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alstry (34.92)

Liquidating Liquidations

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December 15, 2008 – Comments (6)

The victims of the Bernie Madoff scandal continue to mount and include some of the world's biggest financial institutions, major fund of funds managers, well-heeled individuals and many charities....

But many people's entire net worth has been wiped out by the scam, as well as any number of philanthropic organizations. Furthermore, pressure on the fund of funds who invested with Madoff; that, in turn, is going to add to the already intense pressure on their hedge fund clients. Even if that only damages investor sentiment, it could very much affect portfolios of people who never heard of Bernie Madoff prior to last week.

http://finance.yahoo.com/tech-ticker/article/146553/List-of-Madoff%27s-Victims-Keep-Growing-Likely-to-Extend-Beyond-Clients?tickers=%5Edji,%5Egspc,%5Eixic,SPY,DIA,QQQQ

Now the funds that invested in Madoff's fund will likely have to liquidate.  We are probably staring at hundreds of billions in issue.  Maybe more?  Some funds will prevent clients form liqudating so they may have to liquidate someplace else to raise cash.  When they liquidate someplace else, others will likely want to or have to liquidate.  As more and more liquidate, we will have liquidating liquidations.

The best solution to liquidating liquidations?  Drink lots of lucious liquids. A Bloody and a Manhatten may work just fine for current times.

6 Comments – Post Your Own

#1) On December 15, 2008 at 5:17 PM, alstry (34.92) wrote:

More Liquidations???

Citing “a rapid deterioration of U.S. Alt-A RMBS performance,” Fitch Ratings again took the hatchet to its previous assumptions for Alt-A mortgages on Monday morning, revising its surveillance methodology and updating loss projections for all U.S. Alt-A RMBS.

Soon Neg Ams could be a big big problem too.

What happens if everyone liquidates at the same time????

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#2) On December 15, 2008 at 5:19 PM, dwot (42.57) wrote:

Saw this...

It is massive...

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#3) On December 15, 2008 at 5:53 PM, Mary953 (77.81) wrote:

Alstry - this makes me want to go spend my savings for those big ticket items that I have been putting off.  The assumption here is that a new car (bought with cash) cannot evaporate as easily as paper savings.  I am confident that I understand those investments that we have specifically chosen, but pensions, 401 (various), funds?  not so sure.

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#4) On December 15, 2008 at 6:51 PM, alstry (34.92) wrote:

TMFSinchiruna has an excellent post this evening titled Federal Reserve sets stage for Weimar-style Hyperinf...

I can't believe...two great posts in two days....it must be the holiday season.  Nuf2 yesterday and Sinchiruna today.

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#5) On December 15, 2008 at 8:32 PM, nuf2bdangrus (< 20) wrote:

Hedge funds blocking liquidations just creates pent up demand.  It baks to Q2 2008 the earliest "safe" time to buy equities for the long haul, though I';d like another panic sooner.

 

I think the ramifications of this are like those of Lehman in this respect.  The market took the initial Lehman BK in stride, as stocks themselves priced it in.   But the violent selloff afterwards was that of squaring positions and the deleveraging that followed.

 

Liquidity is still scarce, and those that have been burned in the Ponzi scheme are going to liquidate other assetts and pull their money closer.

 

The 'Christmas" rally in my view is over, and I missed it, despite looking at my screen right before the beginning and wanting to pull the trigger.

 

I think there will be some good buys mid-late 2009, when all of the deleveraging is done.   But I'm hedging that with gold, and I wish I bought more last week.  And this time, I bought the PHYSICAL, not paper gold!!!

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#6) On December 15, 2008 at 10:24 PM, alstry (34.92) wrote:

The Liquidations Continue......

SAN FRANCISCO (MarketWatch) -- Bernard L. Madoff Investment Securities LLC will be liquidated to try to salvage some money for the brokerage firm's customers, the Securities Investor Protection Corporation said late Monday. The SIPC said that it had filed an application with the United States District Court for the Southern District of New York for a declaration that the customers of Bernard L. Madoff Investment Securities are in need of the protections available under the Securities Investor Protection Act, or SIPA. Report this comment

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