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Losing key investors
- When recession hit the US economy, during the massive credit crunch in 2008, Clarium Capital had to lower its capital considerably, primarily because of the fact it was losing key investors.
www.hedgethink.com/side-peter-thiel-clarium-capital/The other side of Peter Thiel: Clarium Capital - Hedge Think
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Why did Clarium Capital reduce its capital during a credit crunch?
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Clarium was an employee-owned firm that invests in public equity (primarily in micro-cap companies), fixed income, and hedging markets. Unlike most funds, which charge clients about a 2% management fee for their total assets invested and an additional 20% performance fee of the increase in the fund's net asset value, Clarium charged a 0% ...
- Steps to 2007/08 Credit Crunch
- Credit Crunch in The UK
- Impact of Credit Crunch on Wider Economy
US mortgage lenders sold many inappropriate mortgages to customers with low income and poor credit. It was hoped with a booming housing market, mortgages would remain affordable.Often there were lax controls on the sale of mortgage products. Mortgage brokers got paid for selling a mortgage, so there was an incentive to sell mortgages even if they were too expensive and hig...To sell more profitable sub-prime mortgages, mortgage companies bundled the debt into consolidation packages and sold the debt on to other finance companies. In other words, mortgage companies borr...These mortgage debts were bought by financial intermediaries. The idea was to spread the risk, but, actually, it just spread the problem.UK mortgage lenders did not lend so many bad mortgages. Although mortgage lending became more relaxed in the past few years, it still had more controls in place than the US.However, the credit crunch caused very serious problems for Northern Rock. Northern Rock had a high % of risky loans, but, also had the highest % of loans financed through reselling in the capital...As a result of the credit crunch, the UK has seen a change in the mortgage market. Mortgages have become more expensive. Risky mortgage products like 125% mortgages have been removed from the market.UK Banks continue to face problems. HBOS (Owner of Halifax) struggled to finance its balance sheet. Like Northern Rock, it financed an expansion of lending by borrowing. Now money markets have froz...The fall in bank lending led to a fall in investment and lower consumer spending.Falling house prices created a negative wealth effect, leading to a fall in consumer spending.The recession led to a rapid rise in levels of government borrowing. In response, the UK and many Eurozone economies pursued a degree of fiscal austerity – cutting spending/higher taxes to try and...Jan 12, 2011 · Peter Thiel’s Clarium Capital has been betting against a US recovery and paying a steep price for that. Peter Thiel blew more than 57% gain in 2008 and lost about 4.5% that year.
- Insider Monkey
Mar 18, 2009 · The crunch occurred because years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially...
Jan 1, 2015 · In the model, a credit crunch leads to a sharp decline in output—explained by a large drop in aggregate total factor productivity (TFP) and a relatively small decline in capital stock—and a sustained increase in unemployment.
May 13, 2015 · It appears that higher levels of capital in banking will reduce both insolvency and liquidity risks. Gauthier, Lehar, and Souissi (2012) show that a properly designed capital requirement can reduce the probability of a systemic crisis by 25%. Of course, we need to know how to measure systemic risk for purposes of calibration of regulatory ...
