The Crisis in Hedgistan
by Mike Whitney
from The SmirkingChimp
Two columns of black smoke can still be seen rising over the New York skyline.
Terrorism?
Not quite. The plumes of smoke are all that's left of two major hedge funds which blew up just weeks ago leaving nothing behind but a few smoldering embers and a mound of black soot.
The compiled assets of the Bear Sterns High-Grade Structured Credit Strategies Fund--nearly $20 billion--have vanished into the miasma of cyber-space soon be joined by $1.4 trillion of other, equally worthless, Collateralized Debt Obligations (CDO).
If you look closely, you'll see the mangled bodies of the CDOs, the CDSs (Credit Default Swaps), the RMBS (Residential Mortgage Backed Securities) and the other shaky debt-instruments being pulled from the wreckage and tossed on the bonfire.
Is this how it all ends? Will the sudden spike in subprime defaults send all the funds in "Hedgistan" crashing to earth?
No one knows--yet.
According to Bloomberg News, Bear Sterns announced last week that there's "little value left" in one of its funds and "no value left" in the other.
Nothing, nada, zippo.
(Continued here.)
from The SmirkingChimp
Two columns of black smoke can still be seen rising over the New York skyline.
Terrorism?
Not quite. The plumes of smoke are all that's left of two major hedge funds which blew up just weeks ago leaving nothing behind but a few smoldering embers and a mound of black soot.
The compiled assets of the Bear Sterns High-Grade Structured Credit Strategies Fund--nearly $20 billion--have vanished into the miasma of cyber-space soon be joined by $1.4 trillion of other, equally worthless, Collateralized Debt Obligations (CDO).
If you look closely, you'll see the mangled bodies of the CDOs, the CDSs (Credit Default Swaps), the RMBS (Residential Mortgage Backed Securities) and the other shaky debt-instruments being pulled from the wreckage and tossed on the bonfire.
Is this how it all ends? Will the sudden spike in subprime defaults send all the funds in "Hedgistan" crashing to earth?
No one knows--yet.
According to Bloomberg News, Bear Sterns announced last week that there's "little value left" in one of its funds and "no value left" in the other.
Nothing, nada, zippo.
(Continued here.)
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