Comments on: Emerging Markets Capital Flight Exacerbated By Goldman and Morgan Stanley Becoming Banks http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html Sun, 22 Nov 2009 06:06:33 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: DDK http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23518 DDK Tue, 28 Oct 2008 17:49:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23518 Well, if this is the case, isn't it fortunate that the unwinding of hedge funds has not caused another LTCM type of eruption? <br/><br/>There have been plenty talks about the systematic threat posed by hedge funds. It hasn't materialized. Well, if this is the case, isn’t it fortunate that the unwinding of hedge funds has not caused another LTCM type of eruption?

There have been plenty talks about the systematic threat posed by hedge funds. It hasn’t materialized.

]]> By: thomas j http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23496 thomas j Tue, 28 Oct 2008 14:14:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23496 Matt,<br/><br/>You are the one who is delusional if you believe the US is the only country that was in denial regarding debt deflation or deleveraging. <br/><br/>Just look at the leverage ratio of European banks for starters. They are in far worse shape than their US counterparts particularly with respect to exposure to the emerging markets -- the epicenter of the current deleveraging. Matt,

You are the one who is delusional if you believe the US is the only country that was in denial regarding debt deflation or deleveraging.

Just look at the leverage ratio of European banks for starters. They are in far worse shape than their US counterparts particularly with respect to exposure to the emerging markets — the epicenter of the current deleveraging.

]]> By: Phil http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23493 Phil Tue, 28 Oct 2008 13:55:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23493 This is just another part of "Creative Destruction" <br/>Because we deal in internet speed, the demise of the hedge fund industry seems slow while the problem banks seem to be taking much longer. <br/><br/>The sooner the system is cleansed (IMO a couple of years at least) the quicker the healing can start. This is just another part of “Creative Destruction”
Because we deal in internet speed, the demise of the hedge fund industry seems slow while the problem banks seem to be taking much longer.

The sooner the system is cleansed (IMO a couple of years at least) the quicker the healing can start.

]]> By: a http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23492 a Tue, 28 Oct 2008 13:42:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23492 I can't see any reason why we should cry that hedge funds are going under. One less hedge fund is just one less conduit to enormous compensation by the few. Given that, I don't see any reason to regret the effect on the market of the unwinding of their positions. I can’t see any reason why we should cry that hedge funds are going under. One less hedge fund is just one less conduit to enormous compensation by the few. Given that, I don’t see any reason to regret the effect on the market of the unwinding of their positions.

]]> By: Matt Dubuque http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23483 Matt Dubuque Tue, 28 Oct 2008 12:50:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23483 Deleveraging on a massive scale was bound to occur. It was simply unsustainable. Risk was priced using inferior models and is now undergoing substantial repricing.<br/><br/>To deny the inevitability of this process is to deny the objective reality of debt deflation, a delusional occurrence that I have only seen occur in the United States in the declining days of its empire.<br/><br/>Matt Dubuque Deleveraging on a massive scale was bound to occur. It was simply unsustainable. Risk was priced using inferior models and is now undergoing substantial repricing.

To deny the inevitability of this process is to deny the objective reality of debt deflation, a delusional occurrence that I have only seen occur in the United States in the declining days of its empire.

Matt Dubuque

]]> By: TV http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23480 TV Tue, 28 Oct 2008 12:32:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23480 the capital window was shut for these guys raising money from the market.<br/><br/>They are tremendously over leveraged with level 3 crap.<br/><br/>They are in a death spiral.<br/><br/>Hank Paulson wants to let the hedge funds have it (from his March BSC email)<br/><br/>The prime brokers, by their very nature, can see hedge fund holdings. <br/><br/>I wonder how a firm like GS can extract the money it needs to survive if it is against deaths doorstep, has the blessing of Hankie Pankie, and can see the positions of its highly leveraged hedge fund clients?<br/><br/>Hmmmmmm........ the capital window was shut for these guys raising money from the market.

They are tremendously over leveraged with level 3 crap.

They are in a death spiral.

Hank Paulson wants to let the hedge funds have it (from his March BSC email)

The prime brokers, by their very nature, can see hedge fund holdings.

I wonder how a firm like GS can extract the money it needs to survive if it is against deaths doorstep, has the blessing of Hankie Pankie, and can see the positions of its highly leveraged hedge fund clients?

Hmmmmmm……..

]]> By: wintermute http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23478 wintermute Tue, 28 Oct 2008 12:30:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23478 Regulators likely knew this - but also regard hedge funds as not worth saving. They associate them with predatory capitalism (evil short-sellers etc). In fact they probably believe that hedge funds are more to blame for the credit crisis than government agencies! So they were happy to let them unravel after MS/GS coversion to banks.<br/><br/>In a normal, free market, with proper banking capital adequancy requirements and controls, sensible regulatory framework and balanced govt budgets - hedge funds would be much smaller. They would be valuable in the role of price discovery - revaluing undervalued assets and culling failing companies with failing business models. <br/><br/>Will we ever see such a time in the future? Regulators likely knew this – but also regard hedge funds as not worth saving. They associate them with predatory capitalism (evil short-sellers etc). In fact they probably believe that hedge funds are more to blame for the credit crisis than government agencies! So they were happy to let them unravel after MS/GS coversion to banks.

In a normal, free market, with proper banking capital adequancy requirements and controls, sensible regulatory framework and balanced govt budgets – hedge funds would be much smaller. They would be valuable in the role of price discovery – revaluing undervalued assets and culling failing companies with failing business models.

Will we ever see such a time in the future?

]]> By: Molly http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23477 Molly Tue, 28 Oct 2008 12:29:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23477 It is not clear to me that Morgan and Goldman were immediately subject to the same capital requirements as banks - I thought I read somewhere about a 'transition period' - if they were/are, I should think they would have needed a substantial capital infusion, given their leverage levels. The 'departure' of Lehman, plus declining assets values are large factors unto themselves. It is not clear to me that Morgan and Goldman were immediately subject to the same capital requirements as banks – I thought I read somewhere about a ‘transition period’ – if they were/are, I should think they would have needed a substantial capital infusion, given their leverage levels. The ‘departure’ of Lehman, plus declining assets values are large factors unto themselves.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23476 Anonymous Tue, 28 Oct 2008 12:27:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23476 And where have all the hedge funds gone for new loans? Or has the process yet begun in size? And where have all the hedge funds gone for new loans? Or has the process yet begun in size?

]]> By: Viv http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight.html#comment-23475 Viv Tue, 28 Oct 2008 12:19:00 +0000 http://www.nakedcapitalism.com/2008/10/emerging-markets-capital-flight-exacerbated-by-goldman-and-morgan-stanley-becoming-banks/#comment-23475 Paulson should've known this, maybe there was intent behind it.Remember the sms Dick Fuld sent after meeting with Paulson and learning of his intentions which came to light later on, "kill the bad HFnds + heavily regulate the rest." Paulson should’ve known this, maybe there was intent behind it.Remember the sms Dick Fuld sent after meeting with Paulson and learning of his intentions which came to light later on, “kill the bad HFnds + heavily regulate the rest.”

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