Carlyle Capital, Hedge Funds On Brink of Collapse

This sounds like the modern day equivalent of bank runs.

Like the revolution, I suppose this won't be televised either.   It would be fun though.  Someone want to get dressed up in rags and go bang on a Hedge Fund's door shouting "Give Me My Money!"

Lets see.  Hedge Funds seem to be at the bottom of the incredible price increases we've been seeing in gas, oil, and even food prices lately.  It used to be rich people could only buy up parts of businesses and wait for them to increase, but lately they've realized they can create pyramid schemes on life's necessities and take the less powerful people of the world, like you and I for all they're worth.

Somehow I have little pity for the Hedge Fund managers and those financing them.

Read Times Online report "Hedge funds on the brink as US Federal Reserve cash fails to ease crisis".

 Also read Bloomberg News: Carlyle Capital Nears Collapse as Rescue Talks Fail

As I understand the situation: CC is based in the UK but was created by American company, The Carlyle Group.  CG won't rescue the offbranch since creditors continue to downgrade collateral (housing loans) the company offers.

The feeling for the people caught up in this, sounds somewhat like what most Americans get caught up in since the US Congress refuses to ban usuriuos credit card practices.

 Excerpt Bloomberg report linked above:

The fund's losses were caused by ``excessive leverage,'' said Arthur Levitt, a senior Carlyle adviser, in a Bloomberg Radio interview today. ``This did not affect the overall Carlyle enterprise,'' said Levitt, former chairman of the Securities and Exchange Commission and a board member of Bloomberg LP, the parent of Bloomberg News.

``This was a single fund, and I suspect as this plays out, you are going to see a lot of other private-equity companies, a lot of banks, going down the same road,'' he said.

Carlyle Capital's plea for refinancing on residential mortgage-backed securities failed late yesterday after a pricing service used by some lenders reported a decrease in the value of the assets, the firm said.

``The basis on which lenders are willing to provide financing against the company's collateral has changed so substantially that a successful refinancing is not possible,'' Carlyle said in the statement. It expects additional margin calls today of $97.5 million.

Hmm, but then if your house value declines you are still supposed to pay your mortgage aren't you or get hit with substantial penalties?  A: Will the Carlyle Group face big problems for allowing CC to fail? Or  B: Will they get a bailout from the government?

From the article:

Carlyle's fund has said its so-called agency debt has an ``implied guarantee'' from the U.S. government.

Looks like option "B" for the Carlyle Group. 

Checking headlines again I'm seeing reports that Carlyle Capital's problems are crushing European and American stocks. Search Google News on "Carlyle Capitol" for details.

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