The reason for Bear Sterns demise was overleveraged. Their hedge funds were overleveraged and their bank took away the credit lines and their assets became illiquid and customers started to withdraw money cause they want to cash out in a recession. Funds need to manage the risk of customer withdrawals and illiquid markets.
either they manage their books or face insolvency like any other business. any robot computer can start a hedge fund in bull markets and trade.
Excellent Commentary All ............................................................................. You already know what is going to happen..... Look the funny money made by Fuld and other for several years from third tier assets (you do not know what I got, and you ain't findin out either) including Paulson.... dwarfs this money.... They will most likely find some small scapegoat and glean away his livlihood..... Same crap.... S ecure E mployee C ompensation Remember when I worked at the SEC.....how about a real paying job....at your company that has the fat checks..... Us police gotta watch out for each other...... Wink....wink....wink wink wink....wink wink..... Hey....and anybody gets too cute.....we gotta Congressman that owes us.... wink....wink wink wink.... FO
It's just like Chess. there is a more powerful force until you get to the Queen. The Queen is the Dept of Justice, and nobody, when the Grand Jury gives them the Subpoena, is over the DOJ. Soon, my children. Soon.
Incorrect. They were leveraged so much because they had no reason to not be: they had great lines of credit and were operating fine. It's only when the rumors started that the credit lines were pulled, meaning they couldn't get loans to keep their positions open. If they could have kept those rolling loans they would have been fine, but the underwriters got scarred because of the "rumors" and pulled the financing. You make money by using leverage. If someone pulls the carpet out from under you for no reason other then some bad information, there is nothing you can do.