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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 375.93-1.8%Nov 14 4:00 PM EST
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To: TobagoJack who wrote (24293)10/18/2007 8:08:28 AM
From: elmatador  Read Replies (1) of 217788
 
How London Created a Snarl In Global Markets. In recent weeks, bankers and Treasury officials have held a string of urgent meetings to address the problem. They summoned Messrs. Sossidis and Partridge-Hicks because of their expertise in SIVs, which until weeks earlier some of them had never even heard about. Gordian Knot runs the world's biggest such fund, with some $57 billion in assets, from an office in London's ritzy Mayfair district.

The two bankers are part of a small coterie of London bankers who engendered what became a $400 billion industry. The funds boomed because they allowed banks to reap profits from investments in newfangled securities, but without setting aside capital to mitigate the risk.

Now the industry has become a significant threat to the stability of global financial markets. After the recent meetings, Citigroup, Bank of America Corp. and J.P. Morgan Chase & Co. announced an extraordinary effort: They will attempt to raise a fund of as much as $100 billion by the end of the year aimed at supporting an orderly unwinding of many SIVs, with an eye toward restoring investors' confidence in the debt markets that the funds use to raise money. They chose $100 billion as a goal for the superfund based on a back-of-the-envelope calculation -- roughly one-third of the $350 billion in debt issued by SIVs would be coming due in the next six to nine months.

online.wsj.com

and everybody was saying it would be carry trade unwinding...
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