Destruction is a small price to pay: Business failures, bankruptcies, lost jobs, recessions are all part of natural law eliminating the dead wood from a prior bubble, clearing the way for a new round of creative innovations, prosperity and another roaring bull. So don't get all teary-eyed and maudlin. Suck-it-up, folks. "Pops" are like Irish wakes, lotsa drinking, laughing, singing "Auld Lang Syne," having a good time saying goodbye to a bubble. Well, at least for Wall Street.

A 'Subprime' Fund Is on the Brink
By Kate Kelly
Word Count: 773 | Companies Featured in This Article: Bear Stearns, Merrill Lynch, UBS, Goldman Sachs Group, Bank of America, Deutsche Bank
Concerned that an internal hedge fund at Bear Stearns Cos. wouldn't be able to meet a margin call, Merrill Lynch & Co., one of the fund's biggest lenders, seized $400 million of its assets and is preparing to auction them off.

The auction, in the coming week, could trigger the fund's dissolution -- the second blowup in recent months of a hedge fund that made dicey bets on the market for risky home loans, known as subprime mortgages.

The surprise move involving the two Wall Street firms came as the Bear fund's managers, led by bond-sales veteran Ralph Cioffi, scrambled ...

By Kathleen M. Howley
June 20 (Bloomberg) -- The worst is yet to come for the
U.S. housing market.

The jump in 30-year mortgage rates by more than a half a
percentage point to 6.74 percent in the past five weeks is
putting a crimp on borrowers with the best credit just as a
crackdown in subprime lending standards limits the pool of
qualified buyers. The national median home price is poised for
its first annual decline since the Great Depression, and the
supply of unsold homes is at a record 4.2 million, according to
the National Association of Realtors.
``It's a blood bath,'' said Mark Kiesel, executive vice
president of Newport Beach, California-based Pacific Investment
Management Co., the manager of $668 billion in bond funds.
``We're talking about a two- to three-year downturn that will
take a whole host of characters with it, from job creation to
consumer confidence. Eventually it will take the stock market
and corporate profit.''
Confidence among U.S. homebuilders fell in June to the
lowest since February 1991

e risque de faillite de deux nouveaux fonds spéculatifs (hedge funds) gérés par l'établissement américain, Bear Stearns, pourrait provoquer d'importantes secousses sur les marchés financiers internationaux.

Selon un article publié sur le site Internet du Wall Street journal mercredi 20 juin, ces deux fonds, qui gèrent près de 20 milliards de dollars (14,9 milliards d'euros) seraient proches de mettre la clé sous la porte. Après l'échec d'un plan de sauvetage tenté in extremis, un de ses créanciers, la banque d'investissements Merrill Lynch, a décidé de céder l'équivalent de 800 millions de dollars investis dans le fonds.

Les fonds de Bear Steans subissent de plein fouet la crise immobilière qui sévit en ce moment aux Etats-Unis. En 2000, lors de l'explosion du marché, un très grand nombre de ménages américains se sont endettés pour profiter de conditions de financement très favorables. Ces titres de créance ont été ensuite placés sur le marché de la dette aux Etats-Unis.

Les hedge funds ont alors racheté les titres les plus risqués (les subprime mortgage) liés aux prêts octroyés aux ménages les moins aisés. Le pari des hedge funds consistait à s'emparer de ces titres très décotés en misant sur la remontée des prix. Les difficultés du marché immobilier contrarient leur stratégie.

Le désengagement de Merrill Lynch pourrait faire dévisser les prix liés au marché des subprime mortgages et touché par contagion d'autres hedge funds.

Elle pourrait aussi dévoiler la situation précaire des fonds. "L'opacité existe chez de nombreux hedge funds et certains sont sans doute déjà en défaut de paiement", estime Vincent Treulet économiste chez Natixis.

La faillite de fonds spéculatifs fait aussi redouter un effet domino sur les marchés financiers. Les fonds spéculatifs ont recours massivement à l'emprunt pour financer leurs investissements. Pour 16 milliards de dollars investis, l'un des deux fonds de Bear Stearns n'a mis en espèces "que" 638 millions de dollars, le solde étant intégralement financé par de la dette. Lorsque les fonds se trouvent en défaut de paiement, leurs créanciers sont ainsi à leur tour en difficultés.


LES ALERTES SE MULTIPLIENT


La crainte est d'autant plus vive que les alertes se multiplient. En mars, la plus grande banque européenne, HSBC, a annoncé une provision de 11 milliards de dollars pour couvrir les pertes liées à l'éclatement de la bulle immobilière américaine. En mai, la banque suisse UBS a fermé l'un de ses hedge funds, Dillon Read Capital Management, spécialisé dans le subprime mortgage, après avoir essuyé une perte de 124 millions de dollars. Enfin, les difficultés des hedge funds, qui représentent 40 % du volume de transactions des principales Bourses mondiales selon la Banque de France, pourraient aussi avoir un effet de contagion sur d'autres secteurs.

En cas de crise avérée, le marché peut toutefois espérer compter sur le soutien des professionnels et autorités. La catastrophe qu'aurait pu provoquer la faillite du fonds LTCM en 1998 avait ainsi été évitée grâce à la banque centrale américaine. Elle n'avait pas hésité à abaisser ses taux pour éviter une crise systémique. Et en 2006, la déroute du fonds Amaranth a été gérée par ses banques créditrices. Aujourd'hui, le marché peut aussi miser sur l'afflux de liquidités issues des pays émergents qui contribue à soutenir les prix.

on attend fièvreusement les réactions des frères siamois Lulu & Higuito

Oh je les connais d'avance "Belle maman m'a dit et toi t'es qu'un programmeur" et "tes sources PhiPhi vérife tes sources nous ici les $ poussent sur les pommiers, tu lis des journaux de chiottes..."

Oh je les connais d'avance "Belle maman m'a dit et toi t'es qu'un programmeur" et "tes sources PhiPhi vérife tes sources nous ici les $ poussent sur les pommiers, tu lis des journaux de chiottes..."

Ce n'est pas moi qui le dit... "c'est un bain de sang..."

NEW YORK, June 20 (Reuters) - The ABX derivatives index dropped to a record low on Wednesday amid continuing concerns about a hedge fund facing potential losses due to its holdings of risky subprime mortgages, traders said.

The ABX 2007-1 “BBB-minus” index, which references home loans made to risky borrowers in the second half of last year, dropped to 59.25 compared to 60.39 on Tuesday, according to one trader.
….
The “market has settled down after the initial flurry of selling but the sentiment is still very poor,” a second trader said.

“Hedge fund liquidations and forced selling will keep the market from posting any lasting and meaningful rally. More paper is going to come out and try and get sold,” the trader said.

The ABX 2006-2 “BBB-minus” index, linked to loans made in last year’s first half, is trading at 65.50 compared to 67.67 on Tuesday, the first trader said.

More paper is going to come out and try and get sold,” the trader said.

Cela commence à sentir méchamment le brûlé.....

Bear Stearns's Attempt to Save Hedge Funds May Falter (Update7)

By Jody Shenn and Yalman Onaran

June 20 (Bloomberg) -- Bear Stearns Cos.'s attempt to rescue its money-losing hedge funds may falter after creditor Merrill Lynch & Co. decided to seize and sell $800 million of bonds held as collateral for loans to the funds.

Merrill Lynch accepted bids for the securities until 4 p.m. New York time today, according to people with knowledge of the offering, who declined to comment because the auction isn't public. New York-based Bear Stearns today agreed to buy JPMorgan Chase & Co.'s $500 million of loans to the fund to prevent securities being dumped on the market, one person said.

The 10-month-old High-Grade Structured Credit Strategies Enhanced Leverage Fund, run by Bear Stearns senior managing director Ralph Cioffi, has lost about 20 percent this year. The fund and a sister fund called the High-Grade Structured Credit Strategies Fund, which hadn't borrowed as much and was down less, both have faced pressure from creditors. They specialized in mortgage bonds and so-called collateralized debt obligations backed by home-loan bonds and other assets.

``The real fear has to do with just how many other funds and warehouses could be in trouble,'' said Jeremy Shor, who oversees about $3 billion in asset-backed bonds as a portfolio manager at Brown Brothers Harriman & Co. in New York. A warehouse is a credit line extended to CDO managers to buy the assets that they plan to repackage into new securities.

A slump in the U.S. housing market is leading to rising delinquencies on home loans, especially so-called subprime mortgages, made to homebuyers with poor credit or heavy debt loads. That's pushing down the value of related securities. The fallout has forced lenders such as New Century Financial Corp into bankruptcy, and caused the closure or sale of dozens more.

Bondholders at Risk

As defaults rise, bondholders stand to lose as much as $75 billion of subprime-mortgage securities, according to an April estimate from Pacific Investment Management Co., manager of the world's largest bond fund. Investors in all mortgage bonds will probably take about $100 billion in losses, according to a March report from Citigroup Inc. bond analysts.

Securities and Exchange Commission Chairman Christopher Cox said the agency's division of market regulation is tracking the turmoil at the Bear Stearns fund.

``Our concerns are with any potential systemic fallout,'' Cox said in an interview today. ``So far, so good on that score.''

The two Bear Stearns funds together controlled more than $20 billion a few weeks ago and had about $9 billion in loans as of early yesterday evening in New York, the Wall Street Journal reported today, citing unnamed sources. They'd encountered resistance to a bailout plan, the newspaper reported.

Goldman, Bank of America

Shares of Bear Stearns fell for a third day, declining $3.59, or 2.5 percent, to $143.20 in New York Stock Exchange composite trading. The stock is down 12 percent this year.

Goldman Sachs Group Inc. and Bank of America Corp. earlier agreed to unwind transactions directly with Bear Stearns without dumping the bonds on the market, the Journal said. Michael DuVally at New York-based Goldman declined to comment. Melissa Kitlowski, a spokeswoman for Charlotte, North Carolina-based Bank of America, didn't immediately return a call seeking comment.

JPMorgan reached a similar agreement today after withdrawing plans to sell $400 million of bonds while creditors negotiated with Bear Stearns and the fund.

The bonds New York-based Merrill Lynch is selling are mostly backed by mortgages or CDOs of home-loan bonds, and rated AAA or AA. Merrill Lynch is the largest CDO underwriter, which often provide ``warehouse'' credit lines to managers.

Russell Sherman, a Bear Stearns spokesman, and Jessica Oppenheim, a spokeswoman for Merrill Lynch, declined to comment.

Pressing Ahead

Merrill Lynch is pressing ahead with the sale even after Bear Stearns, the biggest broker for U.S. hedge funds, offered to provide $1.5 billion in secured loans to help rescue the fund and seek cash investments from some of the fund's existing creditors, which also include New York-based Citigroup Inc.

Danielle Romero-Apsilos, a Citigroup spokeswoman, declined to comment. Brian Marchiony, a spokesman for New York-based JPMorgan, declined to comment.

Bear Stearns made the commitment in a meeting with creditors selling off $4 billion of mortgage bonds last week.

Asset sales could force the banks to reduce the value of their own investments and loans they made to other funds, said Josh Rosner, managing director at New York-based investment- research firm Graham Fisher & Co. A bailout would be reminiscent of that of Long-Term Capital Management LP, which lost $4.6 billion, in 1998, he said. At the time, lenders met and agreed to slowly liquidate the fund's assets to limit the impact of its collapse.

`Bullish,' `Bearish'

High-Grade Structured Credit Strategies Enhanced Leverage Fund began with about $600 million. It halted redemptions after investors sought to withdraw $300 million by June 30. The fund borrowed at least $6 billion.

The fund had made $11.5 billion of ``bullish'' investments and $4.5 billion of ``bearish'' bets, the Wall Street Journal reported today, citing documents it reviewed. Using borrowed money, or leverage, can magnify a fund's returns if markets move as planned, or increase losses if investments sour.

CDOs are investment vehicles that repackage loans, derivatives and bonds into new securities, providing managers with fees and underwriting revenue to banks. Some of that new debt gets a higher credit rating than the underlying assets and some offers potentially greater return.

Hedge funds are private, largely unregulated pools of capital whose managers participate substantially in any gains on the money invested.

CDOs are investment vehicles that repackage loans, derivatives and bonds into new securities, providing managers with fees and underwriting revenue to banks. Some of that new debt gets a higher credit rating than the underlying assets and some offers potentially greater return.

Les titres émis ont un meilleur credit rating que le sous jacent, on vend de la merde au prix de l'or quoi...

A prominent hedge fund's implosion revives fears about the poisonous influence in America's subprime-mortgage market