A finger in the dike?


By Michelle Celarier

As Absolute Return was going to press, another hedge fund crisis appeared to have been averted. By putting up $3.2 billion of its own capital, Bear Stearns moved to save one of its own funds, not to mention its bond trading reputation. It also kept the already nervous credit markets from collapsing. Given that the underlying problems in the subprime market are unlikely to disappear and could spread, it seems a little like sticking a finger in the dike.

The CDO market - which was born out of the last credit downturn as investment banks sought