Can't Fix Stupid
Sung to "Just whistle while you work"...
Today, ECB pumping another $65 Billion into their banking system; dropping in $280 Billion in 3 days.
"Put on that grin and start right in to whistle loud and long"...
Goldman Sachs the most profitable securities firm and 2nd largest hedge fund manager, reporting their that Global Equity Opportunities Fund lost 28% this month.
Fund assets have dropped from $5 Billion to $3.6 billion in the past two weeks alone.
"Just whistle while you work... and cheerfully together we can tidy up the place"...
GS will invest $2 billion of its own cash to shore up its largest hedge fund, also $3 billion will come from outside investors...
such as Hank Greenberg, the former chairman of AIG and billionaire Eli Broad who together will put about $1 billion into the hedge fund.
"Just hum a merry tune"... Goldman states:
"current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals."
Yo Dwarfs, stop the music cause Snow White must have took a bite from an apple laced with crack...
Shouldn't that statement read: The value of the assets underlying the funds were NEVER supported by ANY fundamentals?
Thanks Dwarfs, now get over to the railroad, theres more work to be done...
We have recently commented on several key items:
1. the credit crunch spreading to ABCP (asset backed commercial paper).
2. $400 Billion caught in the LBO pipeline sitting on conduit (bridge or warehouse) bank books.
3. 21% of RMBS owned by commerical banks
4. What happens if? (see yesterday's post Captain Crunch & The Kona Pipeline)
5. The possibility of widespread banking failure ala 1930's.
Today, Fleck sees the same wave coming, as he connects the dots and hits the nail on the head in "Credit Problems Too Big for the Fed to Fix":
Alrighty Dwarf's crank it up again... "I been wukkin' on de railroad..."
"The German bank IKB imploded two weeks ago, it was revealed that they had about $17 billion in subprime exposure and had lost $3 billion.
IKB held these structured-credit assets in a conduit, which is a version of a special-purpose entity that banks use to own structured credit. More importantly, conduits are funded in the commercial-paper market.
With some of these ABCP conduits, a certain opaque nature exists surrounding the nonstandard methods of reporting or the standard definitions of certain asset types.
"All de livelong day"...
So, one's not always sure exactly what type of collateral exists inside the conduit.
(Nattering: Nor the value of the collateral as these "conduits" are the same accounting entities which brought down ENRON, they are black boxes or holes.)
ABCP has grown very dramatically in the past 15 years or so, and no investor has ever lost money.
"Doan' yuh hyah de whistle blowin'?"
Hopefully, cool heads will prevail, as most money-market funds hold 50% to 75% ABCP,
and banks or financial institutions are obligated to support nondefaulted -- and in some cases even defaulted -- assets in the conduits.
So, implications for the financial system are large.
"Doan' yuh hyah de cap'n shouin'?"
More than a few outfits may discover that the triple-A pieces of paper they thought were worth 100 cents on the dollar are worth only, say, something in the 70s.
I think we'll discover that some money-market funds owned commercial paper issued by a conduit whose assets may not be up to snuff.
So folks with a lot of assets in money-market funds might want to double-check that they know what's in them."
"Dinah, blow yo' hawn?"
Speaking of money market funds & mortgage backed securities: as reported Saturday in these pages, mortgage lender HomeBanc filed BK, the largest stockholder? FMR Corp.
Drum roll please... FMR is the parent of Fidelity Investments. Oh yeah, this is gonna be a real Dean Martin Xmas Party, so no flippin...
Today, ECB pumping another $65 Billion into their banking system; dropping in $280 Billion in 3 days.
"Put on that grin and start right in to whistle loud and long"...
Goldman Sachs the most profitable securities firm and 2nd largest hedge fund manager, reporting their that Global Equity Opportunities Fund lost 28% this month.
Fund assets have dropped from $5 Billion to $3.6 billion in the past two weeks alone.
"Just whistle while you work... and cheerfully together we can tidy up the place"...
GS will invest $2 billion of its own cash to shore up its largest hedge fund, also $3 billion will come from outside investors...
such as Hank Greenberg, the former chairman of AIG and billionaire Eli Broad who together will put about $1 billion into the hedge fund.
"Just hum a merry tune"... Goldman states:
"current values that the market is assigning to the assets underlying various funds represent a discount that is not supported by the fundamentals."
Yo Dwarfs, stop the music cause Snow White must have took a bite from an apple laced with crack...
Shouldn't that statement read: The value of the assets underlying the funds were NEVER supported by ANY fundamentals?
Thanks Dwarfs, now get over to the railroad, theres more work to be done...
We have recently commented on several key items:
1. the credit crunch spreading to ABCP (asset backed commercial paper).
2. $400 Billion caught in the LBO pipeline sitting on conduit (bridge or warehouse) bank books.
3. 21% of RMBS owned by commerical banks
4. What happens if? (see yesterday's post Captain Crunch & The Kona Pipeline)
5. The possibility of widespread banking failure ala 1930's.
Today, Fleck sees the same wave coming, as he connects the dots and hits the nail on the head in "Credit Problems Too Big for the Fed to Fix":
Alrighty Dwarf's crank it up again... "I been wukkin' on de railroad..."
"The German bank IKB imploded two weeks ago, it was revealed that they had about $17 billion in subprime exposure and had lost $3 billion.
IKB held these structured-credit assets in a conduit, which is a version of a special-purpose entity that banks use to own structured credit. More importantly, conduits are funded in the commercial-paper market.
With some of these ABCP conduits, a certain opaque nature exists surrounding the nonstandard methods of reporting or the standard definitions of certain asset types.
"All de livelong day"...
So, one's not always sure exactly what type of collateral exists inside the conduit.
(Nattering: Nor the value of the collateral as these "conduits" are the same accounting entities which brought down ENRON, they are black boxes or holes.)
ABCP has grown very dramatically in the past 15 years or so, and no investor has ever lost money.
"Doan' yuh hyah de whistle blowin'?"
Hopefully, cool heads will prevail, as most money-market funds hold 50% to 75% ABCP,
and banks or financial institutions are obligated to support nondefaulted -- and in some cases even defaulted -- assets in the conduits.
So, implications for the financial system are large.
"Doan' yuh hyah de cap'n shouin'?"
More than a few outfits may discover that the triple-A pieces of paper they thought were worth 100 cents on the dollar are worth only, say, something in the 70s.
I think we'll discover that some money-market funds owned commercial paper issued by a conduit whose assets may not be up to snuff.
So folks with a lot of assets in money-market funds might want to double-check that they know what's in them."
"Dinah, blow yo' hawn?"
Speaking of money market funds & mortgage backed securities: as reported Saturday in these pages, mortgage lender HomeBanc filed BK, the largest stockholder? FMR Corp.
Drum roll please... FMR is the parent of Fidelity Investments. Oh yeah, this is gonna be a real Dean Martin Xmas Party, so no flippin...
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