1998 Long Term Capital Management Bailout needs a second look in todays light

[Phoebe Loosinhouse]

Check out this link

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

Gee, all the players seem to be the same as in todays debacles 10 YEARS LATER.

(This is the first time "too big to fail" was used as far as I am aware.)

Hedge funds are UNREGULATED FINANCIAL CASINOS for the uber-wealthy.

It's too f!@##ing bad if they become too big to fail. The truth is that THE PEOPLE INVOLVED ARE TOO BIG TO FAIL -

Only they're not.
Because they do.
FAIL.

But they intimidate others to believe that they are.

TOO BIG TO FAIL

Hedge funds make nothing but bets. If they fail, it's just like your local casino going under. They make nothing useful or practical except profits for the uber rich.

If a pension or a retirement or a municipality invests in an UNREGULATED ENTITY like a hedge fund, than everyone involved should be fired and sued for a breach of fiduciary duty.

[gravity]

1. Hedge funds aren't just bets and still have regulation

Many hedge funds actually self regulate with mandates which are bound by laws, to help protect the interest of investors. If someone does their due diligence ahead of time, it is no difference than investing in any other entity.

You can't make blanket characterizations of the whole industry, because of a few bad apples. Enron was a fraud too, but it doesn't mean that investing in stocks is a bad idea.

[Phoebe Loosinhouse]

2. " 'self -regulate' with mandates which are bound by laws"

What kind of gobblygook is that? I have always understood that hedge funds are specifically NOT regulated because their entry is confined to people who are so wealthy and so sophisticated that they are capable of looking out for their own interests. So let them.

What mandates do you refer to which are "bound by laws"?

[gravity]

4. You enter into a contract with the hedge fund

which places restrictions on the actions and investment strategies they can pursue, or else you can sue. Hedge funds set up agreements like this because investors like to invest in something that is legally accountable for their actions.

I do agree that there should be more regulations, but it doesn't mean that the industry is just some wild casino. You can invest safely in hedge funds if you know what the hell you are doing, which a pension fund manager should know.

Placing money into something because you want to strike rich is obviously a dumb strategy. Putting some money into a market neutral hedge fund to diversify your risks can be a sound strategy.

[Warpy]

3. I dumped Merrill Lynch for pushing hedge funds at me

even after I told them I knew they were nothing but Ponzi schemes. It turned out they were even worse than ordinary Ponzi schemes. At least Carlo Ponzi only targeted the greedy. These guys tried to gain legitimacy through respected brokerages and managed well enough to target just about any institution with money to invest.

There should be a special hell for thieves like Madoff and it should be shared by everyone at the SEC who did nothing about him.