Jul 22, 2007 – 03:04 PM
Two columns of black smoke can be seen rising over Wall Street and disappearing into the ice-blue New York sky.Terrorism?
Not quite. The plumes of smoke are all that’s left of two major hedge funds which blew up just weeks ago leaving nothing behind but a few smoldering embers and a mound of black soot.
The compiled assets of the Bear Sterns High-Grade Structured Credit Strategies Fund-nearly $20 billion-have vanished into the miasma of cyber-space where they will soon be joined by $1.4 trillion of other, equally worthless, Collateralized Debt Obligations (CDO).
If you look carefully, you can almost see the mangled and bloodied bodies of the CDOs, the CSDs, the RMBS and the other shaky debt-instruments being pulled from the wreckage and tossed unceremoniously on the bonfire.
Is this how it all ends? The first whiff of trouble in the housing market and then-in a flash–all the funds in “Hedgistan” begin teetering towards earth?
“No Value”-“No Bids”
According to Bloomberg News, Bear Sterns announced last week that there’s “little value left” in one of its funds and “no value left” in the other.
Nothing, nada, zippo.
The news was like a bucket of cold water dumped on the stock market leaving slack-jawed traders shuddering in trepidation.