Sign In
SHARE
Carlyle Deserved to Collapse
Should Carlyle Capital be aggrieved that its lenders are seizing its assets? There is a case to be made - and it's made quite well by Robert Peston - that this is all the fault of the Fed and its new TSLF facility. Rather than dump Carlyle's assets, the banks can use them as collateral at the Fed's new window, and get lovely liquid Treasury bonds in exchange: something Carlyle can't do itself.
So maybe Carlyle got unlucky, in that it might have been able to negotiate something with its lenders had the TSLF window not been in existence. On the other hand, Carlyle was clearly the architect of its own unluck, as would be any insolvent fund with 32x leverage. No one has any business taking on that kind of leverage in this kind of market, and efficient markets demand that when such outsize bets sour, the bettor collapses.
In any case, Carlyle is now in default on $16.6 billion in obligations: that's a huge default, even if recovery value is going to be very high indeed. And it's yet another striking datapoint for whomever is going to write the history of this credit crisis.
Loading...
Thank you for registering as a Portfolio.com Insider. Your comment has been added.
Create Your Public Profile
- The Times' Rorshach Geithner Story
- Apr 27 2009 9:26AM EDT
- Sinking Animal Spirits
- Apr 27 2009 8:45AM EDT
- Counter-cyclical Urban Policy
- Apr 26 2009 10:00AM EDT
- Be Your Own Counterfeiter
- Apr 26 2009 9:36AM EDT
- Being Tim Geithner
- Apr 25 2009 12:37PM EDT
- Notes From a Press Conference Naif
- Apr 25 2009 9:41AM EDT
- What Good is the News?
- Apr 25 2009 8:32AM EDT
- Stressful Enough
- Apr 24 2009 2:29PM EDT
- Not Regretting the Pound
- Apr 24 2009 1:09PM EDT
- Introducing the New Ford Squeeze
- Apr 24 2009 9:47AM EDT
- Non-Economic Questions of the Day
- Apr 24 2009 9:12AM EDT
- The Stress Test Blind Alley
- Apr 24 2009 8:36AM EDT
- Happy Hour
- Apr 23 2009 9:40PM EDT
- Recovery Without Rebalancing
- Apr 23 2009 6:13PM EDT
- The Shape of Your Recession
- Apr 23 2009 5:11PM EDT
Archive
Categories
Links
- Email Ryan Avent
- Econospeak
- Financial Crookery
- The Epicurean Dealmaker
- Naked Capitalism
- Alphaville
- Marginal Revolution
- The Panelist
- FP Passport
- Overcoming Bias
- Andrew Leonard
- Barry Ritholtz
- Brad Setser
- Carbon Tax Center
- Calculated Risk
- Greg Mankiw
- Free Exchange
- Dean Baker
- Alexander Campbell
- Kash Mansori
- The Bayesian Heresy
- A Fistful of Euros
- John Quiggin
- Michael Mandel
- Lance Knobel
- Mark Thoma
- Dan Gross
- Curbed
- Streetsblog
- Chris Anderson
- Deal Journal
- MarketBeat
- DealBook
- DealBreaker
- Carl Bialik
- Michelle Leder
- Brad DeLong
- Ultimi Barbarorum
