Let Them Eat Cake
TrimTabs BarclayHedge Fund report: Investors pulled an estimated $32 billion out of hedge funds in July, the most since 2000, and August could be even worse.
Funds of hedge funds saw an estimated $55 billion, or 5% of their estimated assets of $1.2 trillion, flowing out, according to the report.
Complete data for August won't be available until later in September, but outflows could be even greater.
Insider information... Most hedge funds require a 30-day to 60-day redemption notice, so requests for July redemptions actually began in May and June.
It is likely that the requests for redemptions from funds of hedge funds triggered the hedge fund unwinding and market drop since July 23.
The ABCP market has since collapsed and numerous hedge funds could not meet their redemptions due to solvency issues.
Hedge funds knew by early August what the amount of redemption requests would be by the end of August for September and October.
The Nattering One has mused before on risk mitigation and group behaviour... Charles Biderman, chief executive of TrimTabs:
"To justify their fees, funds of funds tend to trade their assets frequently. In addition, many funds of funds leverage their assets using bank debt.
Add leverage to an industry in which countless imitators copy yesterday's unique investment style, and the law of unintended consequences rears its ugly head."
Synapse High Grade ABS Fund was closed and some assets have been sold.
The fund's main investor was SachsenLB, the German lender that was rescued last month by fellow state-owned banks.
Synapse was forced to shut the ABS fund after SachsenLB asked for its money back.
SachsenLB joined Germany's IKB Deutsche Industriebank AG in getting funding to help guarantee commercial paper, debt due in 270 days or less.
Companies that rely on commercial paper are facing funding shortages as investors refuse to buy debt secured by assets including subprime mortgages.
Novastar Financial cut its retail lending staff to about 125 people from 400 and closed 12 offices.
NFI canceled a rights offering designed to raise $101.2 million and said its auditor expressed doubt about the company's survival.
Bennie & The Fed's Bailout Plea... Seeking to stem foreclosures and further solvency issues, U.S. bank regulators urged mortgage lenders to ease terms on the subprime loans they packaged into bonds.
Bennie & The Fed's and other bank regulators asked lenders to review their authority under pooling and servicing agreements to identify borrowers at risk of default...
and offer to deferr payments or convert loans to fixed rate mortgages to help them keep their homes.
The Nattering One muses... so this is the "free" market at work? What happened to "you dance, you pay the piper"? Let em eat cake...
Greedy mortgage lenders originated loans to sell rather than hold, thus not caring about the quality of property or borrower.
Countrywide Financial is the prime offender in this ponzi scheme. In doing so, they invited a group of feeble minded idiots to the homeowners table...
along with a group of flippin investor sharks. The lemmings and sharks then bid up the price of housing to unsupportable and unjustified levels.
As the unworthy debtors have just begun to fail, the toxic loans have metastisized into an asset backed debt market cancer which is just starting to take its solvency toll on the greedy debt holders.
Unfortunately as always, there is collateral damage in the crossfire, the innocent families which did not want to flip and profit, but just wanted to own a home.
Not one ounce of mercy should be shown to any institution, investor or individual which originated, sold or bought said toxic debt or the assets which back them (Real Estate).
The only exception should be individuals which purchased and lived in ONE primary residence; and did not pull the bulk of the equity out to reinvest or live beyond their means.
The rest, all rose together, and now they should be allowed to fall, vis a vis natural market equilibrium.
Our Nattering Plea, no bailouts, let the greedy bastards get what they deserve, thats a "free" market at work. Let em eat cake, shit cake that is.
Funds of hedge funds saw an estimated $55 billion, or 5% of their estimated assets of $1.2 trillion, flowing out, according to the report.
Complete data for August won't be available until later in September, but outflows could be even greater.
Insider information... Most hedge funds require a 30-day to 60-day redemption notice, so requests for July redemptions actually began in May and June.
It is likely that the requests for redemptions from funds of hedge funds triggered the hedge fund unwinding and market drop since July 23.
The ABCP market has since collapsed and numerous hedge funds could not meet their redemptions due to solvency issues.
Hedge funds knew by early August what the amount of redemption requests would be by the end of August for September and October.
The Nattering One has mused before on risk mitigation and group behaviour... Charles Biderman, chief executive of TrimTabs:
"To justify their fees, funds of funds tend to trade their assets frequently. In addition, many funds of funds leverage their assets using bank debt.
Add leverage to an industry in which countless imitators copy yesterday's unique investment style, and the law of unintended consequences rears its ugly head."
Synapse High Grade ABS Fund was closed and some assets have been sold.
The fund's main investor was SachsenLB, the German lender that was rescued last month by fellow state-owned banks.
Synapse was forced to shut the ABS fund after SachsenLB asked for its money back.
SachsenLB joined Germany's IKB Deutsche Industriebank AG in getting funding to help guarantee commercial paper, debt due in 270 days or less.
Companies that rely on commercial paper are facing funding shortages as investors refuse to buy debt secured by assets including subprime mortgages.
Novastar Financial cut its retail lending staff to about 125 people from 400 and closed 12 offices.
NFI canceled a rights offering designed to raise $101.2 million and said its auditor expressed doubt about the company's survival.
Bennie & The Fed's Bailout Plea... Seeking to stem foreclosures and further solvency issues, U.S. bank regulators urged mortgage lenders to ease terms on the subprime loans they packaged into bonds.
Bennie & The Fed's and other bank regulators asked lenders to review their authority under pooling and servicing agreements to identify borrowers at risk of default...
and offer to deferr payments or convert loans to fixed rate mortgages to help them keep their homes.
The Nattering One muses... so this is the "free" market at work? What happened to "you dance, you pay the piper"? Let em eat cake...
Greedy mortgage lenders originated loans to sell rather than hold, thus not caring about the quality of property or borrower.
Countrywide Financial is the prime offender in this ponzi scheme. In doing so, they invited a group of feeble minded idiots to the homeowners table...
along with a group of flippin investor sharks. The lemmings and sharks then bid up the price of housing to unsupportable and unjustified levels.
As the unworthy debtors have just begun to fail, the toxic loans have metastisized into an asset backed debt market cancer which is just starting to take its solvency toll on the greedy debt holders.
Unfortunately as always, there is collateral damage in the crossfire, the innocent families which did not want to flip and profit, but just wanted to own a home.
Not one ounce of mercy should be shown to any institution, investor or individual which originated, sold or bought said toxic debt or the assets which back them (Real Estate).
The only exception should be individuals which purchased and lived in ONE primary residence; and did not pull the bulk of the equity out to reinvest or live beyond their means.
The rest, all rose together, and now they should be allowed to fall, vis a vis natural market equilibrium.
Our Nattering Plea, no bailouts, let the greedy bastards get what they deserve, thats a "free" market at work. Let em eat cake, shit cake that is.
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