Don’t walk, run to Calculated Risk’s explanation for what really happened with those two Bear Stearn’s hedge funds:
"Let’s leave, for the moment, the question of the incredibly complex and
opaque layers of leverage, synthetic structures, derivatives swaps, and
mark-to-model valuations that transformed mere commonplace mortgage
loan write-downs into 23% losses of $600MM invested equity in
approximately 9 months on a fund created because its precursor fund,
which had dawdled along for two years or so generating a mere 1.0-1.5%
a month return, we are informed, just wasn’t good enough for the high
rollers who didn’t damn well put their money in hedge funds to earn
12-18% a year. This is really all about a bunch of subprime loans."
If you believe, as this NYTimes article apparently does, that its the fault of those pesky sub-prime borrowers defaulting, well, then you just haven’t been paying any goddamned attention.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.