"The extent of the declines in assets such as those at Basis Capital and Bear Stearns is being masked by the reluctance of investors to buy or sell the illiquid securities"
those investors must be miserable watching their money go down the toilet. really quite sad.
those investors must be miserable watching their money go down the toilet. really quite sad.
Well in all honesty many of the kinds of investors in these funds have so much money they won't miss it much.
I have a couple friends like that... one married into money (his spouse inherited the majority stake in a large home building products company worth billions). The other took over his family's small (worth say $10 million) ag products company then on top of that HIS spouse inherited a third of a billion dollar privately held & geographically diversified automotive components company (very active in Asia & Europe besides NAFTA Zone).
In both situations - these companies do well even in tough times... they've done exceptionally well over the last decade and a half. Outstanding really.
We don't talk finances but from what little we do discuss I know both of these folks have 'a little' hot money is funds like this but not a lot of their net worth... if a few of these funds went poof... they wouldn't miss it. Kinda like us normal folks misplacing the change jar... not that big of a deal.
The folks I worry about are the pension funds & insurance companies that might have their hands in these jars. They will need the money again someday. If they are deep into activities like this it will haunt us for years to come.
The article points out that Bear Sterns hired Blackstone for the same reason. Yesterday we learned that Blackstone advises China on where to invest; witness the Barkleys agreement. Who would be suprised to find out that this debt gets placed with the government of China?
Who would be suprised to find out that this debt gets placed with the government of China?
If you mean to suggest the Barkley's money gets invested in the same place Blackstone suggests the China (gov't) fund invests then I wouldn't be surprised.
If on the other hand you suggested Barkley's actually invested in Chinese gov't debt I would be VERY surprised. China is running a massive surplus & additional capital flow into China needs to be sterilized (by the PBoC) else it contributes to inflation (domestic money supply growth) and complicates their currency manipulation efforts.
The last thing in the world China needs right now is to borrow from outside China - currently they will only invite 'investment' into China from outside if 'technology' & 'skilled jobs' are attached (i.e. a factory with skills & technology they covet).
That might change if the US CAD evaporates but for now that's the way it is.
As a percentage of their total assets, investments in hedge funds/LBO funds and other "alternative investments" generally represent something less than 5%.
As a percentage of their total assets, investments in hedge funds/LBO funds and other "alternative investments" generally represent something less than 5%.
Yup... and the best thing to come out of this little hiccup will be that they likely keep them in the single digit percentages.
But a wipe out on the order of the BS Enhanced & Super Enhanced - even if only single digit weighted exposure, it knocks a half year to a years conservative return out of those funds. With the wave of retirees coming that is a problem.
That article is highly entertaining to read!
'Pride cometh before destructio
"The extent of the declines in assets such as those at Basis Capital and Bear Stearns is being masked by the reluctance of investors to buy or sell the illiquid securities"
those investors must be miserable watching their money go down the toilet. really quite sad.
those investors must be miserable watching their money go down the toilet. really quite sad.
Well in all honesty many of the kinds of investors in these funds have so much money they won't miss it much.
I have a couple friends like that... one married into money (his spouse inherited the majority stake in a large home building products company worth billions). The other took over his family's small (worth say $10 million) ag products company then on top of that HIS spouse inherited a third of a billion dollar privately held & geographically diversified automotive components company (very active in Asia & Europe besides NAFTA Zone).
In both situations - these companies do well even in tough times... they've done exceptionally well over the last decade and a half. Outstanding really.
We don't talk finances but from what little we do discuss I know both of these folks have 'a little' hot money is funds like this but not a lot of their net worth... if a few of these funds went poof... they wouldn't miss it. Kinda like us normal folks misplacing the change jar... not that big of a deal.
The folks I worry about are the pension funds & insurance companies that might have their hands in these jars. They will need the money again someday. If they are deep into activities like this it will haunt us for years to come.
The article points out that Bear Sterns hired Blackstone for the same reason. Yesterday we learned that Blackstone advises China on where to invest; witness the Barkleys agreement. Who would be suprised to find out that this debt gets placed with the government of China?
Come here, little Gingerbread man! You can ride across the river on my back!
"The folks I worry about are the pension funds & insurance companies"
Well at least these guys aren't leveraged up 30x. Uh, right?
Who would be suprised to find out that this debt gets placed with the government of China?
If you mean to suggest the Barkley's money gets invested in the same place Blackstone suggests the China (gov't) fund invests then I wouldn't be surprised.
If on the other hand you suggested Barkley's actually invested in Chinese gov't debt I would be VERY surprised. China is running a massive surplus & additional capital flow into China needs to be sterilized (by the PBoC) else it contributes to inflation (domestic money supply growth) and complicates their currency manipulation efforts.
The last thing in the world China needs right now is to borrow from outside China - currently they will only invite 'investment' into China from outside if 'technology' & 'skilled jobs' are attached (i.e. a factory with skills & technology they covet).
That might change if the US CAD evaporates but for now that's the way it is.
Dryfly,
As a percentage of their total assets, investments in hedge funds/LBO funds and other "alternative investments" generally represent something less than 5%.
As a percentage of their total assets, investments in hedge funds/LBO funds and other "alternative investments" generally represent something less than 5%.
Yup... and the best thing to come out of this little hiccup will be that they likely keep them in the single digit percentages.
But a wipe out on the order of the BS Enhanced & Super Enhanced - even if only single digit weighted exposure, it knocks a half year to a years conservative return out of those funds. With the wave of retirees coming that is a problem.