A post from a reader, “Toothless Fed,” argues that the latest wave of financial innovation has produced “profit grabs” by the few at the expense of the many, Ponzi schemes, and an erosion of traditional values like prudence. Overheated? Overwrought? Perhaps. Or maybe he’s just calling a spade a spade. Other people are coming to […]
Read more...Supposedly, the reason that sophisticated investors like pension funds and endowments pay 2% management fees and 20% upside fees (and sometimes more) to hedge funds and private equity funds (and higher-than-index-fund fees for long equity managers) is that they are buying “alpha,” which is the manager’s ability to beat the relevant market. (To be more […]
Read more...Forgive us if we seem to be picking on New York Fed president Timothy Geithner. Actually, not that we know him, but he has a reputation (by Fed standards) for candor. So the problems we have with his speech should not be seen as an attack on him, but on the increasing difficulty of the […]
Read more...Compared to other Fed presidents, Timothy Geithner is straightforward and more than usually willing to talk about bad things. So when he gives a speech that is comparatively upbeat, as he did earlier this week (“Credit Markets Innovations and Their Implications“) it should be reassuring. So why did this speech bother me? It wasn’t as […]
Read more...Apologies for a light day; some family demands took precedence. Hope to have a more normal series tomorrow. A item in today’s Financial Times, “Unions vow to fight the ‘cancer’ of hedge funds,” may seem to be old news, labor versus capital, but there are some new elements in this story. First, the unions have […]
Read more...Hollywood movies are a good indicator of what’s up and down in the popular imagination. It hasn’t been hard to notice that the bad guys are no longer mysterious Eastern Europeans (read Communists) but are now typically Middle Eastern and/or “terrorists.” Money men are increasingly cast as perps. In Blood Diamond, Leonardo diCarprio played one […]
Read more...In the post above, we discussed how hedge funds’ desire to play financial games like bankruptcy contests by their own rules is backfiring. Not only are they failing to get their way, but their efforts to win special treatment are confirming an increasingly dim view the public has of them. In Friday’s Financial Times, Gillian […]
Read more...I refrained a day in the hopes that the Wall Street Journal or the New York Times would report on this story, but I again find myself in the position of turning to the Financial Times. This story, “Warning on hedge funds’ conflict of interest,” discusses that international regulators are concerned about hedge funds ability […]
Read more...Time to eat a little crow. I had a few past posts worrying about the unwinding of the carry trade. Even though the yen has been moving upwards, and the financial press keeps citing the carry trade as a contributor to the turbulence in the markets, two sources I consider well informed, one John Dizard […]
Read more...An excellent piece today by John Authers in the Financial Times, “Look to US for clues on whether sky is about to fall.” It’s not that he covers new ground, but he does a very good job of characterizing the current state of affairs. However, the piece falls just short of something you could share […]
Read more...The Financial Times reported today, in a page one story, “Funds take firm grip on US Treasuries,” Big hedge funds have recently grabbed such a large share of trading in US Treasury bonds that their activity is eclipsing many of the investment banks which have traditionally dominated the market. This falls in the category, “I […]
Read more...There was a great flurry of activity last year when many hedge funds either sought to comply with new SEC registration requirements that applied to all but fairly small hedge funds, or reorganized themselves so as not to qualify (either by having long lock-ups, or by reorganizing themselves offshore). But it all came to naught […]
Read more...A fine post on Seeking Alpha, “What Good is the Carry Trade?” by Tim Iacono, takes a stab at the impact of the alleged unwinding of the carry trade (we have though it played a fairly big role in the upheaval of the last week plus, but no one can tell for certain) and the […]
Read more...Mark Thoma on Economist’s View, sums up his view in his headline, “Kenneth Rogoff: German Leaders Are Right About Hedge Fund Transparency and Regulation“. Rogoff takes issue with Paulson’s dismissal of the idea of making hedge funds more accountable. It’s odd that Paulson even thinks he had a vote on this issue, since the Treasury […]
Read more...An interesting report in the weekend Wall Street Journal, “A Risky Profile,” by Robert Frank, argues that the very wealthy (ah, our favorite top 1%) have taken on more risk and therefore were likely, as a group, to have taken a bigger hit last weak than the wealthy of the past. Now in a way, […]
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