Greece and the IMF appear to be pushing for as much as a 75% haircut

Greece and the IMF appear to be pushing for as much as a 75% loss on NPV basis, while the banks, many of whom have written down 50% of their Greek holdings, appear willing to accept a 60-65% hit on the NPV basis. Participating in the haircut damages the ECB. It is possible that the loss, even from the discounted levels it purchased the Greek bonds, would wipe out the ECB’s capital. Alternatively, as we have point out previously, if the ECB does not take a haircut, it undermines the effectiveness of its sovereign bond purchases. The more the ECB buys the greater the haircut the private sector ultimately faces

Kyle Bass on Hardtalk about Europe, Japan and Hedge Funds

BBC’s Hardtalk recently featured Kyle Bass, Founder of Hayman Capital, a hedge fund based in Texas to talk about global markets and the sovereign debt crisis.

Video below

Hugh Hendry at the LSE

This is an interview with Eclectica Asset Management’s Hugh Hendry from much earlier in the year. It is a wide-ranging interview about the global macro environment, comparisons to the 1920s, investing, money management and hedge funds

Chanos and Gross versus Paulson and Bloomberg

Here’s Jim Chanos on the demonstrations on Wall Street which express the anti-bailout sentiments expressed by both the Tea Party and #OccupyWallStreet. Bill Gross, Vikram Pandit, John Paulson and Michael Bloomberg all chimed in too

“Dexia was not a bank but a hedge fund”

If you recall Global Macro Monitor’s post on Europe’s Bank Problem last week, the IMF chart showed very well how banks were struggling to wean themselves from short-term funding sources and increase tangible common equity. The Belgians had made Herculean strides in this effort. But it has not been enough

Trader: “I go to bed every night; I dream of another recession”

This video clip has been making the rounds so I thought I should post it (without commentary). The line most people have focused on is the one I quoted in the post title. Feel free to comment

The European Bank Run

What will the Europeans do here then? I am anticipating bailouts, liquidity injections and capital injections. But this is looking pretty dismal now so it is not clear if that will be enough

Ray Dalio on the D-Process in Europe

The D-Process played out in greater initial force in the US private sector. Now Europe is playing catch-up, but more via the public sector due to the restrictions imposed by the Euro. Ray Dalio comments on how he sees this process proceding and how to invest in this environment

Is Italy running out of money?

Institutional investors have learned how to create and game self-fulfilling prophecy runs in various asset markets. (George Soros understood this and demonstrated its efficacy with his effort to break the pound in 1992.) Indeed, this is one of the “secrets” to manufacturing higher absolute returns if you are a hedge fund portfolio manager – namely, creating and managing such bandwagon effects. It is a plausible simple story with a self-fulfilling aspect to it

Soros getting out of the game

Apparently, there was a reason that Soros was 75% in cash. He is getting out of the hedge fund business altogether, liquidating assets and returning the funds to investors

“Don’t listen to Hugh Hendry. He’s a loser.”

Below is a nice little interview with Hedge Fund manager Hugh Hendry . The headline quote was his way of showing us he doesn’t take himself too seriously. But his underlying message is that he believes it pays to really massage the most contentious issues and take a view on those. If you do have a contrarian view, it will be backed by more rigorous analysis such that you can be better assured of a decent return in down markets. Right now, one of his most contrarian bets is Japan

Hoenig: Restrict bank activities to core services

Below are extracts of a paper formulated by Thomas Hoenig, the President of the Federal Reserve Bank of Kansas City, to better regulate the US Financial sector. His overarching aim is to isolate core banking activities that are protected by a government guarantee from riskier investment banking and trading activities