Phorgy Phynance

Just heard that on BBG TV’s stream…

[Update: Here is the subsequent story

Goldman's Global Alpha Falls 26% in 2007, People Say

]

Don’t say I didn’t warn you

[Edit: There is a dialect of the English language called Californese, which involves heavy doses of sarcasm and tongue-in-cheekiness. This post is written in Californese.]

Goldman Sachs flagship fund falls 8%

I know. An 8% fall for a hedge fund is not unprecedented, but remember who we’re dealing with…

Plus, the 8% is just for a week. They are down 12% for the year. What is their VaR again? Which CDO model were they using? Are they sure their risk management system really is air tight?

Instant Karma’s gonna get you
Gonna knock you right on the head
You better get yourself together
Pretty soon you’re gonna be dead
What in the world you thinking of
Laughing in the face of love
What on earth you tryin’ to do
It’s up to you, yeah you

Instant Karma’s gonna get you
Gonna look you right in the face
Better get yourself together darlin’
Join the human race
How in the world you gonna see
Laughin’ at fools like me
Who in the hell d’you think you are
A super star
Well, right you are

Well we all shine on
Like the moon and the stars and the sun
Well we all shine on
Ev’ryone come on

Instant Karma’s gonna get you
Gonna knock you off your feet
Better recognize your brothers
Ev’ryone you meet
Why in the world are we here
Surely not to live in pain and fear
Why on earth are you there
When you’re ev’rywhere
Come and get your share

Well we all shine on
Like the moon and the stars and the sun
Yeah we all shine on
Come on and on and on on on
Yeah yeah, alright, uh huh, ah

Well we all shine on
Like the moon and the stars and the sun
Yeah we all shine on
On and on and on on and on

Well we all shine on
Like the moon and the stars and the sun
Well we all shine on
Like the moon and the stars and the sun
Well we all shine on
Like the moon and the stars and the sun
Yeah we all shine on
Like the moon and the stars and the sun

Again, the title is not a fact, but a premonition. Since my last premonition (sadly) came true, maybe there is something to this voodoo analysis after all.

One aspect of the subprime CDO and subsequent contagion that hasn’t gotten much attention (yet) is the influence and impact of risk management systems. In one of my first articles on the blog, I wrote about CDOs and risk management. If you’re anything like me, you’re sick of bloggers saying things like “As I said way back when…” implying that they saw everything coming long before everyone else, so I’ll try to tread lightly.

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