Friday, July 06, 2007
As a follow-up to Umair's post regarding the Hedgeconomy i.e. the Hilton buy-out. Here's an example how hedge funds excuse themselves through massive leverage, and well, you can't:
"Wall Street executives didn't foreclose on the Bear Stearns hedge fund, which borrowed imprudently, because (1) the fund had a rich parent to bail it out, and (2) doing so would have imposed financial hardships on themselves, on their friends, customers, and neighbors. The residents of neighborhoods targeted by subprime lenders typically receive no such consideration. When you owe the bank $10,000, it's your problem. When you owe the bank $10 billion, it's the bank's problem"
Welcome to the deflating real estate bubble. Questions:
- Will regulatory oversight kick in?
- How regulatory oversight make a difference?
- What sectors are especially prone to speculation and collapse?
- What are the transaction costs of such a collapse?
- Who are the ultimate winners? losers?
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