Should This Hedge Fund Have Been Saved?

I was amused to read the last paragraph of "The rescue: What you need to know" (News: Analysis & Commentary, Oct. 12), regarding the fate of Long-Term Capital Management (LTCM) and its partners. That paragraph describes the possibility of personal financial losses on the part of the partners as a "vicious punishment."

Each time a business fails, business owners who manufacture or offer real products or services suffer punishments as "vicious" as or worse than those meted out to the LTCM partners. The real economy sentences hundreds of thousands of business owners to vicious punishment each year. The existence of the LTCM bailout proves that among the financial elite, capitalism isn't understood or accepted (at leastfor financiers). Instead of worrying over losing a few dollars, the LTCM partners should thank their lucky stars that the traditional punishment for bad debts was abolished at the founding of the republic: debtor's prison.

Richard S. Adler

Albuquerque

All the articles I have read on the LTCM bailout suggest that the fund's brilliant managers went too far and were irresponsible in using their massive leverage. Perhaps. But isn't it also possible that they were astoundingly brilliant in their use of leveraging to guarantee against total failure? It seems to me that if I manaGed a fund and were nervous about making risky bets with other people's billions, it would be prudent to find a way to buy insurance against potential loss, no matter how remote that possibility might seem.

I don't have to be a rocket scientist to recognize that the bigger I become (finaNcially speaking), the less likely it is that the U.S. finanCial community would allow me to fail. Therefore, it would seem that borrowing excessively could be a smart way to bulk up for a potential bailout. Is it possible that our country's policies encourage the creation of financial monsters?

Gino J. Coviello

Palm Coast, Fla.

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