July 03, 2007

And then the hedge funds started to collapse... "People are nervous about how deep the revaluations will have to go"


"Mark to Market" anyone?

P.O.N.Z.I.S.C.H.E.M.E.

United Capital's Devaney Halts Redemptions on Funds

July 2 (Bloomberg) -- United Capital Markets Holdings Inc., a brokerage run by John Devaney, halted redemptions on some of its hedge funds that invest in subprime-mortgage bonds.

The funds are within the company's Horizon Strategy group, including the Horizon ABS Fund LP, said Michael Gregory, a spokesman for the Key Biscayne, Florida-based firm.

``We did that as a defensive move because we had an unusually high number of redemption requests and we didn't want to be a forced seller in this market,'' Gregory said in a telephone interview. One of the redemption requests was from an investor who had put up about 25 percent of the funds' money.

The decision by Devaney, 37, follows the collapse of two hedge funds run by Bear Stearns Cos., which also lost money amid a plunge in bonds backed by subprime mortgages. As the Bear Stearns funds faltered, prices of the securities tumbled on concern the bonds would be dumped on the market at fire sale prices. Owners of similar securities may face $90 billion in losses, Deutsche Bank AG analysts predicted June 29.

``People are very nervous about how deep the revaluations of these securities will have to go,'' said Virginia Parker, who helps advise about $1.8 billion in client money at Parker Global Strategies LLC in Stamford, Connecticut. ``These positions didn't get marked down until June. Nobody's hand was forced in the market until then.''

59 comments:

Anonymous said...

Well, well, well...

The liquidity machine begins to go in reverse...

Who would have ever thought THAT was possible?

Bet that 25% investor is MIGHTY PISSED OFF right about now. "WHAT DO YOU F-ING MEAN I CAN'T CASH OUT?!?"

Oh but wait, he must have a tin foil hat on, huh?

HauspocalypseNow said...

Hey so what happens to the suckers who gave money to the hedgies? They stop getting thier 20% interest payment per quarter and FREAK OUT then try to dump? Apparently some are not waiting.

Id like to hear stories from screwed hedge fund investors, i guess they are mostly instituions and thus would want to hide massive losses of OPM.

Anonymous said...

There's gotta be a way to make money on the way down

Short the banks?

My Quid said...

NEW YORK (AP) -- The dollar fell to a 26-year low against the British pound Monday ahead of an expected rate hike by the Bank of England later this week.

The pound rose to $2.0173 -- its highest level versus the dollar since June 1981 -- in New York trading before retreating to $2.0165. The dollar also dropped to within a cent of its all-time low versus the euro, as rising global interest rates made the currency less attractive to investors.

Anonymous said...

Anonymous said...
There's gotta be a way to make money on the way down

Short the banks?

July 03, 2007 9:53 AM

================================

Yeah, short the bejesuits out of WM and their portfolio of pay option mortgages. Or Bank of America and Citibank and their mountains of CDO crap. But then again their trading divisions are probably shorting the heck out of their own stock...

Things are different said...

6:11am: Futures point to positive start after past session's big gains; improved sentiment lifts global markets.

So there! There is no problems. Everyone go home.

Overheard said...

25% investor to hedge fund manager:

Can't get out? What do you mean I can't get out?!?

Look, I just started a class in Chuck Norris crap last month and I'm a frickin' pink belt. Do you know what that means? I'm not just gonna kick your *$$, but it's gonna take all day because I don't know what I'm doin' which is just gonna make it that more painful for you.

Anonymous said...

I dunno about all that. It's happened before, see S&L "crisis". Life didn't end. This too shall pass. Oh and in 10 years from now, it will happen again.

Perspective people, perspective.

Anonymous said...

The pound rose to $2.0173 -- its highest level versus the dollar since June 1981 -- in New York trading before retreating to $2.0165

==================================

Since 1981? HUH? You mean the end of the world was here 21 years ago yet somehow we survived? History's funny like that inasmuch as it repeats itself over and over and over.

You sound like the global warming alarmists. Today was the hottest day recorded....since 1923 therefore global warming is real. Hmmm which means it was hot as shit in 1923 and the fact it's hot this year doesn't really mean a hell of a lot.

Anonymous said...

For what it is worth, proshares offers a double-short financials sector ETF.

I might throw 500 bucks into it - just for laughs.

Mr Shorts

Anonymous said...

Since 1981? HUH? You mean the end of the world was here 21 years ago yet somehow we survived? History's funny like that inasmuch as it repeats itself over and over and over.

You sound like the global warming alarmists. Today was the hottest day recorded....since 1923 therefore global warming is real. Hmmm which means it was hot as shit in 1923 and the fact it's hot this year doesn't really mean a hell of a lot.

July 03, 2007 11:20 AM
==================================
I dont count myself amoung the global warming crowd but I do think that our economy has been collapsing over the last 3 decades. Each time a bubble has burst (like the S&L's in the late 1980's) policy response to these crisis has only made the inevitable that much worse.
I liken this decades long crash to a guy jumping off a large sky scrapper, half way down he thinks to himself "So Far so good".
When we finally hit bottom it will be ugly. Like nothing ever seen before in all human history.

But there is no productive economy underneath this pile of worthless paper.

Anonymous said...

Hedge funds, mutual funds, CDO's - my head hurts - I don't understand any of this mumbo-jumbo! Thank God the new season of American Idol starts soon so that I can focus my simple mind on more important things, such as "Who is going to be America's next Taylor Hicks?"

SPECTRE of Deflation said...

The 6 month once again has a higher yeild than a 10 year. We are inverting once again. Anyone at the switches?

Happy European said...

But who the .... is still buying all these stocks (stock markets beating records all over the world).

It should be cristall clear that this is not sustainable, but somehow, levitation seems to be at work.

Anonymous said...

But there is no productive economy underneath this pile of worthless paper.

July 03, 2007 12:16 PM

===================================

What is your definition of "productive"? I'm guessing it is manufacturing. There is this myth that because manufacturing is gone from the US somehow our economy is not productive or real. Tell that to the Swiss who aside from a watch here and there make nothing yet have the highest standard of living in the world.

What would you rather have in the US? Jobs at google or jobs in a factory? Wall St jobs or jobs in a steel mill? Jobs at KPMG or jobs at a textile plant? Personally I say send all the manufacturing overseas where it can be done for a fraction of the cost here. Only people afraid of that are those with no skills other than the ability to push a button in a manufacturing plant. Well tough shit for you, there is no reason why you should make $25 when someone in China can make $2.5 doing the exact same thing.

The same doom and gloom nonesense was shouted in the 80s. Remember when the Japanese were going to take over? Remember when our debt was going to kill us? Remember when the '87 crash was supposed to send us back to the 1930s? All those predictions were wrong. And all this doom and gloom talk today will be laughed at 20 years from now as well.

So the housing market is tanking after a big boo, big deal. It tanked in the 70s after a big boom, tanked in the late 80s/early 90s after a big boom too. Here is a bold prediction, will tank in the 2010s and/or 2020s after yet another big boom

It's not different this time. It's never different this time. It is always the same as it has been before. Only things that changes are the names of the players, the game is always the same.

Roccman said...

"I dunno about all that. It's happened before, see S&L "crisis". Life didn't end. This too shall pass. Oh and in 10 years from now, it will happen again.

Perspective people, perspective. "

ummmmmmmmmmmm...in 10 years you won't be able to by gas at ANY price.

Perspective people, perspective...

BTW

Enjoy the dieoff moron - when flys are buzzing around your kids eyes because they have not eaten for a month - you keep reminding yourself "how this too shall pass".

Anonymous said...

BEARX FUND

Luv-that -Lil-Bush said...

Anonymous said...

But there is no productive economy underneath this pile of worthless paper.

July 03, 2007 12:16 PM
----------------------------------
Wow. You got that right. The US economy is composed of people passing paper back and forth, looking for the greater fool.

Anonymous said...

HauspocalypseNow said...

Hey so what happens to the suckers who gave money to the hedgies? They stop getting thier 20% interest payment per quarter and FREAK OUT then try to dump?
-------------------------------
It couldn't have happened to a nicer bunch of people.

Anonymous said...

roccman you need to get a hobby, seriously

Anonymous said...

Check this guy out...

http://tinyurl.com/yrdus7

Seems he has been playing Russian Roulette now for years, and making a killing at it.

Yea, I'm jealous.

Mark in San Diego said...

Marketwatch - "more people fall behind on debt-payments" - especially HELOCS!!!. . .just as I predicted . . .but. . .they are paying car loans and credit cards. . .why - a house is just a home, but your car takes you to work. . .

I read a report that said poor people will just walk away from their home, because they have nothing invested (think 100% loans) but they pay their car loans, and credit cards. . .why?. . .you can always move in with relatives, friends, or get a cheap apartment, but you must keep your job and car. So - can we say MINUS household formations???. . .more empty homes.

stuckinthecity said...

And yet in Chicago no one lowers their asking price......

Roccman said...

"roccman you need to get a hobby, seriously"

Got one fool.

whatz ur hobbie??

...house flipp'n...

stamp collec'tn...

pat'n useless eaters on the back telling them they are actually worth something??

STFU and enjoy the die off!!

popcorn please

Anonymous said...

The same doom and gloom nonesense was shouted in the 80s. Remember when the Japanese were going to take over? Remember when our debt was going to kill us? Remember when the '87 crash was supposed to send us back to the 1930s?
--

Ya, I remember the recession in 1990's. I remmeber Bush The First got ousted. I remember Clinton fixing everything. I remember Bush II sealing 2 US elections. I will remember all of this over and over and over again....

SPECTRE of Deflation said...

China's Central Bank to `Moderately' Tighten Monetary Policy

http://www.bloomberg.com/apps/news?pid=20601080&sid=aGodD2jrWME8&refer=asia

By Li Yanping

July 3 (Bloomberg) -- China's central bank said it will ``moderately'' tighten monetary policy to control investment and lending growth and prevent the economy overheating this year.

The statement was posted on the bank's Web site today after a monetary policy meeting for the second quarter.

The bank reiterated pledges to continue to reform its exchange-rate system and to give the market a bigger role in setting the yuan's rate.

If they quit carrying the water on Treasuries, rates are set to go much higher in order to attract capital to our debt addicted nation.

Anonymous said...

From http://tinyurl.com/yrdus7:

Devaney says he earned $5 million his first year in business, almost solely from these high-LTV trades; he immediately began diversifying, setting up United Real Estate Ventures. Today the unit's holdings include houses in the Bahamas and Key Biscayne; among them is the art deco manse used in the filming of the 1983 remake of gangster film Scarface. The Devaneys plan to move into it once it's renovated.

You can't make this stuff up!!

SPECTRE of Deflation said...

US consumers pay highest energy bills in decades [Since 1987]
High oil prices are dampening consumer confidence.

http://www.csmonitor.com/2007/0702/p01s01-usec.html

Didn't something bad happen in 1987?

Anonymous said...

The same doom and gloom nonesense was shouted in the 80s.

My grandfather worked, but my grandmother didn't. Still my grandparents saved up a lot of money, even with children.

My father worked, but my mother didn't. Still my parents saved up a lot of money, even with children.

Today's reality is that wife and husband must work. They can't save up money, even with children.

Anonymous said...

Key home sale index slides to 6-year low
Reading of pending home sales sinks to lowest since September 2001, suggesting more pain for the housing market.
July 3 2007: 10:47 AM EDT


NEW YORK (CNNMoney.com) -- Existing home sales are likely to see more declines in coming months as a key reading of pending deals fell to nearly a six-year low in May, a real estate group said Tuesday

Shane Yancre said...


...there is no productive economy underneath this pile of worthless paper.


<shovel>
<shovel>
<shovel>

There must be an economy in here somewhere...

<shovel>
<shovel>
<shovel>

Anonymous said...

Keith & All,

Gotta read this - sent chills down my spine...

http://tinyurl.com/33uplg

bickerer said...

Question - From what I've learned from this blog, the housing mess and rampant speculation is way further out of control in UK than in US.

Going into the future is this going to hose their currency also? Or is a lack of a voracious credit consumer population the difference.

Anonymous said...

What is your definition of "productive"? I'm guessing it is manufacturing. There is this myth that because manufacturing is gone from the US somehow our economy is not productive or real. Tell that to the Swiss who aside from a watch here and there make nothing yet have the highest standard of living in the world.

What would you rather have in the US? Jobs at google or jobs in a factory? Wall St jobs or jobs in a steel mill? Jobs at KPMG or jobs at a textile plant? Personally I say send all the manufacturing overseas where it can be done for a fraction of the cost here. Only people afraid of that are those with no skills other than the ability to push a button in a manufacturing plant. Well tough shit for you, there is no reason why you should make $25 when someone in China can make $2.5 doing the exact same thing.
================================
Can you google "steak" and can google deliver you a cooked steak via the internet? Can you get your healthcare needs delivered by Google? There is not now nor will there ever be a healthy society that does not produce for the needs of their population.

The real productive side of the US economy has been contracting at a rate of 1% to 2% per year since 1970. Thats why it cost you a greater share of your income for food, clothing, healthcare, education than it did say in 1966.

So your idea that you can replace a skilled workforce with off shore slave labor is a misguided.

We are a self doomed society operating under radical and false axiomatic assumptions, which didnt even exist say at the time of JFK. Which by the way was the last period that the United States showed any real economic growth.

Our productive economy has been contracting for 40 years while the financial paper or obligations against real wealth production has gone through the roof.

You do know that any profit from say derivatives, bonds, stock etc. has to be paid from production. There is no other source of wealth.

showmenouns said...

JOHN DEVANEY, bond trader. Let's keep an eye on this clown.

Anonymous said...

die off? LOL!! roccman like I said before, get a hobby. Anything. Stamp collecting, restoring old cars, anything. You are obviously cracking up and need a change.

Anonymous said...

Today's reality is that wife and husband must work. They can't save up money, even with children.

July 03, 2007 4:30 PM

===================================

Bullshit! You are talking about a rality that didn't exist then and doesn't exist now. My parents both worked when I was young in the late 70s and early 80s. On the other hand in my circle of friends 80% of the wives don't work and stay home with the kids.

Next thing you know you'll tell me about when movies cost a dime and you have to walk 10 miles to school in 2 feet of snow, uphill both ways.

Save the melodrama.

Anonymous said...

The real productive side of the US economy has been contracting at a rate of 1% to 2% per year since 1970. Thats why it cost you a greater share of your income for food, clothing, healthcare, education than it did say in 1966.

So your idea that you can replace a skilled workforce with off shore slave labor is a misguided.

We are a self doomed society operating under radical and false axiomatic assumptions, which didnt even exist say at the time of JFK. Which by the way was the last period that the United States showed any real economic growth.


=================================

That is an absurd comment. The production of steak, in everything from raising the cow to slaughter to transportation to cooking is much more efficient today than it was in the 1970s. A steak today as a % of median income is also cheaper than it was in the 1966.

Obviously you have no formal education in the field of economics. Look up the phrase comparative advantange, you might learn something.

Anonymous said...

BWA HA HA HA. Yeah Clinton fixed everything. He raised taxes and presided over the .com bubble all the while ignoring islamofascists. So they blow up the WTC in 1993, why worry? So the NASDAQ grows at 25% a year? What me worry about bubbles? So US Embasies in Africa get blown up killing hundreds? Too busy to worry about that stuff. USS Kole blown up, what me worry?
All that Clinton fixed was the sexual appetite of a fat whore.


Ya, I remember the recession in 1990's. I remmeber Bush The First got ousted. I remember Clinton fixing everything. I remember Bush II sealing 2 US elections. I will remember all of this over and over and over again....

July 03, 2007 3:54 PM

Jerj said...

So, who's next? I am trying to get an inside scoop on the purported "hedge fund in trouble"....we'll see....

Ron said...

Blah blah blah....yeah and we had a Great Depression and we lived through that. Some huge differences in that though and the prosperous years of this Country have not been that long, nor structured for long term health. We could have another depression, however our Gov is far different and has no reserves to employ the masses as we did previously. Just because something similar happened previously doesn't mean that if it came around again it would be the same. Anyway...whatever.

edd said...

Confewshun say ...

'Dollar saved is quarter earned.'

'What kills you makes you weaker.'

'Make good car or buy Hyundai.'

freakoids infested said...

A little hedge fund nobody has ever heard of collapses. Big deal. The Albertsons down the street shut down. The world is coming to an end.

dufus mcpanic said...

Clinton fixed everything. I remember all those laws he passed to fix them...like the 1993 Bill to Fix the Economy. Then there was the 1998 Dotcom Act. Nobody should forget the Economic Prosperity For All Act of 1996. Yep he fixed everything single-handedly and businesses like Microsoft and IBM had nothing to do with it. In fact, if it wasn't for Clinton, Microsoft would be bankrupt right now and Bill Gates would be living under a bridge. Ok now back to smoking the HP weed.

Anonymous said...

hey dufus, you are nothing buy a neo-con nazi, sheep.

Clinton fixed everything all by himself, duh everyone knows that. The GOP controlling the house and senate from '94 on had nothing to do with it. Yahoo, eBay, Microsoft, AOL, Cisco, Oracle et al had nothing to do with it either. Nope, Slick Willy all by himself working in the top secret White House economics lab did it all. He hired the millions of tech workers all by himself. And lest we forget that the great Albert Gore actually invented the internet which made it all happen.

Anonymous said...

Anonymous said...

The pound rose to $2.0173 -- its highest level versus the dollar since June 1981 -- in New York trading before retreating to $2.0165

==================================
Originally the pound was .2354 ounce of gold, or about $280 US.

K.W. - Southern Ca. said...

No "doom-and-gloom" talk ... it's reality for millions of americans.

People are literally working to keep from going under - that's a sign things have gone terribly wrong in this country.

Take a look around, outside of your immediate neighborhood.

Anonymous said...
The same doom and gloom nonesense was shouted in the 80s.

My grandfather worked, but my grandmother didn't. Still my grandparents saved up a lot of money, even with children.

My father worked, but my mother didn't. Still my parents saved up a lot of money, even with children.

Today's reality is that wife and husband must work. They can't save up money, even with children.

Anonymous said...

hey drama queens and kings, do you honestly think that pre 2000 everyone in America was rich? Look at poverty rates as a % of the population and guess what...it was higher in the 50s and 60s than today. And all that with all the wonderful manufactiring jobs you all seem so nostalgic for.

For crying out loud a "poor" American is richer than 90% of the world. You want poor? Get your whiny asses over to SE Asia or Africa or Mexico or Brazil. That shit is poor. Tell a 3rd world citizen about the plight of "poor" Americans with indoor plumbing, cable TV, cell phones, internet access, 1 or 2 cars and see what their reaction is.

God almighty someone needs to slap some reality into you.

Keyser Soze said...

As far as shorting banks...be careful...no smart banker would keep any of this sub-prime garbage in their portfolio, excluding a WaMu or CFC. You'll need to also look at the loan to asset ratio, alog with the reserve ratio, and see how much is leftover for investments, which could possibly hold a few stinky CDO's. In a nutshell, you'll need to look at both the loan portfolio and investments of each bank to determine it's risk.

Anonymous said...

This scenario reeks of the movie Boiler Room. When some investor gets queasy about being in a generic pump stock because it's going down and wants to sell, the words from the sweatshop manager is "No one sells!" Even Tony Soprano would admire the stunt.

Keyser Soze said...

I meant to say loan/deposit ratio, not loan/asset. Sorry, it's been 12 years since I worked at a bank.

Shakster said...

Kinda like winning a large bet in Vegas then having the goons at the casino escort you out without collecting your winnings. They can even refuse to pay if they see fit,and there isn't much you can do about it.The 25% investor never saw that one coming.

Anonymous said...

I didn't quite understand this when I read it at Bloomberg.

What are "redemptions"?

Anonymous said...

Re: Anecdotal Global Warming evidence.

This winter we broke the all time record LOW temperature, 8 degrees in Lake Arrowhead, California.

If the earth is warming up, it isn't showing up here.

I have one big question. If the average temperature of the planet was rising faster than normal in the 20th century, why isn't sea level rising faster than normal?

http://en.wikipedia.org/wiki/Sea_level_rise

The IPCC notes, however, "No significant acceleration in the rate of sea level rise during the 20th century has been detected."

(There has been a slow rise since the last ice age but no acceleration due to humanity).

Anonymous said...

Yeah we work more than your grandfather did, probably because Pops didn't have a credit card to get himself in over his head.

In one way, some credit is good. It motivates people to work. If you're in debt and need to get out, you are motivated to do more than drink Cuervos on the beach.

Anonymous said...

hey drama queens and kings, do you honestly think that pre 2000 everyone in America was rich?
================================
NO.

Shakster said...

Anonymous said...
hey drama queens and kings, do you honestly think that pre 2000 everyone in America was rich?
================================
NO.
---------------------------------

Are you a teenager ,or just silverspooned?
Yeah we survived the deep recessions of the late 70s,gas crisis,and all that,but man it sucked. This time will be much deeper,and even you will notice.Homeowner insurance,and auto insurance must seem stupid to you.Look at all those tin hats driving around with insurance,idiots.

Anonymous said...

I wonder how long it would have taken the U.S. to climb up out of the Great Depression without all of our industry just sitting idly by (instead of overseas like now)?

Anonymous said...

"I wonder how long it would have taken the U.S. to climb up out of the Great Depression without all of our industry just sitting idly by (instead of overseas like now)?"

You are right on with that. Back during the great depression, we had a large trade surplus. We exported oil, and had some cool American made cars. We made the best stuff in the world.
We didn't have 12 million illegal aliens, and there were no WMD's. We had Hitler and Hirohito sure! But we had the resolve to deal with them!