"Bear Stearns Cos., manager of two hedge funds that collapsed last month, halted redemptions from a third fund after a slump in credit markets prompted investors to demand their money back."
Today, more Bear Stearns' hedge funds filed for bankruptcy:
"Two Bear Stearns Cos. hedge funds heavily exposed to the flagging mortgage industry filed for bankruptcy protection late Tuesday, two weeks after the company told investors one was essentially worthless and the other had lost more than 90 percent of its value."
"The funds were squeezed after Bear Stearns made wrong-way bets on the home mortgage market and was caught as loans to risky investors began to default."
"Bear Stearns is the nation's fifth-largest investment bank and specializes in mortgage-backed securities."
Is it only a matter of time before the company goes belly up? The more news that comes out, the more it looks that way. Meanwhile, investors have deemed other investment bank assets "junk":"On Wall Street, Bear Stearns Cos., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Goldman Sachs Group Inc., are as good as junk."
"The highest level of defaults in 10 years on subprime mortgages and a $33 billion pileup of unsold bonds and loans for funding acquisitions are driving investors away from debt of the New York-based securities firms. Concerns about credit quality may get worse because banks promised to provide $300 billion in debt for leveraged buyouts announced this year."
I wonder what James Altucher thinks about all this? I bet he'll say that Goldman Sachs is a screaming buy.
3 comments:
It is going to get a lot worse.
The mortgage problem sub prime is just the tip of the iceberg.
Goldman, KKR, Blackstone,Carlyle and others have paid way to much for crap businesses and unloaded real bad paper on dumb bankers. 80's dejavue suckers.
I couldn't agree with you more. It reminds me of the savings and loan debacle. It's a variation of rising interest rates devaluing exotic securities.
And people said the problems were contained. Even today there's an article with Henry Paulson trying to assure us that the subprime problems are contained. Yeah, they're contained alright. They're contained in the banking industry and the mortgage industry and the housing industry.
And they'll be even more contained after more adjustable mortgage rates begin reseting.
LIQUIDITY ALARM BELLS SOUND
FT AUG 2
Macquarie one of Australia's biggest banks just announced that its customers will lose 25% of their money due to investments in senior secured corporate loans used to finance leveraged debt in private equity backed buyouts, not sub prime debt in the USA housing market,
"In many ways this is similar to the LTMC crisis of 1998" Melt down
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