The Danger of Hedge Funds

Every time we set pen to paper to write about Hedge Funds..
people’s eyes glaze over. They don’t understand what a
Hedge Fund is…or Derivatives and that whole part of the
so-called Equity Market.

Most of us..haven’t got a clue as to how financial markets
work. We have a tough time tying together the immense
CALPERS and huge Pension Fund plans along with Institutional
Real Estate positions, Gold, Silver and Platinum Markets, Gas
& Oil, Feed Markets, Butter Fat, Commodities in General,
Cotton, Coffee and “What Time is it?” for goodness sake!

Ok, to make it simple – “Everything is connected!” Sounds
Cosmic doesn’t it? Yes, friends and neighbors…we are all
connected at the hip! The best analogy we have would be a
great water shortage, a great gasoline shortage or perhaps
a great union shutdown of transportation, grocery stores,
or airlines. When these markets shut down….people are
very much affected in their daily lives. Sometimes because
they can’t get want they want…sometimes because it affects
friends, families or neighbors they know.

So, here we are talking about “the most obscure, esoteric
financial markets of them all”. Enron fell because Jeff
Skillings wanted to start “a Hedge Fund – that bet on how
many sunny days Washington, D.C. would have in a year!”
Think we made it up….Google it! There is probably a
secret “Hedge Fund” guessing how many hours Paris Hilton
will actually serve in Jail…before she gets out. These
markets are called “betting”, “pyramid schemes”, “shake
down markets”. For those getting the Financial Times..
the front page marker today says: “Amaranth gas trades ‘hit
US consumer'” This fund in particular was manipulating the
Natural Gas Markets by throwing huge “positions” into this
Hedge Fund….raising the prices of Natural Gas inordinately
which directly affected the crude oil prices, coal and yes
fellas and gals….what we pay at the pump.

You may have heard of the Bear-Stearns Hedge Fund meltdown
recently. The small position had to be propped up with a
quick $3.2 Billion dollars to save insolvency. We can only
imagine what the “big position” of the Hedge Fund will have
to come up with or we could be looking again at another
“Savings and Loan bail-out by our paid off Congress!” But
how does this happen?..people want to know! Well, Institutional
Investor’s….those guys like Merrill-Lynch and the big boys
take money from the banks we dump our paychecks into and borrow
it and pay interest, pay various rates back to investors…and
keep the rest. That is why these Fund Managers are making $20
or $30 million dollars a year….for the small positions. As
Sonny Corelone said in the Godfather: “There’s a lot in money
in that powder (Hedge Funds)!”

So, what can an average guy do…to change any of it? Come on,
find an answer that the Average Joe could do to fix a corrupt,
manipulative and corrosive system! Regulate in the strongest
form: “Hedge Funds and Derivative Markets”. Last year Chris Cox,
the Chairman of the Security and Exchange Commission tried his
best to get stronger regulations and increase the amounts
required to participate in Hedge Funds. Called “mature investors”
..the concept was not to let unknowledgeable speculators into
these markets…unless of course…that had lots and lots of money.

Ok…by now…you are probably board stiff. That’s OK…because
when three people at Amaranth Funds…control and Corner or Hedge
the entire market in Natural Gas and raise the price at the pump
because they invested $100 billion dollars in one Hedge Fund….
maybe..just maybe you will figure out…that Governments are not
taking care of us. Not taking care of our life style, not taking
care of anything but their back pockets.

You are now free to move about the country and get really upset
when Cesar Chavez or Iran get blamed for raising the price of
our gasoline. No, it is big oil…otherwise they would be building
cracking plants like crazy. They would not be allowing Hedge Funds
to control markets. They would channel their efforts into getting
us to and from our various grocery stores and work places…without
making $30 million dollars a year! Just remember, when you hear the
words “Hedge Funds or Derivatives”…think “Politicians and if their
lips are moving – they are certainly lying – like rugs!

About Ron & Anna Winship

Independent News Producers/Writers and Directors for Parker-Longbow Productions. Independent Programming which includes a broad variety of Political, Entertainment and Professional Personalities. Cutting Edge - a talk the flagship of over 30 URL websites developed or under development. The Winships have been blogging for the Orange Juice since back when nickels had buffalos on them, and men wore onions attached to their belts, because it was the fashion back then.