Thursday, July 19, 2007

The true ‘Fundamentals’ – It’s one HUGE credit driven bubble!

Here comes the credit crunch!

It’s taken weeks for its analysts to figure out, but investment bank Bear Stearns has finally unveiled the extent of the losses suffered by investors in its beleaguered hedge funds. The revelation that there was practically no value left in the funds sent markets reeling. But this could just be the beginning… Bear Stearns yesterday revealed to the world just how much value was left in its two hedge funds that were invested in subprime mortgage debt. Investors in the most highly leveraged fund will get none of their money back. Investors in the less risky one, will get nine cents for every dollar they put in - in other words, they’ve lost 91% of their money.

Posted by tyrellcorporation @ 10:27 AM (608 views)
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One thought on “The true ‘Fundamentals’ – It’s one HUGE credit driven bubble!

  • And the dirty secret about this is that Bear Stearns just marked-to-market the whole CDO fiasco.
    This means that Banks, with 60% of the CDO market as holdings, are not worth as much as they thought.
    From a Liquidity Covenant point of view, this means that they may have to sell other assets to keep enough liquid cash on hand to maintain these covenants (that their total asset base covers their liabilities).

    Now if you follow this, you see the disaster that is unfolding.

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