Financial markets face mega turmoil from bad loans made to accommodate merger and acquisition mania
Sam Adelton
Sep. 23, 2007

The sub prime loans are just tip of the iceberg. The massive bad loans made to the private equity funds to accommodate the merger and acquisition mania threatens the financial markets all over the world. It is estimated that the sub prime loans make up for just 28% of all the bad loans made.

The hedge funds are financially bleeding. They hold the low quality mortgages that are looking worse every day.

The private equity funds and hedge funds are in for a real tough ride. The merger and acquisition mania started from Bank of Japan’s artificial low interest rates. The carry traders gained a lot initially. Looking at those impressive gains, the hedge funds and the private equity funds jumped in without well-defined hedges.

The net result is close to three trillion dollars in bad loans. The financial markets are in chaos with just the sub prime mortgages. Guess what will happen when Private Equity funds and Hedge Funds go belly up?

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