If you think hedge funds are powerful, check out pensions
Jun 21st, 2007 | Filed under: Hedge Fund Industry TrendsEver since Malaysian Prime Minister Mahathir Mohamad called George Soros a “moron” and accused currency speculators of being “immoral“, hedge funds have been tacitly accused of putting the global financial system at risk. Recently, Germany has discovered the political points that can be scored by taking a tough (although as yet unsuccessful) line on hedge funds (from Munterfering’s “locusts” to Merkel’s “systemic risks“). And just yesterday, ratings agency, Fitch issued a warning about how hedge fund were using excessive leverage in the credit markets.
But in a curious twist, the UN released a report today that raises the “global capital flows” warning flag not on hedge funds (per se), but on pension plans. Yes, pensions. Working men and women of the world, it is you, not the nicey-nicey hedge fund managers who are the real problem in today’s wild west of global capital flows. Repent!
Buried in a gargantuan 212 page report* (with a 22 page prelude) is a section entitled “Institutional investors: transforming financial markets” which argues that being able to feed yourself during retirement is great, but…
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Stability, shmability. Since when are the global financial markets ever “stable”? Not to sound overly laissez faire but I say politicians, pundits, et al stop making such a fuss. Let the money flow where it flows. If there’s a catastrophe we’ll trade our way out of it or the JP Morgans and other banking titans will lend our way out of it via bail outs a la the LTCM meltdown. We start letting central banks and politically motivated cranks (especially quasi-socialist euros) control how the markets trade and it’s curtains for us all.