The 10 people most reponsible for the recession

Generali

Well moggylover, you're talking about different parts of the financial system now.

Hedge funds are mutual investment schemes. They are lightly regulated and often very risky investments and so are open to 'sophisticated investors' and 'professionals' (2 classes of investor as identified by the EU in the MIFIID) only. That they make or lose money shouldn't really impact on the majority of us as it's really rich people losing a part of their large pile of cash. Pension funds have a very small part of their investment in hedge funds in some cases but rarely more than 1-2%.

The obvious example of fraud in the hedge fund industry is Madoff. That people fell for him seems crazy to me. Look at his auditors and walk away I say. I used to take part in due dilligence on behalf of a hedge fund. There will clearly be other examples of fraud in the hedge fund industry that will turn up. The hedge fund I ran was spotless - we invested money in small companies investigating new drugs for cancer, Alzheimer's and obesity so in many ways did society a good service, albeit in the pursuit of profit.

The investment banks have made huge losses and the investment banking industry as we knew it has gone the way of the Welsh mines. These people were following a set of rules and laws set out by national Governments and for the most part followed them, in my experience anyway.

If there have been illegal practices going on they should be investigated and punished (although not by capital punishment IMO as I don't believe in capital punishment). I suspect there won't be that much illegality going on at a systemic level although there will be cases of individual fraud.

fc123

moggylover wrote: »

My personal feeling, and this was compounded by watching Panorama last night about the tax havens and the felonious shenanigans involved in "hiding" large sums of money therein, that probably the thing that will "catch" many of these people will be their hidden assets and the tax they have (almost doubtlessly) been avoiding so I suspect that they may come meet their nememsis via the same route as Al Capone:D . I'm also pretty sure that with several countries VERY willing to make it worthwhile to be a whistle-blower at the moment that there may very well be a lot of pairs of very brown boxers out there:D .

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I haven't seen the Panorama programme as yet. I kind of get what are saying but a lot of these people are going to 'suffer'. It's just that the 'suffering' may be different to that of the 'ordinary' man on Ordinary St. It's all relative.

If any of them have cash stashed away in dodgy places, then it may bite them on the !!!!! anyway.

The old saying that the children shouldn't bear the sins of their fathers is true though.

I understand your anger. I am almost getting to the stage where any midlle aged man in a suit get's a dirty look from me...and I know deep down, that that is not reasonable behaviour.:o

StevieJ

fc123 wrote: »

I haven't seen the Panorama programme as yet. I kind of get what are saying but a lot of these people are going to 'suffer'. It's just that the 'suffering' may be different to that of the 'ordinary' man on Ordinary St. It's all relative.

If any of them have cash stashed away in dodgy places, then it may bite them on the !!!!! anyway.

The old saying that the children shouldn't bear the sins of their fathers is true though.

I understand your anger. I am almost getting to the stage where any midlle aged man in a suit get's a dirty look from me...and I know deep down, that that is not reasonable behaviour.:o

Hey those suckers have only just finished paying off Winstons bill for the second world war :eek: what were you saying about sins and fathers?

StevieJ

In a recent speech to the London School of Economics, George Osbourne, the Shadow Chancellor, said: "Our competitors used the fat years to prepare for the lean years. Britain did not. We are the least prepared country in the developed world to cope with the current financial turbulence. Our financial reputation has been badly damaged by the only run on a retail bank in the world. Our double deficits - external and fiscal - are worse than any other European economy. Taken together, they are worse than the United States." The blame "lies squarely and fairly with Gordon Brown", he concluded.

Interesting that for half the resume on Brown they quote a political broadcast from the Tory party rather than independent comment, bizarre :rolleyes:

Rochdale_Pioneers

StevieJ wrote: »

In a recent speech to the London School of Economics, George Osbourne, the Shadow Chancellor, said: "Our competitors used the fat years to prepare for the lean years. Britain did not. We are the least prepared country in the developed world to cope with the current financial turbulence. Our financial reputation has been badly damaged by the only run on a retail bank in the world. Our double deficits - external and fiscal - are worse than any other European economy. Taken together, they are worse than the United States." The blame "lies squarely and fairly with Gordon Brown", he concluded.

Interesting that for half the resume on Brown they quote a political broadcast from the Tory party rather than independent comment, bizarre :rolleyes:

That because only the Tories are peddling this nonsense about Britain not "using the fat years to prepare for the lean years". Its called politics - repeat something you know not to be true enough times and it becomes "fact".

I don't blame the Tories, its their jobs to lie like it is all politicians. There are plenty of examples of Labour making stuff up about the Tories when they were in opposition.

alared

The 10 people most reponsible for the recession

George Bush
Fed.Reserve
US banks
Everyone to do with US housing market
People who borrowed too much.

Same again but with their British counterparts starting with
Gordon Brown

StevieJ

It is interesting that the rocket scientists who developed the over complex CDO's, that nobody could understand are not on the list, they and the rating agencies are top of mine :eek:

StevieJ

Generali wrote: »

Well moggylover, you're talking about different parts of the financial system now.

If there have been illegal practices going on they should be investigated and punished (although not by capital punishment IMO as I don't believe in capital punishment). I suspect there won't be that much illegality going on at a systemic level although there will be cases of individual fraud.

Surely hedge funds are not there to increase risk but to reduce it? the very word hedge infers that the invester is taking out a type of cover to balance a portfolio. Perhaps Gen you could enlighten on their primary purpose.

Wookster

Rochdale_Pioneers wrote: »

That because only the Tories are peddling this nonsense about Britain not "using the fat years to prepare for the lean years". Its called politics - repeat something you know not to be true enough times and it becomes "fact".

So you don't believe in preparing for the lean years in the good times?

In this case its called truth!

You're just so far up Crash's rear end that you can't see the light of day and take cognisance of this

Generali

StevieJ wrote: »

Surely hedge funds are not there to increase risk but to reduce it? the very word hedge infers that the invester is taking out a type of cover to balance a portfolio. Perhaps Gen you could enlighten on their primary purpose.

Well you raise a number of points that I find very interesting as a former and perhaps (although unlikely) future hedge fund worker albeit one who doesn't think hedge funds are a good investment for investors.

Perhaps the thing to do is to look at why hedge funds have been popular for the past five years or so.

IMO, the reason is that they outperformed the market during the dot com bust. The reason for that? Well it's self selecting! Dot com hedge funds went bust before they could raise substantial funds and what was left was everything else that was either flat or rising.

So hedge funds became Flavour of the Month with investors. Well that's pretty handy for potential hedge fund owners because the fee structure is 2&20 (that is 2% pa management fee plus 20% of the profits made on the investment) which is very, very high. As a result a lot of hedge funds were started up and a lot of hedge fund owners got rich.

Frankly I have long thought hedge funds are a bad investment. I stated that here both before and whilst working for a hedge fund - I ran the business and ops side of a hedge fund management company*. Anyone who disbelieves me should look up my comments. I have better things to do with my life than justify myself.

2 years ago, hedge fund investing was about diversification. If you invest in wine, real estate, commercial property, RMBS, CMBS, CDS, commodities, AU, etc and cash then you're going to be fine. Clearly things are riding high but if you invest in everything then overall you won't lose out. That's the modern day hedge TBH (although hedge fund owners will talk strategy and tell you otherwise).

Trouble is almost 2 years ago, everything pretty much started to fall at once and that's screwed some rich people so now the idea is preservation of capital. So how to preserve capital? Hmm, everything's dropping in value so you can't except by running to cash. So where do you keep your cash? In the bank of course dummy!!! Err........

So what is a 'pure' hedge fund. Well IMO it's an arbitrage fund. You buy and sell assets to make money on pricing differences in different markets. Arbitrage is a simple idea but tough to execute. Also, you aren't going to make huge amounts of money.

The ultimate way to preserve wealth through the generations? Cash purchase of productive land.


*What I did is a bit complicated but it boils down to me making sure that the investments the company made went through in the way we desired when we bought/sold, making sure that we did all that company stuff like being audited properly and sorting out the boss's business life.