The November issue of Euromoney has a fairly scathing (for Euromoney) review of the sordid LTCM bailout. One article describes the genesis of the Fed intervention as follows: "Peter Fisher, executive vice-president at the NY Fed, had heard enough in daily chats with bankers to know they were all concerned about Long-Term Capital Management. He also sensed there was too much rivalry between the main players for them to get round a table and sort this out [LTCM's meltdown] by themselves. On Sunday September 20 Fisher went to LTCM in Connecticut in Greenwich with assistant treasury secretary Gary Gensler and two other NY Fed colleagues. Having looked through LTCM's books, they were all staggered at the sheer volume of trades." (pg 35) Bankers evidently must have amazing conversational powers, to get a whole mission team from the Fed to investigate the books *themselves*. One question: at one point, columnist Michelle Celarier quotes House Rep. James Leach, chair of the House Banking and Finance Committee, to the effect that "a third of hedge funds are highly leveraged." (pg 39). Does anyone know if this is true, and how high that leverage might be? Do we have any idea how horrible a bubble bust could get? -- Dennis
