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To: MulhollandDrive who wrote (108680)	3/9/2008 8:27:26 PM
From: Giordano Bruno	Read Replies (1) \| Respond to of 306849

In all honesty, no one screws with Carlyle.

To: MulhollandDrive who wrote (108680)	3/9/2008 8:46:34 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 306849

Well, LTCM didnt start with 100:1. They had a leverage of an estimated 24x overall (though this doesnt tell anything about the riskiness of their positions) when they showed 5B equity and around 120B on the balance. I have some better examples for you: Thornburg which really tried to avoid poorly rated tranches had a leverage of 12x. Annaly has a leverage of about 9x. Most thrifts use 10x leverage and they also invested into mortgages. This is why 32:1 must be considered reckless. In these times, 8 to 10% equity might be not enough.

To: MulhollandDrive who wrote (108680)	3/9/2008 8:54:44 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 306849

no 32:1 is not the worst of who is out there but it is definitely on the extreme end of leverage. I don't know how Carlyle pitched themselves to their clients.... was it as an extreme, highly leveraged vehicle or more like "we only invest in AAA grade securities" etc. LCTM started out with a 25:1 model. They only hit 100:1 when an extreme event occurred - something that their models said would only hit once in a universe or something. I believe most highly leveraged hedge funds, even the big ones, top out at about 10:1- but I will try to find some hard data on this. 32:1 is way out there.