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Jim Sinclair’s Commentary
The question is how many hedge funds will fail.
It is reasonable to assume that whatever these funds could sell they would have sold before D-Day, leaving only OTC derivatives with no markets.
Hedge funds brace for D-Day
November 14, 2008
Anxiety is sweeping the hedge fund industry before a crucial deadline on Saturday, when investors angered by recent heavy losses are expected to demand the return of billions of dollars.
"Managers have a pretty good feeling for what is coming, and there are significant redemption requests out there,” said Stewart Massey, founding partner of Massey, Quick & Co, an investment consultant that puts money into hedge funds.
Saturday is the last day for thousands of investors to notify hundreds of hedge funds if they want their money back by year’s end.
Hedge funds that require three months notice from investors who wanted to exit by year’s end had a similar deadline on September 30 – also known in the industry as "D-Day.”
More such deadlines loom for funds that allow investors to give less notice before taking their money out, fund managers said.
In the last two days, several prominent fund managers made public predictions that illustrate the depth of gloom now sweeping the $US1.7 trillion ($2.6 trillion) hedge fund industry.
Jim Sinclair’s Commentary
They are not alone. You said business would be worse in Euro land? Right now that looks like an urban legend.
Freddie Mac says it is worth less than zero
Suzy Jagger in New York
Freddie Mac, the US mortgage giant, yesterday admitted that it is so overwhelmed by its liabilities that without government backing, it would no longer be a viable business. The company said that it had lost $13.7 billion (£9.2 billion) in the third quarter of the year and begged for $13.8 billion from the US Treasury in rescue funds.
The plea for the multibillion-dollar cash injection came just days after Fannie Mae reported a record $29 billion loss for the period and gave warning that it was haemorrhaging cash so rapidly, it might need federal funds by the end of the year to survive.
The US Treasury has been overwhelmed by requests for federal aid in the past few weeks. In addition to setting up a $700 billion bailout fund to take equity stakes in troubled banks, the Treasury is being pressed by the car industry for a cash bailout. Yesterday, Neel Kashkari, the Assistant Treasury Secretary, said that he was under pressure to consider ways of using the $700 billion bailout to stem a surge in foreclosures across the US.
The Freddie Mac request for funds would see the drawing down of part of the $100 billion in emergency reserves that were committed by the Treasury in September. Freddie Mac’s problems during the third quarter fell into two categories – the continuing real-estate slump, which has been accompanied by a sharp increase in mortgage borrowers defaulting on repayments, and a tax-related charge. The company had to admit that it cannot use tax credits listed on its balance sheet as assets, because it has not generated enough taxable income.
Jim Sinclair’s Commentary
Standard much ado about nothing.
IMF chief: G-20 action plan a significant step toward stronger int’l cooperation
WASHINGTON, Nov. 15 (Xinhua) — The chief of the International Monetary Fund (IMF) on Saturday hailed the action plan agreed at the G-20 summit as a significant step by the international community toward stronger cooperation.
"The most important outcome of this weekend’s meeting is agreement on an action plan and the commitment of all participants to implement the plan vigorously and fully," IMF Managing Director Dominique Strauss-Kahn told a press conference.
"The IMF will give strong support to these efforts, as called for by the G-20," Strauss-Kahn added.
The chief of the 185-member IMF said he was "very pleased" about the G-20 leaders’ strong support for the important role of the Fund in crisis management and the reform of the international financial architecture.
"In addition to helping some member countries that are facing difficult circumstances with rapid and effective support, we have also created a new short-term liquidity facility and continue to review our instruments and facilities," he said.
Jim Sinclair’s Commentary
Sadly this is the Bear Stearns, Lehman Brothers and most likely GE and GM retirement programs. They are either unfunded or loaded with their own common stock.
Poverty, Pension Fears Drive Japan’s Elderly Citizens to Crime
By Stuart Biggs and Sachiko Sakamaki
Nov. 14 (Bloomberg) — More senior citizens are picking pockets and shoplifting in Japan to cope with cuts in government welfare spending and rising health-care costs in a fast-ageing society.
Criminal offences by people 65 or older doubled to 48,605 in the five years to 2008, the most since police began compiling national statistics in 1978, a Ministry of Justice report said.
Theft is the most common crime of senior citizens, many of whom face declining health, low incomes and a sense of isolation, the report said. Elderly crime may increase in parallel with poverty rates as Japan enters another recession and the budget deficit makes it harder for the government to provide a safety net for people on the fringes of society.
“The elderly are turning to shoplifting as an increasing number of them lack assets and children to depend on,” Masahiro Yamada, a sociology professor at Chuo University in Tokyo and an author of books on income disparity in Japan, said in an interview yesterday. “We won’t see the decline of elderly crimes as long as the income gap continues to rise.”
Crime rates among the elderly are rising as the overall rate for Japan has fallen for five consecutive years after peaking in 2002. Over 60s accounted for 18.9 percent of all crimes last year compared with 3.1 percent in 1978, with shoplifting accounting for 80 percent of the total, the report said.
