Talk About Evaporation!

In my previous post I was talking about water and evaporation and impermanence and change; one exit script from the fabled land of Shangri La. And at the end I was going to shift from water to oil. I thought it would be a clever transition for the end of the post. But it was not to be since most of what I wrote at the end was lost to the etherspace. Drat.

Then today in the Boston Globe there was another kind of evaporation that hints at a further exit path from Shangri La.

To quote: "Bear Stearns Cos. told clients that a melt-down in the subprime mortgage market has made the assets of two of its flagship hedge funds almost worthless. The assets in one of the funds are essentially worthless, while another is worth 9 percent of its value at the end of April, according to a document obtained by the Associated Press. In March, the High-Grade Structured Credit Enhanced Leveraged fund was worth about $638 million - and now has no value. The larger and less-leveraged High-Grade structured Credit fund lost 91 percent of its value. It was worth about $925 million in March."

Talk about evaporation of (imagined) liquid assets!

To paraphrase Tip O'Neil: "A billion here and a billion there, and pretty soon you're talking about real money."

Sigh...

(For further and more technical / detailed elaborations of this development and implications you can look at recent entries at Sudden Debt and Generational Dynamics.)