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20131020
China's Largest Conglomerate Buys Building Housing JPMorgan's Gold Vault
China's Largest Conglomerate Buys Building Housing JPMorgan's Gold Vault
In what is the most remarkable news of the day, which has so far passed very quietly under the radar, Fosun International, China's largest private-owned conglomerate which invests in commodities, properties and pharmaceuticals also known as "Shanghai's Hutchison Whampoa", announced in a statement filed just as quietly with the Hong Kong stock exchange, that it had purchased JPM's iconic former headquarters, the tower built by none other than David Rockefeller, at 1 Chase Manhattan Plaza for a measly $725 million.
Here is Bloomberg described the transaction:
Recall:
What do we know about 1 Chase Manhattan Plaza. Well, aside from the fact that the 60-story structure, built in the 1950s, was the headquarters of the once-legendary Chase Manhattan corporation, and which when it was built was the world's sixth tallest building, not much.
So we set off to learn more.
To learn more, we first went to the motherlode: the Landmarks Preservation Commission, whose report on 1 CMP describes everyone one wants to know about this building and then much more, such as that:
Reading on:
But then we hit the jackpot:
Digging some more into the curious nature of this biggest bank vault in the world, we learn the following, courtesy of a freely available book written by one of the architects:
* * *
So, what the real news of today is not that JPM is selling its gold vault, we knew that two months ago, or that it is outright looking to exit the physical commodities business, that too was preannounced. What is extremely notable is that in one very quiet transaction, China just acquired the building that houses the world's largest gold vault.
Why? We don't know. We do know that China's gross gold imports from Hong Kong alone have amounted to over 2000 tons in the past two years. This excludes imports from other sources, and certainly internal gold mining and production.
One guess: China has decided it has its fill of domestically held gold and is starting to acquire gold warehouses in the banking capitals of the world.
For now the reason why is unclear but we are confident the answer will present itself shortly.
In what is the most remarkable news of the day, which has so far passed very quietly under the radar, Fosun International, China's largest private-owned conglomerate which invests in commodities, properties and pharmaceuticals also known as "Shanghai's Hutchison Whampoa", announced in a statement filed just as quietly with the Hong Kong stock exchange, that it had purchased JPM's iconic former headquarters, the tower built by none other than David Rockefeller, at 1 Chase Manhattan Plaza for a measly $725 million.
Here is Bloomberg described the transaction:
None of this is particularly newsworthy What is, however, is what Zero Hedge exclusively reported back in March, namely that the very same former JPM HQ at 1 Chase Manhattan Plaza is also the building that houses the firm's commercial gold vault: incidentally, the largest in the world.Over the past year, other Chinese developers and wealthy investors have been buying real estate in the U.S.
China Vanke Co., the biggest homebuilder listed in mainland China, said in February it joined a residential real estate venture in San Francisco. The families of Zhang Xin, co-founder of Soho China Ltd. (410), the biggest developer in Beijing’s central business district, and Brazilian banking billionaire Moise Safra this year bought a 40 percent stake in New York’s General Motors Building.
The landmark 1 Chase Manhattan Plaza, designed by architect Gordon Bunshaft and built in the 1950s, was once the headquarters of Chase Manhattan Bank. Rockefeller, as head of the bank’s building committee, selected the site and oversaw its construction.
JPMorgan intends to relocate about 4,000 employees, most of the people who work in the 60-story skyscraper, to other New York locations, Brian Marchiony, a spokesman, said in August. JPMorgan occupies about half of its space.
Recall:
What do we know about 1 Chase Manhattan Plaza. Well, aside from the fact that the 60-story structure, built in the 1950s, was the headquarters of the once-legendary Chase Manhattan corporation, and which when it was built was the world's sixth tallest building, not much.
So we set off to learn more.
To learn more, we first went to the motherlode: the Landmarks Preservation Commission, whose report on 1 CMP describes everyone one wants to know about this building and then much more, such as that:
So the old Chase HQ, once the stomping grounds of one David Rockefeller, and soon to be the other half of JPMorgan Chase, has 5 sub-basements, just like the NY Fed...One Chase Manhattan Plaza combines three main components: a 60-story tower, a 2½ acre plaza, and a 6-story base, of which 5 floors are beneath grade.
Reading on:
Or, about the same depth as the bottom-most sub-basement under the NY Fed...Excavations, said to be the largest in New York City history, reached a depth of 90 feet
But then we hit the jackpot:
And there you have it: the JPM vault, recommissioned to become a commercial vault, just happens to also be the "world's largest bank vault."Originally constructed with white marble terrazzo paving and enclosed by a solid parapet of white marble travertine that was personally selected by Bunshaft in Tivoli, Italy, the L-shaped plaza levels the sloping site and conceals six floors of operations that would have been difficult to fit into a single floor of the tower, including an auditorium seating 800 [and] the world’s largest bank vault.
Digging some more into the curious nature of this biggest bank vault in the world, we learn the following, courtesy of a freely available book written by one of the architects:
In other words, the world's biggest bank vault, that belonging to the private Chase Manhattan empire, and then, to JPMorgan, was so safe, the creators even had a plan of action should it sustain a near-direct hit from a nuclear bomb, and suffer epic flooding (such as that from Hurricane Sandy).On the lowest level was the vault, which rested directly on the rock - the "largest bank vault in the world, longer than a football field." It was anchored to the bedrock with steel rods. This was to prevent the watertight, concrete structure from floating to the surface like a huge bubble in the event that an atomic bomb falling in the bay would blow away the building and flood the area.
* * *
So, what the real news of today is not that JPM is selling its gold vault, we knew that two months ago, or that it is outright looking to exit the physical commodities business, that too was preannounced. What is extremely notable is that in one very quiet transaction, China just acquired the building that houses the world's largest gold vault.
Why? We don't know. We do know that China's gross gold imports from Hong Kong alone have amounted to over 2000 tons in the past two years. This excludes imports from other sources, and certainly internal gold mining and production.
One guess: China has decided it has its fill of domestically held gold and is starting to acquire gold warehouses in the banking capitals of the world.
For now the reason why is unclear but we are confident the answer will present itself shortly.
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America's Most Obvious Tax Reform Idea: Kill the Oil and Gas Subsidies
America's Most Obvious Tax Reform Idea: Kill the Oil and Gas Subsidies
When Saudi Arabia's longtime oil minister, Ali Al-Naimi, opens his mouth, the world listens. Yesterday, during a speech in Hong Kong, he delivered a message that U.S. policy makers in particular would do well to take note of. The days of $100-a-barrel crude, he told the crowd, are here "for the foreseeable future."
If he's right, one thing that shouldn't be around for the foreseeable future are the outdated tax credits that protect oil and gas companies, which will be plenty profitable in a world of $100-a-barrel oil. If Democrats and Republicans are looking for safe ground to set up camp for the budget negotiations, let's start with these $7 billion-a-year subsidies.
Why Big Oil Doesn't Need Uncle Sam's Help
The oil industry's lobbyists like to argue that its array of tax write-offs (which allow companies to deduct everything from drilling costs to the declining value of their wells) aren't any different than other deductions for less publicly reviled companies. Cutting them will discourage new exploration and put jobs at risk, they claim.
Yet, some of the breaks are anachronisms that date back almost to the days of John D. Rockefeller. And in a world of permanently high crude prices, there's very little rationale for subsidizing the bottom lines of companies like ExxonMobil and BP.
Make no mistake, either: Those profits are perfectly healthy. Between drilling and refining, Exxon's U.S. operations alone earned $7.5 billion after taxes in 2012. California-based Occidental Petroleum Corporation, one of the so-called "independent" oil companies and the top oil driller in Texas, raked in $7.1 billion via its oil and gas division.
There are plenty of reasons, far beyond the word of a single middle-eastern oil man, to expect that those profits will stay high. Oil prices have continued to hover around the $100 mark in part because of instability in the Middle East, but also because, even in our sluggish global economy, demand is still relatively tight. As things improve, demand -- and prices -- will only increase. So if you think China's best days are still ahead of it, and that Europe will eventually pull out of its funk, you should expect prices to keep floating skyward. The Energy Information Administration, for one, believes the cost of a barrel will most likely increase to around $162 by 2040 (as shown on the blue line below).
The oil-filled shale formations in states like North Dakota and Texas that have powered the U.S. energy boom are notoriously expensive to drill. But if predictions like the EIA's come even close to true, then they should remain profitable plays for the industry for years to come. One might argue that without subsidies, they won't be quite profitable enough -- that by nixing the tax breaks that support domestic drilling and refining, we might encourage companies to put their money to do something else with their money. But as Harvard's Joseph Aldy has noted, independent analysts forecast that cutting the subsidy cord would have at most a minimal effect on U.S. drilling activity, possibly reducing it by as little as 26,000 barrels-a-day. Since 2009, he notes, production has been growing each month by 30,000 barrels a day.
If there's money to be made sucking oil out of the ground, in the end, somebody is likely to do it.
The Worst of the Worst
Some of the biggest subsidies are, well, a bit goofy. In its FY 2013 budget request, Obama administration singled out eight oil and gas tax breaks for the ax, worth about $38.5 billion over the next decade. Those are laid out in the table below from a Congressional Research Service report earlier this month. Let's take the three big ones highlighted in the table below.
Expensing Intangible Drilling Costs ($13.9 billion): Since 1913, this tax break has let oil companies write off some costs of exploring for oil and creating new wells. When it was created, drilling meant taking a gamble on what was below the earth without high-tech geological tools. But software-led advances in seismic analysis and drilling techniques have cut that risk down.
Deducting percentage depletion for oil and natural gas wells ($11.5 billion): Since 1926, this has given oil companies a tax breaks based on the amount of oil extracted from its wells. The logic is, if manufacturers get a break for the cost of aging machinery, drillers can deduct the cost of their aging resources. (You decide for yourself whether that makes any sense.) Since 1975, it's only available to "independent oil producers," not the big oil companies, like Exxon and BP. But many of these smaller companies aren't actually small. According to Oil Change International, independents made up 86 of the top 100 oil companies by reserves. Those 86 had a median market cap of more than $2 billion. So essentially, this is a tax break that subsidizes the Very Big oil companies at the expense of the Very Biggest.
The domestic manufacturing deduction for oil and natural gas companies ($11.6 billion): In 2004, as American manufacturing was being ravaged by China's entrance on the global scene, Congress passed legislation designed to encourage companies to keep factories operating in the U.S. Thanks to some intensive lobbying, the oil industry ended up as one of the beneficiaries. But while the refining process does involve high-tech manufacturing, there was never any danger that either drilling or refining was going to migrate overseas.
The big tax breaks don't stop there. For instance, accounting rules worth about $2 billion a year to the industry let companies deduct more for the cost of developing wells as oil prices rise. But it gives you a flavor of what we're talking about here -- bonuses that aren't even available to every company in the industry.
No matter how badly John Boehner and House Republicans might wish otherwise, any long-term deficit reduction deal is probably going to have to raise some taxes, probably by nixing deductions. At least, it will if it has any hope of making it past Senate Democrats and the White House. Just $40 billion to $70 billion won't be enough. But the oil and gas subsidies are breaks that, by all rights, have outlived their usefulness. It's time for them to go.
When Saudi Arabia's longtime oil minister, Ali Al-Naimi, opens his mouth, the world listens. Yesterday, during a speech in Hong Kong, he delivered a message that U.S. policy makers in particular would do well to take note of. The days of $100-a-barrel crude, he told the crowd, are here "for the foreseeable future."
If he's right, one thing that shouldn't be around for the foreseeable future are the outdated tax credits that protect oil and gas companies, which will be plenty profitable in a world of $100-a-barrel oil. If Democrats and Republicans are looking for safe ground to set up camp for the budget negotiations, let's start with these $7 billion-a-year subsidies.
Why Big Oil Doesn't Need Uncle Sam's Help
The oil industry's lobbyists like to argue that its array of tax write-offs (which allow companies to deduct everything from drilling costs to the declining value of their wells) aren't any different than other deductions for less publicly reviled companies. Cutting them will discourage new exploration and put jobs at risk, they claim.
Yet, some of the breaks are anachronisms that date back almost to the days of John D. Rockefeller. And in a world of permanently high crude prices, there's very little rationale for subsidizing the bottom lines of companies like ExxonMobil and BP.
Make no mistake, either: Those profits are perfectly healthy. Between drilling and refining, Exxon's U.S. operations alone earned $7.5 billion after taxes in 2012. California-based Occidental Petroleum Corporation, one of the so-called "independent" oil companies and the top oil driller in Texas, raked in $7.1 billion via its oil and gas division.
There are plenty of reasons, far beyond the word of a single middle-eastern oil man, to expect that those profits will stay high. Oil prices have continued to hover around the $100 mark in part because of instability in the Middle East, but also because, even in our sluggish global economy, demand is still relatively tight. As things improve, demand -- and prices -- will only increase. So if you think China's best days are still ahead of it, and that Europe will eventually pull out of its funk, you should expect prices to keep floating skyward. The Energy Information Administration, for one, believes the cost of a barrel will most likely increase to around $162 by 2040 (as shown on the blue line below).
The oil-filled shale formations in states like North Dakota and Texas that have powered the U.S. energy boom are notoriously expensive to drill. But if predictions like the EIA's come even close to true, then they should remain profitable plays for the industry for years to come. One might argue that without subsidies, they won't be quite profitable enough -- that by nixing the tax breaks that support domestic drilling and refining, we might encourage companies to put their money to do something else with their money. But as Harvard's Joseph Aldy has noted, independent analysts forecast that cutting the subsidy cord would have at most a minimal effect on U.S. drilling activity, possibly reducing it by as little as 26,000 barrels-a-day. Since 2009, he notes, production has been growing each month by 30,000 barrels a day.
If there's money to be made sucking oil out of the ground, in the end, somebody is likely to do it.
The Worst of the Worst
Some of the biggest subsidies are, well, a bit goofy. In its FY 2013 budget request, Obama administration singled out eight oil and gas tax breaks for the ax, worth about $38.5 billion over the next decade. Those are laid out in the table below from a Congressional Research Service report earlier this month. Let's take the three big ones highlighted in the table below.
Expensing Intangible Drilling Costs ($13.9 billion): Since 1913, this tax break has let oil companies write off some costs of exploring for oil and creating new wells. When it was created, drilling meant taking a gamble on what was below the earth without high-tech geological tools. But software-led advances in seismic analysis and drilling techniques have cut that risk down.
Deducting percentage depletion for oil and natural gas wells ($11.5 billion): Since 1926, this has given oil companies a tax breaks based on the amount of oil extracted from its wells. The logic is, if manufacturers get a break for the cost of aging machinery, drillers can deduct the cost of their aging resources. (You decide for yourself whether that makes any sense.) Since 1975, it's only available to "independent oil producers," not the big oil companies, like Exxon and BP. But many of these smaller companies aren't actually small. According to Oil Change International, independents made up 86 of the top 100 oil companies by reserves. Those 86 had a median market cap of more than $2 billion. So essentially, this is a tax break that subsidizes the Very Big oil companies at the expense of the Very Biggest.
The domestic manufacturing deduction for oil and natural gas companies ($11.6 billion): In 2004, as American manufacturing was being ravaged by China's entrance on the global scene, Congress passed legislation designed to encourage companies to keep factories operating in the U.S. Thanks to some intensive lobbying, the oil industry ended up as one of the beneficiaries. But while the refining process does involve high-tech manufacturing, there was never any danger that either drilling or refining was going to migrate overseas.
The big tax breaks don't stop there. For instance, accounting rules worth about $2 billion a year to the industry let companies deduct more for the cost of developing wells as oil prices rise. But it gives you a flavor of what we're talking about here -- bonuses that aren't even available to every company in the industry.
No matter how badly John Boehner and House Republicans might wish otherwise, any long-term deficit reduction deal is probably going to have to raise some taxes, probably by nixing deductions. At least, it will if it has any hope of making it past Senate Democrats and the White House. Just $40 billion to $70 billion won't be enough. But the oil and gas subsidies are breaks that, by all rights, have outlived their usefulness. It's time for them to go.
20131010
Oops: Azerbaijan released election results before voting had even started
Oops: Azerbaijan released election results before voting had even started
Azerbaijan's big presidential election, held on Wednesday, was anticipated to be neither free nor fair. President Ilham Aliyev, who took over from his father 10 years ago, has stepped up intimidation of activists and journalists. Rights groups are complaining about free speech restrictions and one-sided state media coverage. The BBC's headline for its story on the election reads "The Pre-Determined President." So expectations were pretty low.
Even still, one expects a certain ritual in these sorts of authoritarian elections, a fealty to at least the appearance of democracy, if not democracy itself. So it was a bit awkward when Azerbaijan's election authorities released vote results – a full day before voting had even started.
The vote counts – spoiler alert: Aliyev was shown as winning by a landslide – were pushed out on an official smartphone app run by the Central Election Commission. It showed Aliyev as "winning" with 72.76 percent of the vote. That's on track with his official vote counts in previous elections: he won ("won"?) 76.84 percent of the vote in 2003 and 87 percent in 2008.
The Azerbaijani Central Election Commission sent out these vote totals to its official smartphone app before voting started. (meydan.tv)
In second place was opposition candidate Jamil Hasanli with 7.4 percent of the vote. Hasanli had recently appealed to the Central Election Commission for paid airtime on state TV, arguing that Aliyev gets heavy airtime and the opposition does not. He was denied.
The data were quickly recalled. The official story is that the app's developer had mistakenly sent out the 2008 election results as part of a test. But that's a bit flimsy, given that the released totals show the candidates from this week, not from 2008.
You might call this a sort of Kinsley gaffe on a national scale. (A Kinsley gaffe, named for journalist Michael Kinsley, is when a politician gets in trouble for saying something that's widely known as true but that he isn't supposed to say.) There's supposed to be a certain ritual to an election like Azerbaijan's: demonstrations are put down, reporters are harassed, opposition candidates are whittled down, supporters are ushered to the polls and then Aliyev's sweeping victory is announced. They got the order wrong here.
As of this writing, Azerbaijan's election authorities say they've counted 80 percent of the ballots, with Aliyev winning just under 85 percent of the vote so far. He's been officially reelected.
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Massive fire rips through Quincy Masonic Temple
Massive fire rips through Quincy Masonic Temple
Thick billows of black smoke could be seen from the four-alarm fire reported just after 12 p.m.
Sky 5 showed flames shooting out of the temple’s roof, and windows on the building had been knocked out.
Large crowds have gathered at street corners and in parking lots in Quincy Center, as black-charred debris rained down from the smoldering temple.
The temple, located at 1170 Hancock St., was built in 1926 and added to the National Register of Historic Places in the late 1980s.
The Quincy Masonic Temple, a neoclassical structure built in 1926 for the Freemasons, was valued by Quincy assessors at $3 million.
Hanover-based broker 1st US Realty listed the property for sale over the summer.
Leo Martin, a Quincy realtor who has agreed to purchase the temple, told the Patriot Ledger the fire started shortly after noon when two of his employees were "grinding out a heat line" in the basement, and the insulation caught fire. The two employees exited the building safely, Martin told the Patriot Ledger.
Authorities secured a two block radius around the fire. Nearby apartments were not immediately evacuated.
Thick billows of black smoke could be seen from the four-alarm fire reported just after 12 p.m.
Sky 5 showed flames shooting out of the temple’s roof, and windows on the building had been knocked out.
Large crowds have gathered at street corners and in parking lots in Quincy Center, as black-charred debris rained down from the smoldering temple.
The temple, located at 1170 Hancock St., was built in 1926 and added to the National Register of Historic Places in the late 1980s.
The Quincy Masonic Temple, a neoclassical structure built in 1926 for the Freemasons, was valued by Quincy assessors at $3 million.
Hanover-based broker 1st US Realty listed the property for sale over the summer.
Leo Martin, a Quincy realtor who has agreed to purchase the temple, told the Patriot Ledger the fire started shortly after noon when two of his employees were "grinding out a heat line" in the basement, and the insulation caught fire. The two employees exited the building safely, Martin told the Patriot Ledger.
Authorities secured a two block radius around the fire. Nearby apartments were not immediately evacuated.
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