Carlyle Fund Gets Default Notice After Margin Calls

[Cleaner44]

http://www.bloomberg.com/apps/news?p...9.8&refer=home

March 6 (Bloomberg) -- Carlyle Group's publicly traded mortgage bond fund failed to meet margin calls, prompting its creditors to seek immediate repayment of loans linked to even the highest-rated bonds.

[Primbs]

That is big news. Usually it seems with their close government contracts Carlyle had lots of defense contractor investments which were very lucrative. I am surprised they would get involved in such risky investments.

[Cleaner44]

America has no idea how bad the economic situation really is including us. I am convinced much is being hidden. That is obvious to many I am sure. I kind of look at it like this, America sees we have froshbite and might lose a couple of toes, when the reality is that the whole leg will probably be lost.

[Libertytree]

I very much agree with ya Cleaner. While I'm in no way an expert on financial matters it seems to me that the situation is much more dire than even the most astute forecast.

Sometimes I think I'm just a doomer and gloomer but as more and more information becomes available and apparent, me thinks I'm not so far off base.

[Sarge]

Wow!

It looks like they took around a 75M haircut on their share price today and that is not counting their problem on the defaults.

The big boy's might have out done themselves this time.

[ToryNotion]

Carlyle said last month its agency mortgage securities ``have the implied guarantee of the U.S. government and are expected to pay at par at maturity.'' The U.S. Treasury denied speculation today that the government will guarantee mortgage- backed bonds issued by Freddie Mac and Fannie Mae, which are the two largest sources of American home financing.

Oops.

[Cowlesy]

It's getting even worse for Carlyle Capital.

http://biz.yahoo.com/ap/080307/brita...e_capital.html

I wouldn't be surprise if the whole thing gets unwound.

Question is -- How many more of these 32x leveraged funds are out there?

Sticking tight in SKF right now. I feel like more of these will blow up. Today's downward pressure on SKF could be due to short-covering on the financials to take some profits.

[timosman]

Is this what triggered the Great Financial crisis of 2008?

[Cleaner44]

Is this what triggered the Great Financial crisis of 2008?

No, but this was an early result. I remember moving my money to prepare about 8 months before this.

[Madison320]

Is this what triggered the Great Financial crisis of 2008?

I don't think it matters. As Peter Schiff likes to say, "It's a bubble in search of a pin." And the bubble is in the form of debt and it's a lot worse than it was in 2008.

The interesting thing is that to the casual observer it seems as if everything is just chugging along normally. The markets are up, unemployment is down, interest rates are low.

But behind the scenes the Fed has started to reverse course and our debt is piling up. And there's another possible pin coming up. We're about to run out of emergency cash from the debt ceiling. When they lift the borrowing freeze our debt is going to instantly jump up another half trillion or more.