House of Paine

bayou proves it again : "its big ,its easy ,its way fun"

 " fraud's 
  inevitable 
long as you got .....
  the proper  set
 of opportunities
and incentives "
                      gary Becker 

---------------------------
  yup
  that's what Gary  
  preached 
    way back in '76

we micro freaks
used to kall it 
"the agency/principal problem "

now comes bayou

to prove it once again 

========================


 "lets  try bayou 
         by isreal"

 lots of folks did

and today
            "fuck its all gone "

and unlike natural dissasters
   we pretend financial ones are


prevent-able ....

---------------------------- 

so who got the rubes 
into the saw mill ?



advisor to "funds of funds ...."

funds of funds ?

"Funds of funds 
are paid substantial fees 
to select 
 the best-performing hedge funds "
  

"Many such funds
 brag about 
their due diligence efforts 
as part
 of what justifies their fees"

fees?

"fees until recently
   typically included
 a management fee of 1 percent
 of total assets 
      under management 
and 5 to 10 percent
 of profits
 from the portfolio's performance"

 ----but times have been savage
           of late

too many wizzards chasing too few marks 

so .....--------

" Those fees 
have been squeezed 
substantially 
 according to executives
 of funds of funds
 sometimes 
  only a management fee is  charged"

---------------------------

----- but hey fooled once ....--------

------- sorry --------

 " the funds  of funds
       feeding
 Bayou are by no means
    the first 
 well-known gatekeepers
 caught up in the collapse 
    of a hedge fund" 


"  after the bond rout
    of 94
there was a wave 
of  hedge  collapses 
that caught many a prominent 
      fund of funds
  with their  diligence pants down "


  


" ones that had  
 bragged about 
their  due diligence 
 their numerous 
"tell us all"  visits 
to hedge fund manager
etc etc 

" many a claim
 beginning
 'even before allocating money....' " 

  ------ and today 
 with  all the  thousands 
of  new hedge funds 
started in recent years...------

 " not just failure
but fraud 
 massive fraud in fact 
 was inevitable "


 "particularly given
 the rich compensation 
  paid out
  by  hedge funds
 to  managers 
placing funds with them"


"often well past
   20 percent
  of any 'profits'"

-------  'profits 
as in enronian paper profits'

 serious econcon ...."incentives" ---------------

"The only way to protect against fraud 
is to hold a well-diversified portfolio," 

------- okay so
u can't pick em clean

answer hold your nose
  and 
 spread your risks  extra wide -----------

 the bayou by isreal  lesson ?

"There is this 
foolish myth out there 
that due diligence 
will insulate you from fraud....."

------- indeed this myth
is out there
  
fuck its worth 
hundreds of millions 
in  valueless
  "performance based" fees 
  and other incentive 
each year
  to keep the fucker cookin  ------------

------  as one old 
"street hand "
     hold me 
      30 years ago ...
 'if someone is determined
    and  smart 
  they 'll
  figure a way
  to   defraud you ...
        you 
     and alot of folks 
     just like you.... 
     they'll
defraud you and 
as long as you ride 
    with em
keep defrauding you
till you both  
 go over the embankment
        together  "