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CR--
Can you give us your god's eye view take on how wide the ramifications on the BS meltdown might be, in terms of best case/worst case?
Thx as always.
GUNFIGHT!
in due time - This will impact the whole CDO market.
My assumption is that since Bear bailed out the best fund and are collaterized they didn't bail out the second fund since there is insufficient collateral/value. Therefore, some lenders will lose money. This is very important if it causes lendors to reexamine aggressive lending and collateral requirements with other hedge funds. The amount of forced selling this causes is unclear but could substantially increase the cost of the flood of junk borrowings expected this summer to fund recent deals. Could cause a weak stock market as well.
Howls of derisive laughter!!
Ten cents!! Still too much for C and D stuff!
Oh well, time to take a nap...the market is closing down for the week and I am quite happy with today's market.
SDTWGE...
I looked back at all the stories earlier in the day, and they do make the point it was just the one fund. I had glossed over that completely.
Josh Pate, I think the best case is there are few financial ripple effects, and just some minor tightening on mortgage underwriting - negatively impacting housing.
The major concern right now is that other hedge funds (or other investors) will also go under. This is really a liquadiation issue - with institutions and wealthy investors losing money - and not a liquidity issue. But the more money that is lost, the less these investors will want to buy mortgage related instruments. And that will impact housing.
Best Wishes.
Allenm, thanks for switching to the acronym (SDTWGE), but boy are any blog newcomers going to be puzzled...
I think these would make the perfectly fitting part of the endowment funds of the colleges that train the smartest people in the room.
Dow Jones is now reporting:
Bear CFO: Liquidations of Hedge Fund Assets On Hold - CNBC
What? Maybe another bailout?
Best to all.
Cramer says buy Bear Stearns
Too damn funny!!! When the grandmaster shill himself is out cheering like this, you know it's really bad.
And it's going to get worse, much worse.
CANTOR FITZGERALD SAYS AUCTION SUCCESSFULLY COMPLETED
Business & Financial News, Breaking US & International News | Reuters.com
dotcommunist, you're my kind of guy. Cramer IS a shill.
Oooh. Cantor Fitzgerald's comment from MP's link:
"We had a successful auction," said Cantor Fitzgerald spokesman Robert Hubbell, who didn't immediately have a figure on how much was sold. "We have no exposure to the Bear Stearns hedge fund. We have not lost a penny."
Just a wee tinge of running for the hills, there.
Get ready for the shock wave coming to a hedge fund near you.
(Serious) Question: Who is responsible if the margin debt can't be repaid? Would Bear Stearns have to make up the difference?
This is the first time in years when institutional investors are losing money before retail Average Joe does. Usually it's vice versa.
I'm sure they will do everything to make Joe to catch up fast. Cramer will definitely help in that, his job is to direct Joe where most money could be lost.
ac, who knows? We don't have enough detail yet. We do know that BS stepped in on the high-grade fund, so they're on the line now for that one.
If the margin calls go beyond $3.2 billion, that's where the lawyers will step in and try to stick BS for the rest of it.
10 cents on the dollar! "Squeak!"
Jeez, some second liens are selling for more than that.
10 cents on the dollar! "Squeak!"
There's going to be a bloodletting, no doubt about that.
ac Lenders would lose amounts that are manageable for such very large companies. They might tighten up on other highly leveraged hedge funds since they probably don't like or expect many losses on this type of business. Highly unlikely Bear would have guaranteed the loans. If they had guaranteed they would have bailed out this fund too.
It will be interesting to know just how much Cantor sold to make back their exposure, and what prices they were getting. Any sort of firesale could have a grim industry fallout.
In other words, how much of that $.10 on the dollar real..
NEW YORK, June 22 (Reuters) - Fitch Ratings on Friday said it may cut its collateralized debt obligation (CDO) manager rating on Bear Stearns Asset Management, part of Bear Stearns Cos.' (BSC.N: Quote, Profile , Research), due to troubles arising from bad bets on subprime mortgages.
Reuters:
Fitch may cut Bear Stearns Asset Management CDO rank
Troubles at the hedge funds owned by Bear Stearns Asset Management may affect the firm's ability to maintain the level of collateral it posts as part of the management of the CDOs, Fitch said in a statement.
Fitch awards BSAM a CDO manager rating of "CAM2," the second highest of five rankings.
I guess this means they aren't all that good at risk management after all.
Wham! Bam! Thank you, Ma'am!
NEW YORK, June 22 (Reuters) - Fitch Ratings on Friday said it may cut its collateralized debt obligation (CDO) manager rating on Bear Stearns Asset Management, part of Bear Stearns Cos.' (BSC.N: Quote, Profile , Research), due to troubles arising from bad bets on subprime mortgages.
Business & Financial News, Breaking US & International News | Reuters.com
Fitch Places Bear Stearns' 'CAM2' CDO Asset Manager Rating on Watch Negative
News
I don't know where to jump in!
We don't know some very important things yet. Having said that, I suspect there will be late nights all weekend for Warren Spector and the boys. I am VERY surprised that Bear has agreed to make these loans and I have a suspicion that there are conditions we don't know about and the Bear actually is in a time-buying mode before they actually kick in $. Anything else would run comkpltelty counter to Bear's approach to the business.
I'll bite: "SDTWGE" = ?
Someday this war's gonna end....
Ahhh, thanks Semper fu!