Why all the fuss about these BNP
Paribas funds? They’re long-only funds which own some very illiquid paper,
and as a result they’re impossible to value accurately. If someone wants to
withdraw money from a fund, you first have to know how much the fund is worth.
Since the fund managers don’t know how much the funds are worth, they’re not
letting people withdraw money until they do know how much the funds are worth.
There is no chance of the funds being wiped out, like the Bear Stearns hedge
funds were, since they’re long only.
And yet stock markets around the world are falling in response to this non-news,
there’s a flight to quality, and BNP Paribas stock has dropped over 5% –
despite the fact that it’s other investors’ money we’re talking about, here,
not BNP Paribas’s own. All I can conclude from this is that the market is very,
very nervous, and will sell on just about anything.