months—was followed by a period of intense volatility.

"The rise in volatility taking place in the gold price was clearly an indication that gold was no longer a low-risk asset," said Natixis analyst Nic Brown. 

"We are unwinding much of recent move over last two to three months. It's too early to say whether it's the big burst. It could be, but it's equally possible that it could be what allows the market to push over further highs over the next few months." 

Long-term investors hold on 

Holdings of gold-backed exchange-traded funds have remained relatively steady during recent sell-offs, suggesting they have been reasonably resilient to short-term moves. 

Analysts say recent sharp price moves are a likely result of repositioning by large institutional investors like hedge funds. But these are not the only, or even the main, buyers of gold. 

Small-scale retail investors, particularly Asian buyers looking for a store of wealth and a hedge against inflation, have also been key bullion buyers, and are likely to remain so. 

In the short term, investors are likely to be wary of "catching a falling knife," and buying into the market before the correction has fully run its course. But they may be swift to do so as prices stabilize, analysts predicted. 

While gold's retracement was sharp, spot prices are still up 7 percent this quarter, and nearly 14 percent on the year, despite the failure of a number of key risk factors, like fears of a U.S. default or fresh monetary easing, to materialize. 

"In Q4 2008... the gold price fell by 25 percent over a fairly short period," said VM Group analyst Carl Firman. "But it does tend to recover at significantly higher levels." 

"I think what you will see could be a gold recovery very similar to the one you saw in Q1 2009, when the gold price recovered long before other assets hit bottom," Firman said.

"We are still looking at a high inflationary environment, we are looking at negative real interest rates, there are all sorts of uncertainties out there," he said. "That has got to benefit gold, at some point." 

Copyright 2011 Thomson Reuters.

SOURCE: http://www.cnbc.com/id/44671131