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Post by agito on Sept 20, 2010 20:43:23 GMT -6
read a good article on the bloomberg site, wanted to share Hedge Funds Are Running Out of Reasons to Exist: Matthew Lynn...Likewise, the London-based Alternative Investment Management Association is trying to hold the line against European Union regulations on short-selling. It claims selling shares you don’t own increases liquidity and aids price discovery, which means there should only be more transparency, not a clampdown.
Please, guys. This script just won’t work anymore. If you want to defend the industry, you need some new lines.
These two representations, by themselves, don’t matter much. They are just a couple of examples. But there will be dozens of proposals for new rules from the U.S., the EU and U.K. regulators in the next few years. The problem is that the arguments put forward by the hedge funds haven’t moved forward at all. It is as if the credit crunch never happened.
First, stop going on about “liquidity” all the time. It just isn’t plausible that holding stocks for milliseconds -- which is all that high-frequency trading amounts to -- makes the market work better in any way. .....
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Post by unlawflcombatnt on Sept 20, 2010 22:15:25 GMT -6
My favorite parts:
"Bigger Isn’t Better
The key problem here is the basic assumption. The hedge funds are taking it as a given that a bigger and busier capital market is a better one, and one that creates a healthier economy. But surely the main lesson of the last two years is that this isn’t true. The capital markets got bigger and bigger, trading became more frenetic -- and we ended up with the worst financial crisis since the Great Depression....
The industry might well be a giant parasite that does nothing more than siphon vast wealth from the economy, while doing little in return. "
Yes.
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