Cover-up in the Bear's Lair

Here is an interesting blog post which pulls together a number of other articles to present the bigger story behind the Bear Stearns hedge fund debacle. Merril Lynch's moment of panic in forcing a fire sale of assets showed just how fragile these assets are. Before the reality of this over inflated asset class could be laid bare the banks halted the sale.

Another interesting point from this blog is the source of the articles - both UK papers. Why can't you read this type of commentary in the mainstream US media? Maybe you can but I haven't found any.

Anyway here are some of the more pertinent points about just how much trouble these funds are in:

• Investors in the worse-hit of two stricken Bear Stearns hedge funds are offering to sell their holdings for as little as 11 cents on the dollar but still finding no buyers, according to unfilled trades on Hedgebay, a secondary market for funds.

• Vulture funds and others have been quick to bid for holdings in the two funds, but the best bid for Bear Stearns High-Grade Structured Credit Strategies Enhanced Leveraged Fund, the more geared of the two, is just 5 cents on the dollar.

• The less-geared Bear Stearns High-Grade Structured Credit Strategies Fund, which the bank has rescued with a $1.6bn loan, is being offered at about 70 cents on the dollar. The fund is only attracting bidders at about 30 cents, according to people who use the system.

Ouch! Remember this stuff is supposedly "high grade" - not for much longer I suspect.