Another Bull market fairy tale---If true this is SHOCKING!!
DRUDGE REPORT
Wed Sep 23 1998 21:09:15 ET
x x x x x
HEDGE FUND NIGHTMARE; LONG-TERM CAPITAL MANAGEMENT BLOWOUT
Wednesday night, losses mounted on more than $100 billion of bets made
in financial marketsaround the world by a huge private investment fund run by Wall Street legend John Meriwether and two Nobel Prize-winning economists: Long-Term Capital ManagementL.P.
The WASHINGTON POST leads with the developing story in Thursday
editions. The NEW YORK TIMES also fronts the financial fright, the DRUDGE REPORT has learned from media sources.
"In an attempt to avoid a new bout of global market turmoil that might
be caused by a fire sale of the fund's assets, chief executives and other top officials from two dozen of the world's largest banks and brokerage firms spent six hours hammering out a preliminary agreement
Wednesday at the New York Federal Reserve Bank to provide a rescue plan of more than $3.5 billion" for the fund, the WASHINGTON POST's Mufson and Berry report.
A source close to the negotiations described to the POST how "hedge
funds" are the "connectors of the global economy."
NYT Gretchen Morgenson is rushing to build a story for the TIMES.
"It is extremely unusual for the Federal Reserve to get involved in the bailout of a hedge fund," notes Morgenson. A spokesman for the New York Federal Reserve Bank, the biggest of the Fed's 12 regional banks, declined to comment on the intervention.
"And like many hedge funds, Long-Term Capital made its bets on borrowed money. At times, the value of its positions exceeded its capital by 50, even 100 times," reveals the TIMES.
"Recently, for example, Meriwether's firm was said to be holding
positions worth $90 billion, while its capital, as of Sept. 2, stood at $2.3 billion." |
