Monday, October 06, 2008 3:56:42 PM
John Manley sez "seal the pipes"
i don't pretend to understand the nuances, but the counterparty risk still seems to be a major issue keeping people from loaning their money out.
they have to bring some transparency into the unregulated credit default swap market... don't know how they can do it, but if they can coordinate a solution to those credit WMDs, we will have a resounding rally
Dow claws itself back above 10,000
may hold after final settlement
Read this: It's The End Of The World As We Know It
"By now you've heard that BNP Paribas has suspended redemptions on three of its hedge funds, telling investors that problems in the US sub-prime mortgage sector have made it "impossible to value certain assets fairly."
The funds had about 2 billion euros or $2.76 billion of assets. Or, you know, was pretty sure it did. Those assets included something like 700 million euros in securitized debt products rated AA or higher. But now it says that it has no idea what the assets might be worth. And, well, we've all learned that those debt ratings aren't all they're cracked up to be.
To make matters worse, the funds have ridiculous French names like Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. We're thinking of just calling them "Freedom Funds."
"Remember those pictures from the Great Depression? The ones where the banks had to lock their doors because depositors were rioting to withdraw their savings. That's what we've got right now," one particularly morose money manager told DealBreaker.
Another described this morning as a "Rumsfeld moment."
"There are known unknowns and unknown unknowns. And now we're discovering there are a lot more unknown unknowns than anyone thought," the manager said.
The announcement hit the European stock markets hard, and it's putting huge downward pressuring on US equities futures. LIBOR leaped upward. US Treasuries shot up. The European Central Bank has already reacted by injecting Euros into the market and throwing the debt window wide open. The Fed is also throwing out some more money. No doubt central bankers hope that the move will hold off an even broader sell-off. But it may just further obscure asset valuation and create additional capital misallocation.
One factor that hasn't been getting a lot of attention yet is the risk to counterparties. Depending on how much leverage the freedom funds employ, banks that have lent them money may now be facing a "collateral crunch"—a situation where they can't evaluate their own risk because their clients have no idea what their assets are worth. This concern could hit many other hedge funds, as counter-parties attempt to manage their risk by re-evaluating collateral valuations."
http://www.dealbreaker.com/2007/08/its_the_end_of_the_world_as_we.php
Now look at the date!
over a 14mo ago.
It's The End Of The World As We Know It
BNP Paribas Suspends Redemptions And Sets Off Panic
Posted by John Carney, Aug 09, 2007, 9:02am
i don't pretend to understand the nuances, but the counterparty risk still seems to be a major issue keeping people from loaning their money out.
they have to bring some transparency into the unregulated credit default swap market... don't know how they can do it, but if they can coordinate a solution to those credit WMDs, we will have a resounding rally
Dow claws itself back above 10,000
may hold after final settlement
Read this: It's The End Of The World As We Know It
"By now you've heard that BNP Paribas has suspended redemptions on three of its hedge funds, telling investors that problems in the US sub-prime mortgage sector have made it "impossible to value certain assets fairly."
The funds had about 2 billion euros or $2.76 billion of assets. Or, you know, was pretty sure it did. Those assets included something like 700 million euros in securitized debt products rated AA or higher. But now it says that it has no idea what the assets might be worth. And, well, we've all learned that those debt ratings aren't all they're cracked up to be.
To make matters worse, the funds have ridiculous French names like Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. We're thinking of just calling them "Freedom Funds."
"Remember those pictures from the Great Depression? The ones where the banks had to lock their doors because depositors were rioting to withdraw their savings. That's what we've got right now," one particularly morose money manager told DealBreaker.
Another described this morning as a "Rumsfeld moment."
"There are known unknowns and unknown unknowns. And now we're discovering there are a lot more unknown unknowns than anyone thought," the manager said.
The announcement hit the European stock markets hard, and it's putting huge downward pressuring on US equities futures. LIBOR leaped upward. US Treasuries shot up. The European Central Bank has already reacted by injecting Euros into the market and throwing the debt window wide open. The Fed is also throwing out some more money. No doubt central bankers hope that the move will hold off an even broader sell-off. But it may just further obscure asset valuation and create additional capital misallocation.
One factor that hasn't been getting a lot of attention yet is the risk to counterparties. Depending on how much leverage the freedom funds employ, banks that have lent them money may now be facing a "collateral crunch"—a situation where they can't evaluate their own risk because their clients have no idea what their assets are worth. This concern could hit many other hedge funds, as counter-parties attempt to manage their risk by re-evaluating collateral valuations."
http://www.dealbreaker.com/2007/08/its_the_end_of_the_world_as_we.php
Now look at the date!
over a 14mo ago.
It's The End Of The World As We Know It
BNP Paribas Suspends Redemptions And Sets Off Panic
Posted by John Carney, Aug 09, 2007, 9:02am
TRADING: "More Signal...less Noise"
LIVING: "One World, One Family, Warm Heart" Dalai Lama
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