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admittedly, I'm just getting my mind around this one but I have to ask in reference to the bolded portion. Do you feel the fall out is due to perception problems or due to actual loss of funds. As I realize that the way things are right now, consumer and investor confidence is extremely important and hard to get a finger on kind of thing.
I think the fall out will be due to the fact that many of the specific fund holders have not yet been identified.
As this unfolds, it appears that many other hedge funds, and possibly some pension funds, had investments in this failed fund as part of their diversification/risk mitigation strategy. In a steep downturned market, such as this, a total evaporation of even a small % of a fund's investment can really have a significant "amplification" through the financial markets.
I think the fall out will be due to the fact that many of the specific fund holders have not yet been identified.
As this unfolds, it appears that many other hedge funds, and possibly some pension funds, had investments in this failed fund as part of their diversification/risk mitigation strategy. In a steep downturned market, such as this, a total evaporation of even a small % of a fund's investment can really have a significant "amplification" through the financial markets.
Does this translate to a tumbling of the Stock Market come Monday only to be done with in a day or is this going to bleed itself out for some time to come?
Does this translate to a tumbling of the Stock Market come Monday only to be done with in a day or is this going to bleed itself out for some time to come?
Reactions are always difficult to predict, however I can assure you that many portfolio managers will be going through their holdings to determine if they have exposure here.
The real fallout will come when pension funds and third party investors find that they had exposure, and weren't aware of it. How extensive this will be is unknown at this point, but I can assure you that a lot of conference calls will be taking place Monday as institutional investors try to determine their personal impacts, if any.
This is the risk of significant leveraging, a specialty of hedge funds.
Hopefully, those with exposure will find it is less than 1% of their portfolios, and that we won't get a cascading of failures from this fraud. Right at this moment, the unknowns are of substantial concern.
$50 billion must be the worlds largest pyramid scheme. I think the government should bail him out so he can keep the pyramid rolling. It is not fair that we bailed out the rest of his cronies on Wall Street while throwing this investor under the bus.
While $750 billion is okay for failed bank why did we let the blue collar auto industry die? I surmise that they are not the right type for a bail out, go see Gran Torino to clarify why.
Just picked up an update, overseas institutional investors (their markets open ahead of ours) are now beginning to understand the potential magnitude of this fraud:
The extent of the fall-out from the alleged Bernard Madoff fraud started to become apparent yesterday, as dozens more institutions and individuals across the globe were revealed to have had some exposure to the funds that his firm managed.
Spanish newspapers revealed that Banco Santander had more than $3bn (ÂŁ2bn) of clients’ money invested in Mr Madoff’s products, while Royal Bank of Scotland, BNP Paribas, Nomura Holdings and Unicredit (via its subsidiary Pioneer) were among other large institutions reported to have had exposure to his funds.
Scandal continues to grow, in terms of impact on institutional investors:
LONDON/TOKYO (Reuters) - Royal Bank of Scotland, Man Group and Nomura on Monday joined a growing list of financial groups acknowledging exposure to the alleged $50 billion fraud surrounding Wall Street trader Bernard Madoff.
A report in the Financial Times said HSBC Holdings Plc had emerged as one of the largest victims, with potential exposure of about $1 billion. HSBC could not immediately be reached for comment.
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bail out the pyramid scheme
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