Worst yet to come...

This was my fear too, and now seemingly made public with someone far more knowledgeable about the industry and interconnectedness of all of the financials out there. Mr Roubini. P.S. I dont really think its fair to label this guy as Dr. doom and gloom. He has just presented everything fairly logically and objectively and been warning with multiple specifics and how this would unfold for several years up to now. He is Only one i know who has been fairly accurate, very consistent and unwavering in his message in so much as the depth and damage, and has not been ranting and raving like a guy like a Schiff or a Prechtor from years back or some of the perrinial doom and gloomers. He stays on message. No funny back talk or caveats. I really think people need to take heed from what this guy is saying, and he also has presented many solutions, which seem logical and workable, and even predicted the market reactions when the Fed has made its recent bumbling stumbles. So how this truly plays out is in question, but my feel is also, the markets just have not at all bottomed out here sufficiently with the level of the impact of the fallout from this total crisis in numerous financial distortions going on. There are so many previously unthinkable and largely supposedly "improbable" scenarios actually playing out, that it makes all of the models heretofore utilizied in the creation of these (formerly "genious") financial products and bets, totally unavoidably implosive. People call it somewhat innocuously "de-leveraging." I think tht is pure understatement intended not to fully depict the damage that will happen or is happening now somewhat behind the scenes, and the public truly doesn't know of the impact. This is the least of transparent markets out there. I also think TA and technicals are going to be further tested to the limit as far as predicting how far this could go on or down. Anything more than very short term trading seems highly highly risky to me. From Bloomberg: Oct. 23 (Bloomberg) -- Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said. ``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, said at a conference in London today. ``There will be massive dumping of assets,'' and ``hundreds of hedge funds are going to go bust,'' he said. Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close. ``Systemic risk has become bigger and bigger,'' Roubini said at the Hedge 2008 conference. ``We're seeing the beginning of a run on a big chunk of the hedge funds,'' and ``don't be surprised if policy makers need to close down markets for a week or two in coming days,'' he said. Roubini predicted in July 2006 that the U.S. would enter an economic recession. In February this year, he forecast a ``catastrophic'' financial meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities. Bear, Lehman The comments preceded the collapse of Bear Stearns & Cos. and Lehman Brothers Holdings Inc. as well as the government seizure of Freddie Mac and Fannie Mae. The Dow Jones Industrial Average, a benchmark for American equities, has lost 37 percent this year, including its biggest daily drop in more than twenty years on Oct. 15. The Dow average rose 0.5 percent to 8563.42 as of 10:09 a.m. today in New York. Italian Prime Minister Silvio Berlusconi roiled international markets on Oct. 10, first saying world leaders were discussing shutting down global financial exchanges, and then saying he didn't mean it. ``In a fairly Darwinian manner, many hedge funds will simply disappear,'' Roman said, speaking at the same event as Roubini. The hedge fund industry is stumbling through its worst year in two decades and posted its biggest monthly drop for a decade in September. Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall. `Very Ugly' ``Things are getting very ugly also in the emerging markets,'' Roubini said. ``We used to say when the U.S. catches a cold, the rest of the world sneezes. Well, the U.S. now has chronic and persistent pneumonia. It's becoming a mess in emerging markets.'' Developing nations' borrowing costs jumped to the highest in six years today as Belarus joined Hungary, Ukraine and Pakistan in seeking a bailout from the International Monetary Fund to help weather frozen money markets and a slump in commodities. Argentina risks defaulting for the second time this decade. ``There are about a dozen emerging markets that are now in severe financial trouble,'' Roubini said. ``Even a small country can have a systemic effect on the global economy,'' he added. ``There is not going to be enough IMF money to support them.'' Roubini, a former senior adviser to the U.S. Treasury Department, earlier this month said that the world's biggest economy will suffer its worst recession in 40 years. ``This is the worst financial crisis in the U.S., Europe and now emerging markets that we've seen in a long time,'' Roubini said. ``Things will get much worse before they get better. I fear the worst is ahead of us.''

Edited by nimblebear, 23 October 2008 - 08:04 PM.

I follow Roubini as I lean towards the skeptical bear camp. However this 100's of hedgefunds blowing up is kinda out there doomsday stuff. However I guess it could happen these hedgefunds probably have the same toxic assets on their balance sheets and no on is going to bail them out and they are not really regulated.

I agree totally about Dr. Roubini. He had not been saying this years and year as some have without any specific timeframe. When he began his strident warnings in the summer of 2006. At that point, there were already "cracks in the dam." Housing was already in the beginnings of it's collapse. Any savvy long-term investor with a wit of smarts should have had their fingers on the trigger at that point. The Bear, Stearns funds started cracking eight months later and a few months after that the dam broke. In July 2007, I pulled the trigger on my long-term monies that were in equities and they have been on the sidelines intact, collecting what little interest they can collect, since but...intact.

Anything more than very short term trading seems highly highly risky to me.

I've felt that way for over a year now. The IT was just too unpredictable. Dispite the great IT technical analysis here, I could never be sure when what's happening now would begin. To each his own but, IT is too stressful for me and it's way too early to redeploy my LT monies.

Edited by milbank, 23 October 2008 - 08:20 PM.

I follow Roubini as I lean towards the skeptical bear camp. However this 100's of hedgefunds blowing up is kinda out there doomsday stuff. However I guess it could happen these hedgefunds probably have the same toxic assets on their balance sheets and no on is going to bail them out and they are not really regulated.

What about the hundreds of hedge funds who are and have been short banks and gold?

Further, why do you think the market has been going down? It's because dumb hedge fund operators are liquidating their over leveraged funds. You don't think stocks are really worth what they're trading at, do you?

M

So much for the "Hedge" part. The funds that are blowing up are more accurately "Ponzi Funds" leveraged to the hilt like everything else. You ask a good question Mark. I, for one don't know anymore. What a company is worth this year might be all together different a year from now. Even three months from now. A stock is, of course, worth what a buyer is willing to pay for it. I expect there is going to be a lot more deleveraging of "Hedge" Funds as well as stock funds before this calamity is over. On a slightly related note, I saw in the news that not only is GM going to lay off more workers, they are going to stop their matching payments into the 401Ks of those who are left. I expect this is going to become very fashionable for many businesses soon. Joe and Jane are on their own. As far as Main St. goes, Washington fiddles as Rome burns.

hundreds and hundreds? it will be thousands...but also old news, as this forced liquidation is whats driving the mkt down. I think there are around 8,000 hedge funds? expect to lose 25-50%. Most never had any idea what they were really getting into. Leverage is a double edged sword friends, and when its the other side...oh my, its bad. Money management is most important during something like this, in fact, it may be THE single most important thing...as those who don't, will not be around to play anymore. Gonna end far worse than most could have ever imagined.

Edited by tommyt, 23 October 2008 - 10:36 PM.