Mark to Market: A ticking bomb for the hedge funds

It just feels like we are 4 to 12 weeks away from a "big financial event." This is the result of the increasing "risk premium" being seen in all financial markets. Quite frankly, the current system is set up for a negligible risk premium. That risk premium (or risk aversion) will only grow over the next few weeks.

Head over to calculated risk as they talk about the 3rd Bear Stearns hedge fund to halt disbursements. We all know what was left from the first two... This is going to

A link for the only good "Hedge fund implode-o-meter" I know of:
http://wasatchecon.blogspot.com/2007/06/hedge-fund-failometer.html

I just cannot imagine "the rich" doing without their jets, clothes, vacations, etc. So when liquidity becomes precious, they'll rush towards it. I still remember a friend's glee as he tracked the sultan of Brunei's cash flow issues post Gulf war I. ;) Can we say "high end fire sale?"

I am predicting that the meltdown in subprime will really start to hurt real estate closings in September. This is probably not enough... but the slow down in the LBO market might be...

Either way, I'm thinking J6P gets his wake up call in September or October. No later.

I've also decided to completely shut up about finance at work or with friends. I'm tired of being Mr. Doom. Its too late to save them; at this point I'll only give them something to hate me for. I know people who left our work to seek employment with yacht builders; maybe not the best time in the economic cycle for such a decision?

If you haven't read "The Hungry Years," consider it. Its very depressing. But it does a good job of describing how jobs were shed in the great depression. Ouch.

Thankfully the one coworker who did listen just entered escrow on selling his home! He's dutifully cut his asking price 5% every couple of weeks (he couldn't quite make himself do it every week). He actually ended up with a *tiny* bidding war. (Two buyers, one just out did the other. 1st buyer refused to increase the bid.

Its too late to stop this. I don't think the crash will occur in August...

But the Nikkei, Hang Seng, and Jakarta composite aren't exactly doing hot tonight.
http://finance.yahoo.com/intlindices?e=asia

Got popcorn?
Neil