The 10 people most reponsible for the recession

Mr_Matey

Generali wrote: »

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.

How long did you hold said "ethical" investments on average?

There are cases where the lack of regulation around hedge funds have caused problems that do affect the public. The sheer weight of money in the industry means they can cause large movements in markets.

Some say that Hedge Funds triggered the currency problems in Asia in 1997 and there have been other instances where they have attacked currencies in order to make a quick buck.

Warren Buffet has long opposed hedge funds and has spoken about them as "a potential threat to the stability of global markets" (see link)
http://www.nysun.com/business/warren-buffett-criticizes-hedge-funds-even-as-he/13332/

Speculation causes problems in financial systems (see local property market) and many hedge funds are speculators.

Arbitrage funds are interesting, as in theory they reduce volatility in prices.

Interested to hear your views Generali.

Wookster

Generali wrote: »

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........

What do normal people do now?

Rochdale_Pioneers

Wookster - is paying off debts not preparing for the lean years? You can't get away from the simple fact that when we entered this recession UK debt was down 5% vs when Labour took office.

You can obsfucate all you like, 44% is a smaller number than 49%.

sabretoothtigger

They could have done better is the point I guess.
They took office as the uk left a recession so just a 5% reduction is fairly poor takings from an apparently successful period.
Now people are saying other then the fake bubble, the uk was in a decline over this time but I dont believe that personally as all sorts of advances in technology have allowed for more efficient business

Governments should always aim to reduce this debt to 0% because paying interest on it is ultimately money down the drain

Rochdale_Pioneers

sabretoothtigger wrote: »

Governments should always aim to reduce this debt to 0% because paying interest on it is ultimately money down the drain

A fine principle, and one that we as individuals strive towards. Not something that governments of countries the size of ours can manage unfortunately, we're certainly in more debt than some smaller nations, but when you look at the list and see the likes of France Germany Japan America etc with substantially higher levels of debt (40-100+%) we don't do too badly.

treliac

Sapphire wrote: »

I think that being naive and stupid can be just as much of a crime as committing outright fraud. I am no more clever than the average person, yet I did not gamble and get seduced by all the advertising, etc. To me it was as clear as daylight that there was an ever-growing debt bubble over the last few years that would burst and have enormous repercussions on the economy. People also didn't just get mortgages for 'security in their own home'. They wanted bigger and 'better' all the time, and to constantly 'move up the ladder' because property was such a great 'investment' – it wasn't about security at all. It was about greed.

The 'naive and stupid' need protection against their own uneducated actions. And, yes, there are those who will believe whatever they're told by 'professional' tricksters.

I knew full well how much I could reasonably afford to pay back for my borrowings but what I couldn't foresee was the current economic disaster looming, nor whether I or OH might lose our jobs (which hasn't happened yet thank goodness).

I have no sympathy for the greedy who only wanted more and more and were willing to risk all by mortgaging up to the hilt in order to have the apparent trappings of (false) wealth. They contribute to the mess that the rest of us will pay for once they've lost it all.

But like yourself, we didn't all do that and there are many who stretched themselves to a potential breaking point in the last few years to buy a modest property, because they thought it was the only way to achieve their home-owning dream, and they don't deserve to be lumped in the same category as the greedy and dishonest.

sabretoothtigger

Theres no good reason we could not have reduced the debt to 0% if we wanted. Its a problem that solves itself eventually as the savings compound as the debt is reduced.

The reason why we didnt is greed and the result is we are all poorer for it, ironic

Yep other countries have it way worse, they always say americans dont understand the idea of irony well about 20% of USA annual budget goes in payments to their debt I think

In 2003 $318 billion was spent on interest payments servicing the debt, out of a total tax revenue of $1.95 trillion-- that is, 16.3% of total tax revenue.[46]

http://en.wikipedia.org/wiki/United_States_public_debt

we're certainly in more debt than some smaller nations, but when you look at the list and see the likes of France Germany Japan America etc with substantially higher levels of debt (40-100+%) we don't do too badly.

Measuring our success by the failure of others means we arent doing so bad unless they drag us down with them of course and the USA is one of our largest trading partners unfortunately.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

ManAtHome

What does this 5% reduction in debt (0.5% per year) amount to - anywhere near the 6-7 billion quid leached out of private-sector pensions every year..?

stevsand

dervish wrote: »

1. Gordon Brown.
2. Gordon Brown.
3. Gordon Brown.
4. Gordon Brown.
5. Gordon Brown.
6. Gordon Brown.
7. Gordon Brown.
8. Gordon Brown.
9. Alastair Darling
10. Gordon Brown.

What a stupid post.