Henry Paulson, the Secretary of the U.S. Department of Treasury, recently announced a plan to purchase equity stakes in large public financial institutions to stem the tide of bankruptcies and failures brought on by the credit crisis. By buying shares in big banks, the government is essentially providing much needed cash to stabilize the companies and provide for some liquidity and credit stimulus. This is just one of many actions announced in an attempt to diffuse the credit crisis. Equally busy are Ben Bernanke and the Federal Reserve. Paulson swears …

Florida, one of the hottest real estate markets during the insanity of the housing bubble, is suffering from a barrage of wildfires that look suspiciously like the work of arsonists. When the credit crisis struck and housing values began to fade, I wondered about the potential for unethical and desperate homeowners willing to experiment with creative ways to escape their financial obligations. With many homeowners over-leveraged and paying for homes worth less than their mortgages, otherwise known as “underwater” mortgages, I thought that some homeowners would happily walk out of …

Life is “solitary, poor, nasty, brutish, and short.” Thomas Hobbes might say the same about life in the stock market for hedge fund managers. The mortality rate found in the hedge fund world is extremely high; it is an ecosystem that is filled with predators and would-be predators. By mid-2007, an estimated 9,700 hedge funds controlled approximately $1.7 trillion in assets. According to Hedge Fund Research, 1,518 launched in 2006 and nearly as many called it quits. The battle for investment survival mirrors Hobbes’ State of Nature found in his …

Bear Stearns plunges amid trade risk worries – Bear Stearns (BSC) was a pathfinder in the securitization of mortgages, but its over-reliance on mortgage-backed securities led to big losses in a couple of its hedge funds. Now external hedge funds, clients of its prime brokerage, are fleeing in droves for fear the bank lacks sufficient cash or liquidity. Oh how our mighty investment banks have fallen. Funny how the top in these stocks coincided with record numbers of MBAs coming out of our business schools to join the likes of …

As a renter, I’ve always thought that I had the advantage of not having to worry about property taxes, home maintenance, unruly tenants, and worst of all the illiquidity that homeowners or real estate investors suffer from. The real estate boom almost shook my conviction but the delirious giggles caused by incessant price appreciation and easy credit thankfully reached an audible decible. I reasoned that something was awry when my close friend, a U.S. Postal letter carrier at the time, managed to lever up with mortgages on three …

I love this guy Sam Zell – he’s just so funny and sharp. Zell is the real estate investment billionaire who sold his Equity Office Properties Trust to the Blackstone Group for $39 billion in the early part of 2007. He recently bought the Tribune Company, owner of the Chicago Tribune and the Los Angeles Times. The company also owns the Chicago Cubs major league baseball franchise. Zell is known for using colorful language during press conferences and speaking very clearly and succinctly in a straightforward …