WE NEED YOUR HELP!
Please donate to keep ReaderRant online to serve political discussion and its members. (Blue Ridge Photography pays the bills for RR).
At this point, I doubt there are many that would downplay the integral role speculation plays in our dangerously unstable global markets.... The interplay between central bankers and the leveraged speculators (hedge funds, proprietary trading desks, etc) has been instrumental to the expansive global Credit Bubble. For the first time, global finance operates with no limits to either the quantity or quality of new credit creation. There is no gold standard; no Bretton Woods currency management regime; nor even an ad hoc dollar-reserve system to anchor Credit expansion.... Unconstrained finance is nirvana for speculation. Importantly, boundless Credit completely abrogates a system's capacity to self-adjust. I thought one positive outcome from the crisis would be a much smaller and less destabilizing speculating community. It was not to be. In less than two years, hedge fund assets surpassed a record $2.0 Trillion....Amazingly, global markets became more speculative and dysfunctional than ever....
Hedge fund de-leveraging was surely a primary factor behind last week's market tailspin. The community is again on the wrong side of rapidly moving markets, and they're being forced...to liquidate positions and rein in risk.... And now that de-risking and de-leveraging have begun in earnest - and with losses accumulating rapidly - the fear will be of de-leveraging begetting liquidity issues and only more de-leveraging....And there will be the issue of hedge fund redemptions, with the distinct possibility that industry fundamentals have recently taken a dramatic turn for the worse.
