This year has already been the worst in at least a decade for the $2.5 trillion hedge-fund industry, associations say. But last week's collapse of Lehman Brothers and an unexpected, temporary ban by the Securities and Exchange Commission on the short selling of financial stocks -- a widespread hedge-fund practice that bets a share price will fall -- sent shockwaves through the industry. Several funds are now teetering.
Unregulated and secretive about their trading strategies, hedge funds have enormous sway over the markets. Industry groups say they are responsible for more than a third of stock trades. Some market analysts worry that a collapse of a major fund could shake confidence in an already fragile financial system.
In the first place, the idea that our problems stem from light regulation and could be solved by more regulation doesn’t fit all the facts. The current financial crisis is centered around highly regulated investment banks [???], while lightly regulated hedge funds are not doing so badly. Two of the biggest miscreants were Fannie Mae and Freddie Mac, which, in theory, “were probably the world’s most heavily supervised financial institutions,” according to Jonathan Kay of The Financial Times.
Roubini. And Martin Wolf, who has an uncanny ability to calmly dissect the financial apocalypse and propose sensible action. Gotta love the British.
Precious:
David Brrrrrrooks, last Friday.
Were you poking fun at Brooks' comments or agreeing with them?
Bobo Brooks is a complete moron.
"When the going gets weird, the weird turn pro."
Hunter S. Thompson
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