Sell-out: Why hedge funds will destroy the world
July 27, 2006 (Janet Bush - New Statesman)
If hedge funds were a country, it would be the eighth-biggest on the planet. They can sink whole economies, and have the potential to crash the entire global financial system. Yet they are beyond regulation. We should be very afraid.
Something ominous is going on in world finance - again. On 11 May, the US Federal Reserve, America's central bank, raised rates and hinted that it might do so again. Wall Street wobbled but stock markets in the emerging economies fell through the floor. Since that day, Colombia's stock market has slumped by 42 per cent; Turkey's by 38 per cent; Pakistan and Egypt by 28 per cent; India by 25 per cent; the Czech Republic by 22 per cent.
Why? These fast-developing economies have been the recent darlings of the world's mobile capital, acting as magnets for multinational corporations seeking new frontiers. Yes, the US economy is still the biggest in the world and changes in US interest rates affect the entire global financial system. But there is something very dark indeed at the heart of this story and it is called the hedge-fund industry - lords of havoc who, a consensus is building, have the potential to be responsible for the next great crash - and nobody knows what to do about it.
AntiSpin: $1.5 trillion under management of 9,000 hedge funds, a fraction of them at best run by a couple dozen geniuses, maybe a few hundred more run by truly competent and mature money runners, and few thousand run by nitwits. What could possibly go wrong? As Martin Mayer told us, the Fed is well aware of the risks but lacks the will to do anything about it.
July 27, 2006 (Janet Bush - New Statesman)
If hedge funds were a country, it would be the eighth-biggest on the planet. They can sink whole economies, and have the potential to crash the entire global financial system. Yet they are beyond regulation. We should be very afraid.
Something ominous is going on in world finance - again. On 11 May, the US Federal Reserve, America's central bank, raised rates and hinted that it might do so again. Wall Street wobbled but stock markets in the emerging economies fell through the floor. Since that day, Colombia's stock market has slumped by 42 per cent; Turkey's by 38 per cent; Pakistan and Egypt by 28 per cent; India by 25 per cent; the Czech Republic by 22 per cent.
Why? These fast-developing economies have been the recent darlings of the world's mobile capital, acting as magnets for multinational corporations seeking new frontiers. Yes, the US economy is still the biggest in the world and changes in US interest rates affect the entire global financial system. But there is something very dark indeed at the heart of this story and it is called the hedge-fund industry - lords of havoc who, a consensus is building, have the potential to be responsible for the next great crash - and nobody knows what to do about it.
AntiSpin: $1.5 trillion under management of 9,000 hedge funds, a fraction of them at best run by a couple dozen geniuses, maybe a few hundred more run by truly competent and mature money runners, and few thousand run by nitwits. What could possibly go wrong? As Martin Mayer told us, the Fed is well aware of the risks but lacks the will to do anything about it.
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