August 9, 2007 (LPAC)--Goldman Sachs's Global Alpha hedge fund, valued at $9 billion, is reportedly down 16% for the year. The Wall Street Journal reported today that according to people briefed on the situation, "The fund's traders have been selling certain risky positions," and that early this week, those moves sparked wide-spread rumors on Wall Street that the entire fund might be shut down.

A Reuters report today noted speculation that the investment bank "is liquidating large parts of its portfolio." London sources reported to EIR on Aug. 8, and again on Aug. 9, that it appeared that a very large "market-neutral" stock portfolio was being rapidly liquidated, in the billions of dollars, using worldwide stock markets as they opened, "following the Sun." The liquidation could be a large hedge fund or funds collapsing, they said; or, the generation of cash by a central bank or "plunge protection team."

Reuters, citing "traders," listed among Global Alpha's risky positions, German car parts supplier Continental, aerospace company EADS, and Italian auto firm Fiat. Faced with a collapse of its own share prices, Goldman on Tuesday denounced the rumors it was closing Global Alpha as "categorically untrue."

Global Alpha is a so-called "quant" (for "quantitave") hedge fund, in which much of the trading is done directly by computers, or on human traders' selections among choices offered by computers. The Journal's subheadline drolly noted, "Computer Models Failed To See Risk Increasing." In a brief article on Global Alpha's problems and the computer trading, Forbes.com today concludes, "Investors may still remember the epic 1998 collapse of one particular fund that was driven by quantitative formulas: Long-Term Capital Management."