From Thursday night cocktail chatter with a Bank of America employee, on the fate of the traders who sold the subprime mortgages which brought down the banks:
“Of course, the traders made millions in commissions. They all did fine. Now they’re getting fired. But it doesn’t matter. They starting up hedge funds. They’re buying up distressed debt, the same mortgages they sold which crashed and which are now bargains. They’re going to make even more!”
PerTrac Financial Solutions has released a study indicating that emerging hedge funds outperform established funds.
“Our original study, released early last year, asserted that smaller, younger hedge funds outperform larger, older hedge funds, based on research spanning January 1996 to July 2006,” said Meredith Jones, managing director of PerTrac. “The new study, which includes data through December 2007, confirms the original results.” Data was compiled and analyzed using the PerTrac Analytical Platform software application.
So much for experience.
Sometimes despotic monarchies do work better than democracies. If Saudi Arabia was a functioning democracy, rather than an old-fashioned monarchy, the oil would likely be pumping much faster, and President Bush and other leaders of oil-addicted nations wouldn’t have to go begging to the King for more oil, a request the King is politely denying. Wisely, in fact, as he is looking out for the long-term revenue stream of himself, his family, and possibly even the people who live in his country.
In a democratic Saudi Arabia, self-interested citizens would vote to open the taps and get the cash now. The world, and the United States in particular, would have a short term cushion, and serious decisions about efficiency and use could be staved off. When the oil did run out, however, it would run out more precipitously. Better a steady diet than a feast and a famine. Thanks, oh, glorious King.
Above, Bush is pictured, hoping the meeting is going well. It didn’t. link
The U.S. Senate Committee on Homeland Security and Governmental Affairs is looking into the effects of speculators — or, as we will call them from now on, “the devils in their gambling hells” — on the prices of commodities.
With oil approaching $130 a barrel and a global food crisis looming, the panel heard testimony from experts about how speculative investment by institutional investors and hedge funds may be contributing to food and energy price inflation.
One angry American reports:
“The gambling in food products utterly destroys anything that could be called a market. What business has a man (or a devil) selling or pretending to sell, a food product which he does not possess? These men who ‘operate’ on the boards of trade (more appropriately called gambling hells) have no more right to the consideration of honest men than the devil has to a seat in heaven.”
That last American was speaking in 1892, and is quoted in Ann Fabian’s Card Sharps and Bucket Shops: Gambling in the Nineteenth Century. Her chapter on the rampant speculation in commodities at the end of the nineteenth century is remarkably current, with a little more devil talk than we get these days.
Here we have Greenlight Capital’s founder David Einhorn, playing a bit of poker…. at the final table of the 37th annual World Series of Poker. The shirt includes handprints from his wife and children. It’s an old picture, but we love it.
But we post it because of a new book. Einhorn is also the author of Fooling Some of the People All of the Time, about his frustrating efforts to short Allied Capital.
