I Was Speaking To A Hedge Fund Manager Last Week

[THUNDER HANDS]

I'm a court reporter and I was doing a deposition last week where the witness was a hedge fund manager. During a break I asked him what he thought about the bailout and if he thought it would work.

He said no.



He gave some overly complicated reason that went way above my head as to why, but essentially he said he didn't think it was going to have any practical effect.


What does that mean? I don't know. But it was a guy with a LOT of money saying that giving Wall Street more money isn't going to help anything. Sorry I didn't post this sooner, but I just thought about it again as I'm here typing up the transcript.

[BlooInBloo]

1. If it went over your head, how in the world can you possibly know that it was OVERLY complicated?

[tulsakatz]

2. when Krugman was on Real Time recently........

..he said it wouldn't work either...

[BrklynLiberal]

3. I guess that is a pretty telling opinion. He really is right there and knows.

[scheming daemons]

4. His company should fire him.. He's clueless on the ABCP and credit markets.

[4 t 4]

6. You Know none of us Really know

what will happen, because it's never happened before to this extent but..... I would think a hedge Fund manager knows something. I doubt Very much if it's gonna work. I have learned Anything * is for I am NOT.

[chupacabranation]

9. IMHO, a lot of those hedge fund guys aren't that smart.

More, well-connected and can talk a good sports game.

[avaistheone1]

5. The Director of Congress' own Budget Office has advised Congress that the bailout may make things

worse.

Not like his opinion counts for anything!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

:sarcasm:



Bailout Could Deepen Crisis, CBO Chief Says
Asset Sales May Lead to Write-Downs, Insolvencies, Orszag Tells Congress
By Frank Ahrens
Washington Post Staff Writer

The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092402799_pf.html

[Warpy]

7. It's like paying a compulsive gambler's debts without

getting him into treatment for the compulsive gambling. It buys a little time but fails spectacularly as the conditions that led to its necessity occur again.

This isn't a handout to Wall Street. It's an attempt to shore up the asset columns in the banking industry. Banks bought up a lot of exotic paper from hedge funds that turned out to be bits and pieces of bad loans in Florida and California. The paper is so exotic that nobody knows what the hell half of it represents or who owns what. What is apparent is that banks are insolvent when they subtract the toxic paper from their balance sheets.

My best guess is that Robert Reich is correct and that a smaller handout of $150 billion will shore up the balance sheets adequately until a Democratic Congress convenes in January and can start attacking the underlying problem: thieves setting up shop in the absence of common sense regulation due to GOP dogma.

Two things are at work here: first, much of the exotic paper might not be that toxic and second, the real trouble won't begin until next year when the worst of the bad paper starts to default.

In other words, we have time to keep the compulsive gambler from getting his legs broken while we wait for an opening in rehab to treat his problem.

The straight bailout didn't work for Hoover in 1931, it didn't work for Japan, and it won't work now.

[madville]

8. What does that mean? Chelsea is out of a job lol

just kidding lol

[earth mom]

10. Most of us don't need to be financial experts to know this bailout is nothing but a ripoff. nt

[Gregorian]

11. America is overvalued.

Am I wrong?

I think the problem lies therein. Our wages were too high. Our housing prices were too high.

And now I've probably pissed off everyone on this forum. How dare I take a whack at workers.

It wouldn't be a problem if other countries weren't willing to work for lower wages.

This is why I believe throwing money at it won't do anything but a short term blip.

[girl gone mad]

12. a former classmate of mine..

who is a math genius and worked for hedge funds for years also says it won't work.