News Item : 48 Date Posted : 5/26/2005 Posted By : david
THE RECENT HEDGE FUND TURMOIL MAY JUST BE THE PRELUDE TO A GIANT EARTHQUAKE [Source: FTD 24.05.05]
THE RECENT HEDGE FUND TURMOIL MAY JUST BE THE PRELUDE TO A GIANT EARTHQUAKE, states the German edition of the Financial Times, featuring the ongoing rush of investors into the so-called "safe haven" of government bonds. In the last days, the 10-year yield on Euro government bonds has plunged to 3.27%, the lowest ever, while the yields on U.S. Treasuries were falling as well. At the same time, investors are liquidating holdings of corporate bonds and other high-risk assets. This "fear of a financial crash" could increase further, states FTD, once a victim of the hedge fund crisis appears in the open or new threats become visible on the horizon. Clearly, the "chances for a financial mega-disaster have risen in recent years." "The present nervousness could be interpreted as the first rumblings before an earthquake. In the case of the Krakatau eruption anno 1883 it took more than three months from the first rumblings to the explosion of the mountain."
