The hedge fund parasites

[Hannah Bell]

THE TOP 25 hedge fund managers in the U.S. earned a collective $25.3 billion last year...a new record...the magazine AR: Absolute Return+Alpha. Yes, you read that correctly. Twenty-five people earned an average of $1 billion each--for one year's worth of "work...." "And it couldn't have happened without the carnage of 2008."

How did they do it? The short answer is this: A number of hedge funds made big bets that the politicians in Washington, D.C., wouldn't let their buddies on Wall Street go down...As a result, hedge fund bosses profited mightily by riding the financial system's taxpayer-financed recovery.
All told, the U.S. government has invested, loaned and guaranteed funds to the financial sector worth as much as $14 trillion--and much of that money gushed straight to the top...

WHILE THE mainstream media has been agog over the massive payouts to hedge fund managers, few journalists have asked a simple question: What benefit do hedge funds provide for all these riches? And how can it be that a handful of investors are reaping billions at a time when the unemployment rate is still pushing 10 percent, few jobs are being created, and average wages are stagnant or falling?

It's ultimately impossible to escape the conclusion that hedge funds exist merely to make the rich richer--and at a terrible price for the rest of us...

http://socialistworker.org/2010/04/08/hedge-fund-parasites


Article goes on to note:

- hedge funds are largely unregulated
- hedge funds are open only to the largest investors (minimum investments = $500K to $3 mill)
- hedge fund speculators take enormous risks though their purpose is supposedly to minimize risk
- the only way they can get big returns is through leveraging debt (e.g. Long Term Cap Mgt debacle)
- hedge fund operators take their *own* profits up front
- hedge funds are lightly taxed

--- if hedge funds were taxed as ordinary income, their taxes would more than double (e.g. the top 25 funds alone would have sent an additional $5 billion to the government last year).


"Yet the financial reform bill recently unveiled by Sen. Christopher Dodd (D-Conn.) will do little to rein in the funds."

http://socialistworker.org/2010/04/08/hedge-fund-parasites

[Ghost Dog]

1. socialistworker makes it official, then:

The verb 'to earn' no longer means what it once did.

[Hannah Bell]

2. it's SW quoting the cited magazine. but i take your point.

[amborin]

3. hedges promised big returns for big fees, but can't beat index funds; Calpers among suckers:

http://dealbook.blogs.nytimes.com/2010/04/03/pension-funds-fail-to-reap-private-equitys-rewards/?scp=1&sq=pension%20funds%20calpers%20hedge&st=cse

[Hannah Bell]

4. looting of public pension funds, not accidental