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Jim Chanos Discusses The Demonization Of Hedge Funds And Their Role In Europe's Collapse
Thank god smart people still have the temerity of existing in this world. Jim Chanos is, for better or worse, one of them. In this short but sweet Bloomberg TV Interview, he tells the retaaards from Europe just where they can shove it. "Hedge funds are being demonized once again for the failings of governments and regulators everywhere. We've seen this happen in subprime, we've seen this happen in the banking crisis, we are now seeing it happen in the currency and sovereign debt crisis. Hedge funds are being attacked as causation. They're the symptom and not the cause of the problem."
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"Hedge funds are being demonized once again for the failings of governments and regulators everywhere."
Why take the blame (particularly, but not necessarily, if you're one of the powers-that-be and actually to blame) when you can stick it to your neighbor or neighboring country, friend or the friendly "Axis of Evil", business partner or the "Global Competition for Natural Resources and the Last Greater Fool". Or that all time favorite, "them" or "they".
There's an entire chapter in the "Book of Propaganda" called "Misdirection and the Blame Game".
That's some argument: "We vultures are merely a reaction to the dead body. We aren't killers."
With a rationale like that no wonder he pays such a low income tax rate. He does so much for the economy
Well, it's actually true.
If a guy commits suicide, you don't blame the vultures for pushing him off the bridge. They're just there to clean up the mess.
Greece's debt levels are tantamount to fiscal suicide. So are the debt levels of Iceland, Ireland, Portugal, Spain, Ukraine, the UK, California, and the US. I welcome anything -- hedge funds included -- that forces these irresponsible governments to face the problems they've created before it's too late.
To believe that debt levels alone is the trigger for the crisis is wrong as within our admittedly flawed monetary system debt is money and therefore a representation of wealth - the problem is that vast amounts of money and wealth are no longer providing a income and therefore those investments are now broken vehicles.
Those European Governments even if well run which they were not had no control over the monetary mechanism since the ECB was calling the shots and the local central banks were under the prevailing dogma of the time that stated that commercial banks will do what is in their interest and that there is no need to interfere in the smooth runnings of the "market" as the banks interest coincides with the states interest.
In short governments were passengers on the great ship Greenspan and would have been crushed into dust if they went against the real power in the land .
Now if you want to destroy the remaining fiscal powers of these infantile governments go right ahead but your actions will merely complete the process of transferring the remaining smaller surplus to the Printers of money.
Any voice of reason in today's market is quickly steamrolled by the lamestream media.
Umm, take what Chanos says about hedge funds with a grain of salt. I agree with him that hedge funds are wrongfully demonized in the media, but let's not kid ourselves, hedge funds thrive on volatility and the exaggerated markets moves you see are often directly related to their speculative activity. Chanos is a lobbyist for the hedge fund industry so his comments must be taken with a grain of salt. Always ask yourself: what's his angle? Why is he vigorously defending hedge funds?
Probably the same reason you're always talking about pensions and solar stocks...
I agree. With a few exceptions (not many), politician, central banker, hedge fund, each would sell their mother for personal gain.
I thought the whole purpose of ZH was to argue the merits of the case, not point to what somebody's agenda is.
Argue against what he said, not who he's allegedly talking for.
How about, instead of passive-aggressively questioning Chanos's character, why don't you address his substantive point that hedge funds don't have the power or market influence to topple sovereign debt or currency markets? That, in fact, it is absurd for government toadies like Joseph Stiglitz to be running around claiming that they do?
I seem to remember Chanos trying to explain what was going to happen with subprime a few years ago to a bunch of bankers and regulators. The committee wheeled him out, yawned all the way through his presentation, failed to grasp even the basic nature of the problem, then went back to congratulating themselves on how amazing the world economy was doing after they fed-exed him back out again.
Chanos was interviewed about it much later afterwards - wasn't warning them gonna damage your profit from this amzing shorting opportunity etc. His response was that sometimes it isn't about profit - on this occasion avoiding Great Depression II was worth missing out.
Don't get me wrong, Chanos talks his book and wants to make money and he made some with subprime - but he did try to warn. Demonising hedge funds'in general makes no sense. You might as well demonise the police because there are some crooked officers.
Speculators will speculate. Having a political class bitch and whine about it because they were too weak to make / enforce laws preventing fraud is the real problem. IMHO.
Shut up, Jim. No one cares.
I am Chumbawamba.
You'll care if he starts buying gold.
Hedge Funds Bitches!
I hear he likes tungsten ;)
Ummm ... I kinda do.
Chanos is absolutely right (as usual).
Thanks.
I rest my case.
I am Chumbawamba.
Hedgefunds are both sympton AND problem, since regulators are reactive, and seldom enough proactive.....
Back in 2004/2005, German politicians had it right when they coined the "locust" label. Wish they had followed up words with deeds when something could still be done about the mess.
Hedge funds are the economic cancer of the planet.
Are there any hedge funds against hedge funds?
I don't think so. Great idea. Let's start one.
We can call it a hedge fund of funds against hedge funds.
Private capital has controlled the economic policey of my government for at least 25 years - ever since the days of Yes Minister it became unfashionable to rely on the internal advice of the civil service and in any case the brightest and best started to work for non - state bureaucracies with their own agenda - this has of course predictable consequences
For example there is exactly 2 economists of low calibre working for the entire upper echelon civil service of the Irish state which I believe consists of 500 people and to believe that most elements within small European states knew what was going on is just plain wrong.
Investment banks employ many thousands of operatives that function with the sole agenda of extracting rent while many Government employees have a utility function that if stopped would soon reduce the productive elements of their economies to a very basic level
These hedge funds and investment banks that are now hedge funds have control of both sides of the trade and are profiting from the inside information that that power conveys.
Again this has nothing to do with a market it is about power and who has the ability to wield it - this naive belief in perfect markets with such information asymmetry is a quaint ritual that should have been ejected from the human brain two years ago but I guess some of us still believe in the Holy Trinity of Soros , Paulson and Chanos
Make Markets Be Markets
http://makemarketsbemarkets.org/?utm_source=Institute+Master+List&utm_ca...
As eloquent an explanation of the logic behind holding precious metals as I've ever heard.
Having stolen from the little people about all they can manage to extract, the truly big guys (TBTF) are now having to attack the only moderately big guys (Hedge Funds). When these two divisions of the privileged classes are fighting amongst themselves, you know the looting has reached an advanced degree. Cannibalism is a sign of desperation and provides yet further proof of the rot spreading. --Boris
In principle I agree with Chanos...however, it bears reminding those of the stories of Overstock and Dendrion and the collusion of hedge funds to take down these legitimate companies. Lengthy stories but well worth the read.
http://www.deepcapture.com/
I'm glad someone pointed out this Chanos miscreant. :)
I'm glad someone else beat me to the punch with this link. Like you said, long and detailed, but pretty convincing evidence that he's a snake of the highest order.
Overstock is a fraud:
http://www.ritholtz.com/blog/2010/02/overstock-com-to-restate-earnings/
well those links from 2002 were spectacularly unconvincing.
Barry Ritholtz is a liar, cheat, slanderer, & part of the NY misinformation machine (i.e. the mafia)
http://www.deepcapture.com/podcast-barry-ritholtz-tale-of-two-media
You might want to cite a better source... Just sayin'
Thank god someone posted a link to deep capture.
I cannot believe that ZH doesn't touch the issue of naked short selling the way deep capture does. I'm not shocked by much on ZH anymore but praising Chanos is truly shocking.
Love this site. Love it.
That being said, you guys do realize that for every 1 hedge fund that does some shit that is less than ethical there are countless others that are above board, right? It makes no sense for any of you to demonize an entire subsect of an industry for the sins of a few. It flies in the face of a lot of what this site is trying to accomplish, and in the end, it will serve to dillute the message.
Chill. the. fuck. out.
Hedge funds that are shorting Greece are no different than the rest of the people here that may have shorts on the S&P right now, myself included. You see something you think is bullshit, and you try to make money off of people that chase the bullshit. That simple. That doesn't make you a villain, and it certainly doesn't villify the hedge fund complex.
Video: Chanos and Stiglitz
http://www.newdeal20.org/?p=2193
Yeah, and next let's go after the evildoers who destroyed the savings of a nation by shorting the yen into oblivion for lo these 20 years.
And to think, those same foul spawn of Satan might one day be emboldened to use the US dollar as a carry trade instrument! Unthinkable! This must be stopped.
So ZH determines that Hedge Fund are not evil - how about Quant Funds? e.g. D.E. Shaw
But wait.
Try this mental exercise.
Transport yourself back to the wonder years of 'irrational exuberance'.
Wasn't all fine in 2003?
2004! A dandy year.
Good Lord, 2005 you could flip houses like burgers and squirrel away cash like it was worthless!
Wine, women, and song! Good times where had all around!
There wasn't a starry eyed peasant who wasn't waiting for *their* ship to come in, and with so many ships crowding into the fatted harbor of destiny, no one could deny you'd be forced aboard one soon, and what good fortune!
A sudden denizen of a world of crystal chandeliers, big bands, scantily clad dancing girls, songstresses, luxury and glamor to make Anne Hathaway blush!
Ah yes! The good years! The roaring 2000's.
The DOT COM age, immortalized by such colloquialisms as 'He went dot.com' to suggest the modus operandi of another
ghetto to Glamour e-story.
And yet even back then there was the undercurrent , the dark slime oozing from the cracks, the theme songs of a coming prolapse, the White Zombies and Tools providing a hummable ode to a day that shall never come in our Golden Years.
'learn to swim'
how is your 8 dollar ford short doin jimmy
The SEC wants hedge funds to retain Docs. about shorting the Euro implying there maybe a collusion to short the currency (what a joke). Meanwhile, a massive collusion to short Gold and Silver has been perpetuated by central banks for years and that's apparently OK.
Yah know what else is okay is the massive short on the airlines before 9-11.
Think they're related?
Aren't members of the press contractually obligated to refer to him as the LEGENDARY short-seller Jim Chanos, and stick in a reference to Enron?
I believe the contractually obligatory verbiage is "hedge fund titan"
http://www.in.com/videos/watchvideo-all-hail-jim-chanos-short-selling-titan-6069587.html
Thank you Tyler for posting this. I need to hear something coherent at least once per day to calm down my insanity and sickness........
Blaming hedge funds for sovereign debt and currency crises is like blaming the thermometer when the temperature in the room gets too cold.
http://www.theglobeandmail.com/report-on-business/economy/governments-mi...
RBC CEO to shareholders:
“Political rhetoric is distorting the cause of this recent crisis and potentially distorting the cure. This crisis was not caused by Wall Street, executive compensation, nor proprietary trading, although they all played a part. The root cause of the crisis was the failure of the U.S. residential mortgage market, ... the basic requirement to qualify for a large mortgage in the United States was a pulse.”
Chanos and Nixon speak from self-interest, but are also correct.
Any responsibility or fault to the borrower who knew the loan was impossible to pay back by ordinary means and relied on speculation in a market not understood?
please stop using the term "retards". it's amazingly offensive. it's as bad as "niggers".
More offensive actually. A "nigger" can get an education, job, all the pleasures that life has to offer and can even be president. A retard is imprisoned in a malfunctioning mind and body and needs help to survive. They feel joy and pain but have no hope for better because they are unable to better themselves. Lastly, use the term nigger and you can expect a beating so bad you might up as a retard. That would be ironic, no ?.
So.. Use those words if you must. It is a free country. Don't expect everyone to laugh at your use of the words nigger or retard. Expect a punch in the mouth from time to time. I'm happy to oblige you there..
Nikki.. North of Detroit
"The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
greed is good, until it morphs into criminality
Bank robbers are being demonized by the failings of our financial system. It's without merit and they are simply a sympton not a cause.
If you need help Nikki, I'm you guy.
If you need help Nikki, I'm your guy.
If Hitler had to compete with Ross Perot for prez it would be game over in the 1930s.
First there was gunpowder, then armies, then nuclear bombs, then hedge funds.
?
You might find the following article useful/interesting.
Latin American Hedge Funds: Review and Outlook
Alternative Latin Investor recently spoke with two high profile hedge fund players in Latin America, Otávio Vieira, Portfolio Manager at Safdié and Carlos Rojas Perla, Chief Investment Officer at Compass Group. We were privileged to hear how both managers felt markets had played out in 2009 and to learn of the themes they expect to dominate in 2010, as well as the strategies they were employing to best harness future returns.
For free access to the full article, please visit:
http://www.alternativelatininvestor.com/37/hedge-funds/latam-hedge-fund-...
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