"All your base are belong to us"
Posted on 02/15/2008 2:15:40 AM PST by BGHater
Citigroup Inc (C.N: Quote, Profile, Research) has barred investors in its CSO Partners hedge fund from withdrawing their money, according to a Wall Street Journal report on Friday.
Citigroup suspended redemptions in CSO, a fund specialising in corporate debt, after investors tried to withdraw more than 30 percent of the fund's $500 million in assets, said the story.
CSO had an 11 percent loss last year, forcing Citigroup to inject $100 million to stabilise the fund, said the Journal.
Hah, funny. “You gave us this money and now it’s ours.”
That is theft.
I expect this sort of gate is well-described in the fund documents. It's not "theft" if the investors agreed to it, and shame on the investors if they don't like what they signed up for.
"All your base are belong to us"
Ruh Roh!
Yes, but as they understood it they were signing up for 20% yearly returns.
It’s a ‘hedge’ fund. It’s inherently very high risk, and normally people who invest in a hedge expect to lose that money.
A hedge position, properly used, is effectively an insurance policy. It’s a high-risk, high-gain bet that should be placed directly against your major holdings, so that if your real asset base takes a hit, the hedge fund - which was betting the other way - makes up the difference. For example, if half your assets are in pharmaceutical stocks, it’s a sensible hedge position to take to be that pharmas will tank. You’ve then got things set up so that no matter which way the stock moves your basic financial position is protected.
So the people who are losing their money from this hedge fund are probably making it along just fine.
"Your money is worth about this much..." After my 150 million cut from Citi.
I’ve had a couple of run-ins with Citi, where I had to call out the lawyers. I fired these bozo bag men five years ago. Bunch of socialist clowns.
“Derivatives have permitted financial risks to be unbundled in ways that have facilitated both their measurement and their management…. As a result, not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.”
~~Alan Greenspan, May 2003
“The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions.”
~~Alan Greenspan, May 2005
“The damage from the subprime market has been largely contained. Fortunately, the financial system and the economy are strong enough to weather this storm.”
Richard Fisher, Federal Reserve Bank of Dallas President, Apr 4, 2007
"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
~~Fed Chairman Ben Bernanke, May 17, 2007
Amazing how in the 50’s there were no derivatives like there are today and the economy managed to get along just fine!
Perhaps even better.
Oh, okay. I feel much better now.
Pass the Xanax please.
” . . .normally people who invest in a hedge expect to lose that money.”
That’s a baseless claim without a word of truth in it. Multi-millionaires don’t invest with the expectation of losing money.
I love those quotes!
In a financial context, a hedge is by definition a position against one of one’s major positions. If you win on your hedge, it means you lost on your major position. Thus a hedge is an insurance policy. It is literally “hedging a bet”.
A person who invests in a hedge fund without an opposite position is a speculator whose methods are akin to piracy, and for whom no tears are warranted.
"I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
~~E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
~~Irving Fisher PhD, leading U.S. economist , New York Times, October 17, 1929
"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement."
~~Harvard Economic Society, October 19, 1929
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
~~R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
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| The Federal Reserve recently took emergency measures to cut the federal funds rate by the largest amount in decades. That move came on the heels of a global stock market meltdown, giving the impression that the Fed takes such actions, in order to "manage" the economy. But it is a principle of economics that meddling in a free market only serves to cause the kinds of distortions that lead to market bubbles and market busts. That's why real economic growth in America was greater in the 19th century without the Fed than it was in the 20th century with the Fed. Fortunately, Congressman Ron Paul has introduced legislation to restore financial stability to America's economy by abolishing the Federal Reserve. Click here to contact your congressional representative and ask him/her to co-sponsor H.R. 2755. Thank you, The John Birch Society |
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IMHO the problem is not with the Federal Reserve, but with congress for allowing lending institutions to sell adjustable rate mortgages.
What are the pros and cons of abolishing the Federal Reserve?
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