Thanks for the posts Peter...

A Gloomy Picture for Hedge Funds; Bailout Planners Fight Exhaustion

Hedge funds’ annus horribilis is getting worse. The average fund, after losing nearly 5
percent in the first eight months of 2008, was down an additional 7 percent in September.
Many other factors are making life difficult for fund managers, too. An industry shakeout
looks inevitable.

At the end of last month, many funds were expecting more than increased requests from
jittery investors to cash out. It’s hard to plan trades if your investment funds are
suddenly snatched away. And a flood of redemptions can force the sale of assets, hurting
remaining investors — one reason that fund managers sometimes block withdrawals.

Hedge funds bolster returns with lots of borrowed money. Now that is a scarce commodity.
The ability to bet on price declines has also suffered, thanks to short sales restrictions
world-wide.

Some funds have assets trapped in Lehman Brothers’ London unit, now defunct.

[see more at NY Times 10/6/08]

Investors Say No Thanks to Commercial Paper

Forty-five percent of large U.S. companies say they are finding fewer buyers for their
commercial paper, according to new research from Greenwich Associates. And more than 70
percent of the 291 companies surveyed say their cost of issuing the short-term debt is
increasing, including 22 percent that report it is up "significantly."

Companies of all sizes are being affected, according to Greenwich, a financial-services
consulting firm. For example, 43 percent of companies with more than $5 billion in annual
sales say their access to the commercial paper market has been reduced, and two-thirds of
companies with sales of $500 million to $999 million say so.

[CFO.com: http://tinyurl.com/3mrg9c]

Last edited on: 10-05-2008 07:24 pm

Cash-Thirsty Banks Swarm the Fed

The level of borrowing from the Federal Reserve hits an all-time weekly high that is twice
the previous record.

U.S. banks are borrowing money from the Fed's discount window at a record pace. According
to Reuters, banks borrowed $367.8 billion per day from the Federal Reserve in the week
ended October 1. That was nearly double the previous record daily average of $187.75
billion — which was set the prior week.

The United States is not the only place where banks are tapping the Central Bank for
funds. According to Bloomberg, on Thursday banks borrowed more than 15 billion euros from
the European Central Bank at its emergency rate for a third day. This pushed the amount
borrowed over a three-day period to a record, according to the report.

[CFO.com: http://tinyurl.com/447z5j]

Laura Gilbert, a Manhattan-based artist, plans to stand on Wall Street this Tuesday and
give away signed and numbered originals of “The Zero Dollar,” a slightly downsized
rendering of the $1 bill with zeros in place of the one.

Facing Shortfall, Massachusetts Inquires About a Federal Loan

10/5/08

BOSTON (AP) — The Massachusetts state treasurer has asked the federal government about
lending the state money under the same favorable terms given to banks and investment firms
during the financial crisis.

Treasurer Timothy P. Cahill’s requests last week to the Treasury Department and the
Federal Reserve Bank of Boston were prompted by the state’s inability to borrow from the
short-term debt markets, The Boston Globe reported on Saturday. The financial turmoil has
caused credit markets to stop lending, or to charge prohibitive rates.

California has made a similar request, saying it will run out of money by the end of the
month if the short-term debt markets do not ease. That state has said it may need a $7
billion emergency loan.

Peter, If you are even close to being correct about the $500 trillion figure, I've got a
really bad feeling about our future. $250 trillion here, $250 trillion there, pretty soon
you are talking REAL money. I'm going to be really frustrated if I end up flipping burgers
for the clown (Ronald McDonald).

Peter,
WTF is going on?

Nevermind that. Actually, I'm finding the media quite amusing. It's funny, because all
of them have suddenly become experts. I don't know everything, and being an economic
novice, I can recognize another novice quite well. Anybody listen to these people on the
radio?

I've seen that $500 trillion printed, but you dont see many estimates of the size of the
derivatives market; a lot of guess work on the enormity of it

Todd Harrison put the number at $500 trillion and I'll go with that.

Last edited on: 09-29-2008 09:07 pm

More relistic 3.5 trillion