Bennet Sedacca Dies in Fall....Money manager who blew Credit Alarm and predicted a Depression.. [View All]

[KoKo]

Bennet Sedacca, money manager who blew credit alarm, dies

BLOOMBERG NEWS
March 20, 2009

Bennet Sedacca, a money manager credited with being one of the first to warn that Bear Stearns Cos. - and, by extension, the U.S. economy - would be run over by a credit crisis, has died. He was 49.

Sedacca, chief executive of Atlantic Advisors Llc in Winter Park, Fla., died Tuesday of a brain injury suffered in a fall at his Orlando home, according to an e-mail from Chelsea Valencia, a colleague at the firm.

On the financial Web site Minyanville.com, Sedacca posted a red-flag announcement on March 5, 2008, that "the great credit unwind is upon us."

The posting, which focused on Bear Stearns, constituted "the first murmurings of impending doom for the financial world," William D. Cohan wrote in his new book, "House of Cards." Sedacca had monitored the credit default swaps of Lehman Brothers Holdings Inc. and Bear Stearns for months and had noted the rising cost of insuring their short-term debt, Cohan wrote.

"I've been talking about it for years," Sedacca told Cohan. "Because if you think about it, if you have all this nuclear waste on your balance sheet, what are you supposed to do? You're supposed to cut your dividends, you're supposed to raise equity, and you're supposed to shrink your balance sheet. And they did just the opposite. They took on more leverage."

Sedacca had more than 28 years' experience in the securities industry, according to a profile on the Web site of Atlantic Advisors, a $3.5-billion investment-management company.

He was a senior vice president at PaineWebber and a vice president at Salomon Smith Barney. He also had worked at Drexel Burnham Lambert and lost his first fortune when the firm was liquidated in 1990, Cohan wrote.

http://www.newsday.com/services/newspaper/printedition/friday/news/ny-sedacca206076148mar20,0,6744254.story

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Welcome to the Depression
Courtesy of Bennet Sedacca at Minyanville

Recession:
A recession occurs when a nation’s living standards drop and prices increase. This downturn in economic activity is widely defined as a decline in a country’s gross domestic product for at least 2 quarters.

Depression:
An economic condition caused by a massive decrease in business activity, falling prices, reduced purchasing power, excess of supply over demand, rising unemployment, and other negative economic factors.
- Bloomberg financial definitions

Truth or Dare: Recession or Depression?

As unpopular as it may have been, I have been writing about the impending recession over the past several years. I am rather used to being called a "perma-bear" as it relates to the asset-based, over-leveraged mess we call our economy.

Truthfully, it’s been no fun whatsoever to call ‘em as I see ‘em. An outlier view has been a necessary evil, however, and one that I’ve been proud to have had the guts to provide.

I will now turn to what, in my view, is the biggest risk of all: We’re in a recession - and the economy can actually shrink. And shrink it has, is, and will likely continue to do. The question now: Are we going through a traditional recession, or a once-in-a-lifetime depression?

I actually hoped the unprecedented credit unwind would end up in a nasty recession; but I fear a depression is either upon us or will soon be upon us. To be truthful is essential in markets and life: To face head-on the bad news which isn’t at all fun or exciting to face.

I hate to say this, as unpopular as it may be: Welcome to the depression. For my reasoning, please read on.


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