Today five of the most powerful men in the hedge fund world are in Washington speaking to the Oversight committee. The were invited (told) to testify in Washington to the effect that hedge funds had in the economic crisis that is upon us now.
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George Soros Of Soros Fund Management, John Paulson of Paulson & co., Jim Simons of Renaissance Technologies along with Citadel Investment Group’s founder Ken Griffin appeared in front of Committee Chairman Henry Waxman.
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Ironically they agree that there needs to be more transparency from the industry of secretive funds. They also gave different views on whether or not they contributed th the financial crisis. George Soros di say that hedge funds were part of the reason for the financial bubble. Mr Soros wrote in a statement “A deep recession is now inevitable and the possibility of a depression cannot be ruled out,” sent to the Oversight and Government Reform Committee hearing.
This is the ma who is know for betting against the British pound back in 1992 and recently backing Senator Barack Hussein Obama for President.
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The Committee wants to hear from the leaders in the hedge fund industry about the role of these funds as well as their tax status and regulation. Oddly enough when the financial and economic world was falling apart, these gentlemen made on average $1 billion last year. That is also why they were called to appear in Washington.
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“Currently, hedge funds are virtually unregulated,” Waxman said. “They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren’t even certain how many hedge funds exist or how much money they control.”
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I don’t know about you but this is quite fishy. Why is it that these guys can do what they do and not have to be accountable for their actions? Yes I know that many of them are operated outside of the United States, but they trade in U.S. currency and it’s assets.
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I also know that they are not the only reason for the collapse of the financial industry. Most of that blame does have to fall on the managers of those institutions, rating agencies, investment banks as well as the people who over-extended themselves with credit.
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As to the regulations that were non-existing for the last several years. Most of that blame must be put on Congress, the Treasury Dept. and the Federal Reserve. It’s their job to keep things in order. Unfortunately, many of those politicians were re-elected. Barney Frank, Henry Dodds along with Obama who was able to deflect most of the blame during the election. We will have to wait until 2010 before we have a chance to remove some of these lazy, elected government officials.
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David Ruder, a former chairman of the U.S. Securities and Exchange Commission tried a few years ago to force the hedge funds to register with the agency, but failed was also present at the hearing.
“Although hedge funds have been active participants in the financial markets during the past years, they do not seem to have played a major role in the events precipitating the crisis,” Ruder told the hearing.
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The men who were summoned to the hearing today are some of the leaders in the hedge fund industry. These guys are known by playing by the rules. The bad thing is that there aren’t that many rules for them to follow. Many of the hedge funds that we’ve been hearing about going under are the less respectable ones. The ones that don’t really follow any rules and leveraged the hell out of their funds.

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For those who believe in alternative energy and expect big things from the industry may have to hold on a little longer. Throughout this week T. Boone Pickens has been going around speaking at events as well as being interviewed on CNBC on Wednesday saying that because of the credit crunch, his big plans for huge wind farms will be delayed.
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The financing just isn’t there and with falling prices natural gas that are used in power plants as well as oil prices hitting levels that haven’t been seen in over a year and a half are making his projects less economical.
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As I’ve writen before here on this blog, Pickens started a campaign to help the U.S. reduce their need for foreign oil. The plan is for major investment in the wind energy and the conversion of natural gas for vehicles
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He has said that this is just a temporary setback due to the financing of the project. When he spoke with the New York Times he was quoted in saying. “When we were looking at the project, we felt like we could do it with 30 percent equity and 70 percent debt.” The 70 percent debt is where we’re having a little slowdown.”
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Mesa Power, a company that he founded was given the job to oversee the massive wind farm in Texas that would be able to power over 1.3 million homes. The company has placed the orders for the first phase of the project. A total of 667 turbines from General Electric will be able to generate 1,000 megawatts of electricity that will power more than 300,000 average homes.
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Originally that part of the project was to go online in early 2011.
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This is just part of what we’ll see for the next several months with the condition of the credit crisis. So buckle up, it’s going to be a bumpy ride.

What is the difference between a bailout and a rescue plan? There really isn’t one. It’s just a matter of how you want to get the message across. The AIG bailout is what they were calling it, but then the government was getting too much slack for how it was being presented.
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So when Hank Paulson went to Congress to get $700 billion to save the financial sector and the credit markets, he first called it a bailout. Then Congress went ahead and didn’t pass the bill, which in turn caused the stock market to plunge. By the end of the week they repackaged it and pitched it as a rescue plan.
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Either way you look at it, it’s still the same thing.
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Now it’s General Motors (NYSE:GM) and Ford Motor Corp (NYSE:F) turn. What will happen is still not clear. There is still two and a half months before Obama takes office. President Bush and Obama sat down yesterday in the oval office to discuss several things that need to be hashed out. Rumor has it that the auto industry was talked about, but neither of the men will reveal what was discussed, even though it seems that Obama’s aids have leaked the information out.
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If we are to save this economy we will need to save jobs and create new ones. Letting the the two auto companies to fail and possibly close some or all of their factories will not help this country bounce back any quicker.
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If we can go ahead and save the white collar jobs of Wall Street, why wouldn’t we save the blue collar ones of Main Street. What’s your opinion on this topic? I’d like to know.