Hedge Shearing?
January 25th, 2008 by 
reality
According to Marketwatch, markets are nervous today in part because of rumors of hedge funds in trouble. How can there not be? Most of the big banks and brokerage houses are in trouble to a greater or lesser degree, and the hedge funds are in many of the same trades, and typically use much more leverage than the big corporations. It is unlikely that all the hedge funds have better traders and knowledge than the big boys who have been handed their heads on a platter. The hedge funds also are dependent on the big boys for the credit lines that fund that leverage. Those credit lines are doubtless being carefully scrutinized and in many cases reduced, as the big boys find their lending constrained by their recent loss of capital.
The only difference is that hedge funds are private, and what happens in the partnership, stays in the partnership, unless they end up in court, or the blow-up is so spectacular that it can’t be hidden. We hear about the skilled or lucky who have been shorting the daylights out of the ABX indices and so forth, because even though they can’t legally advertise they can make news. P.R. didn’t die with the internet bubble. But silence is not necessarily golden.
Posted in Rogues and Rascals | 
January 25th, 2008 at 10:40 am
great points, there’s probably quite a few shops that are unraveling. bank of america was one of the largest prime brokerage suppliers, and are completing shutting that unit down. Hedge funds prosper by leveraging other people’s money; if the bets pay off, they get rich; if the bets sour, they simply shut down and open up a another shop.
January 25th, 2008 at 8:21 pm
not really related to this post…. but here’s a radical thought:
If you don’t pay taxes, you don’t get to vote.
That is, if you don’t contribute to the pot, you have no right to say how it gets distributed.
And you sure as hell don’t have the right to stick your hand in the pot, or into my pocket.
Just ranting ;-)
January 25th, 2008 at 10:08 pm
Voting doesn’t matter anyway. Between the two-party system, gerrymandering, control of ballot access, voting fraud, patronage, corruption, aaah why go on. Your vote doesn’t count for bupkes.
January 26th, 2008 at 7:26 am
reality, unfortunately too true. And they’re so entrenched that they can’t be rooted out with anything less than a full-blown revolution … and maybe not even then.