patrick.net

No problem. All we need to do is talk Mr. Lahde into opening a bank! (One that IS solvent btw). We'll call it Lah-de-dah Savings and Trust.

Since most lenders have lost 90% of their market cap his returns from his short positions have to a large extent covered the damages. Meet your new banker.

This is a weird experience, watching a very slow motion train wreck. The super-SIV idea, the mortgage freeze idea, mothballing homes, weakening the dollar. Everything is designed to buy time so that the fire-sale won't happen. But there is simply no derailing the asset repricing express, and its not just housing.
The credit bubble has created unhealthy valuations virtually everywhere. The economy needs this recession. Badly. Just to bring sanity back to life.
Debt is not wealth. Hard work, saving, and wise investing are wealth.

Once the Joneses are not given their MEW, credit cards, and easy access to serial bankruptcy they are going to be a lot easier to keep up with.

Hedge funds betting against the lending industry. You betcha!

One NY hedge fund manager is warning that we'll see something similar to the Great Depression very soon:

A Wall Street superstar this year who runs Balestra Capital Partners, Jim Melcher, says he's "worried about a recession. Not a normal one, but a very bad one. The worst since the 1930s. I expect we'll see clear signs of it in six months with a dramatic slowdown in the gross domestic product."

Talk of Worst Recession Since the 1930s
http://www.nysun.com/article/66268

"a lot easier to keep up with"

Yes it will. Duke, I agree. It's all about buying time right now. Puttin' the "freeze" on loans, the whole Maryanne. It will be interesting to see if indeed the HF's take an interest in filling the void created by 189 imploded lenders? They'll have to do "something" with all those profits!

You got it right Duke. The slow motion train wreck that will be reduced to a crawl with all the upcoming rate cuts from the fed.

You are correct also Boom. A recession is coming. But we need a recession to get rid of all of this deadwood. The speculation, the greed, the lack of savings and the unhealthy dependency on credit in our society. All this needs to be wiped away. The NASDAQ is a casino. Our homes are an ATM. We have mortgaged our children's future for current consumption.

We need a new beginning. A good start would be to export Ben Bernanke to China.

I don't see Hedge Funds taking up the housing charge. In fact, I see global banking getting away from securitization for quite some time.
I have been thinkning about the term 'frictional unemplyment.' There is a rate of unemplyment at which it is no longer cost effective to put another body to work - their net econmic effect is negative.
Similarly I believe that with too much credit sloshing about people have been throwing bad money at stocks, bonds, housing, bad R&D, etc. The net effect of adding more capital to the market is generating only waste and speculation. Capital markets should back only those ideas and goods that meat a threshold. Frankly the world is just not yet ready for a 48T economy.

What of housing? Fannie and Freddie will show some spectacular losses. People will call for regulation until it finally emerges that housing is a form of generational warfare. New buyers should ask for the disolution of Fannie and Freddie as the net effect of cheaper rates set against lower prices completely favors lower prices. But the financially immature don't get that.
In the end we will get some banking reform that will limit price destruction at the cost of the strength of the US dollar .

By the way, this fund seems very hard to find on the net in terms of contact info. I couldn't find a website, and the best other contact info I could find for them is this:

Lahde Capital Management LLC
2700 Neilson Way, Suite 1126
Santa Monica, CA 90405
310-392-3010
Andrew@lahdecap.com

Note: the website lahdecap.com is under construction, but that doesn't mean the email @ lahdecap.com isn't working.

Also note: "The funds charge a 1% management and 20% performance fee, with a $250,000 minimum investment requirement."

http://www.finalternatives.com/node/1143

Lahde's new fund betting on a major slowdown in commercial real estate will probably be another winner.

P.S. I have no connection with or stake in Lahde Capital. Although I wish I'd been there a year ago!

I was kidding. I don't see HF's having any desire... to get caught up in that. Least not for some time to come. It's funny though that Lahde decided to get out at this point and move to commercial? One of Randy H's links showed that a majority of HF's fully planned on milking the subprime slide for quite a while.

I will beg to differ on securitization though. The Street likey and now I'm hearing boomer death put bonds will join the fray (among others). Of course they'll have claimed to have learned their lesson and promise not to do it again. I agree, it should go away, we can only hope.

I don't even understand how this all works ..... Bet? What do you mean? Like going to the racetrack and meeting up with a bunch of big guys wearing pinky rings and telling 'em, "I'll bet'cha a million dollars this or that goes down?"

I understand sight alignment though, and 'scope parallax, and how to snipe a target so the sound bounces off of something and everyone thinks it came from the grassy knoll, or a building across the street etc..... Lots of us understand that, and more can be taught.

Now Abu Dhabi owns CitiBank, it's right and proper to stiff 'em all, they're not American companies any more and probably have not been for a long time. I suspect we will get to the stage where goon squads will come out to take whatever they can for their Arab rulers, so you know what to do.

Get armed, get expert, keep ready.

As ex-sunnyvale-renter says, it is not always so obvious to figure out how a certain bet is made.

What conduit (if I dare use that word) did Lahde Capital use for their bets?

DinOR,

Can you explain boomer death put binds in a nutshell?

@justme,

A lot like "viaticals". Back when AIDS was really raging some smart investors decided to give people 200k upfront for their 500k life insurance policy. (I know, join the world of the living!) Anyway, early on they were great deals (for investors) but as the condition became more survivable and longevity increased... returns decreased. Obviously they became a lot less popular.

No sooner does "the first boomer" sign up for her SS them WS comes out with a newly securitized product. Off course they'll be underwritten, cast in pools and traded on the secondary. For me it's a major turn-off. All those fees built into "the product" and I'm sure by the time they're done they'll be labeled "AAA" (so.. jack for yield) and then somehow guys like me are supposed to sell it as "quality paper" for a lousy 1/4 maybe 1/2 pt. mark-up.

They sales pitch will go something like; "Mr. Investor these BDB's are a great addition to your portfolio b/c it plays on the boomer demographic, it has NO correlation to the stock market AND it has this "implied guarantee" of the gub'mint" (or words to that effect).

Since we basically single-handedly stopped the "bail-out" maybe if enough people get behind this we can stop it before it gains momentum?

I still like simply killing off the rich and looting their enclaves, what's wrong with that? It's easy to understand, ecological, and fun. A whole generation raised on the video game Doom as well as working-class despair will prove enthusiastic, and any farm kid or hunter who's cleaned game won't find gutting a body much different.

Go where the money is.....

We here at Patrick.net do not advocate violence of any kind. :(

Since most HF firm's min. is at least 250K (and that's in ONE investment mind you) as I've said before, the rich will take it in the shorts on THIS one! The reason Lahde is even a story is b/c he was on the right side of that trade. (Most HF's weren't).

That's the reason there's even any discussion about "propping up home prices" and injecting liquidity. Where were these guys when daytraders were takin' it in the ying-yang?

The September Case /Shiller Home Price Index numbers (PDF alert) are out. Shiller does a victory lap:
“The declines in the national figure are notable for two reasons,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “First, the 3rd quarter decline, at 1.7%, was the largest quarterly decline in the index’s 21-year history. And, second, the year-over-year decline posted its second consecutive record low at -4.5%. Consistent with prior 2007 reports, there is no real positive news in today’s data. Most of the metro areas continue to show declining or decelerating returns on both an annual and monthly basis."
Miami continues its spectacular fall and SF Bay Area is down .8% month-to-month.

I don’t even understand how this all works ….. Bet? What do you mean? Like going to the racetrack and meeting up with a bunch of big guys wearing pinky rings and telling ‘em, “I’ll bet’cha a million dollars this or that goes down?”

In a metaphorical sense, you're absolutely right! Derivatives to me have always seemed like sanctioned gambling, only with much, much higher antes and a house that's willing to spot you a few billion here and there.

What we're seeing unravel is what the "mortgage elimination" crowd bases a lot of their claims on. You go to buy a home, get a loan and sign some doc's? But where did the money for the seller really come from? Did the bank that issued the check have that much on deposit?

I know they sound like incredibly simplistic questions but from what we've seen (so far) in '07 you can understand why people feel confused. And we haven't even gotten to all the derivatives yet!

Investopedia has some great links to explain short selling and derivatives.

DinOR,

Not quite sure how the BoomerDeathBonds (BDB) work. Something like, "I'll give you 200k up front fot the right to all your future SS checks"?

I wonder if there is a rule that you cannot "pledge" (that is the term used in stock options agreements) your SS payments against anything. Come to think of it, that such a rule would be unreasonable, because then you could not borrow money (for a house :)) against your future SS income.

Wells Fargo CFO is presenting at an investor conference tomorrow AM. Should be interesting given the recent housing market/Great Depression comments from their CEO. Will their subprime portfolio go nuclear? Stay tuned...