Saturday, April 14, 2018

The Instruments of Financial Sovereignty



Michael Hudson, a progressive economist with a keen sense of history, argues that today the stock market is primarily gamed by hedge-funds. I recommend watching his video here:
Laura Flanders interviews Michael Hudson (2018, April 4). Monopoly Capitalism at the Breaking Point https://trofire.com/2018/04/04/monopoly-capitalism-at-the-breaking-point/
Is that true?

The growing influence of hedge funds over stock markets was examined approvingly in a 2014 report issued by academics and a Federal Reserve Bank governor that noted approvingly noted their role in promoting “information efficiency of equity prices” except under conditions of financial volatility as examined in relation to the Lehmann collapse of 2007-2008:
Charles Cao, Bing Liang, Andrew W. Lo, Lubomir Petrasek (2014). Hedge Fund Ownership and Stock Market Efficiency. Available https://warwick.ac.uk/fac/soc/wbs/subjects/finance/events/seminars/hf-eff_2014_04_01.pdf

The contribution of hedge funds to price efficiency is greater than the contributions of other types of institutional investors, such as mutual funds or banks. However, stocks held by hedge funds experienced extreme declines in price efficiency during liquidity crises, most notably in the last quarter of 2008, and the declines were most severe in stocks held by hedge funds connected to Lehman Brothers and hedge funds using leverage.
By November of 2015, the hedge fund industry controlled $3.197trillion and institutional (public pension funds) and retail investors (such as Wells Fargo) were piling in, as were wealthy individuals.[i]

By November 2016, the hedge fund industry assets under management reached $3.22 trillion, increasing $70bn year-over-year according to 2017 Preqin Global Hedge Fund Report Sample Pages.[ii]

What is a hedge fund?

According to the online investment encyclopedia, Investopedia, a hedge fund is a pooled fund that aims “to earn active return, or alpha, for their investors.” Hedge funds aren’t accessible to everyone as access is conditional, available only for “accredited investors” because hedge funds are less regulated by the SEC than other funds.[iii]

Hedge funds seek short term gains and are inclined to hold liquid assets and pursue short-selling, options, and derivatives trading.[iv]

Hedge funds are ordinarily structured as limited partnerships with payments of management fees to to managing partners in addition to a percentage of profits.[v]

So, a hedge-fund is an instrument constructed of law by the state that offers capital additional liberties in the pursuit of profit. Hedge funds are only accessible to the very wealthiest individuals, retail investors, and institutional investors who must buy in, paying six-to-seven figures.
[Private equity is another legal instrument created in law that offers capital additional liberties and reduced taxes in the pursuit of profit. Private equity is also an exclusive club structured often as a partnership].

Hedge-funds are instruments that thrive on valitility. They extract value and circulate at speeds limited only by the state of electronics.

Hedge-funds, private equity, and sovereign wealth funds are the new instruments whereby sovereigns control the territory but rather than deploying armies and policing, they deploy electronic value - much of it highly leveraged - to extract value.


They are abstract instruments but their effects in the material world operate to consolidate ownership of value across global society within a ever-narrower slice of the population.

RESOURCES

[i] 2016 Preqin Global Hedge Fund Report Sample Pages. Preqin Alternative Assets, ISBN: 978-1-907012-88-4 http://docs.preqin.com/samples/2016-Preqin-Global-Hedge-Fund-Report-Sample-Pages.pdf

[ii] Preqin Alternative Assets, ISBN: 978-1-907012-98-3 file:///C:/Users/Alex%20Nadesan/Documents/MAJIA/2017-Preqin-Global-Hedge-Fund-Report-Sample-Pages.pdf

[iii] Hedge Fund https://www.investopedia.com/terms/h/hedgefund.asp#ixzz5CfXb5BGw

[iv] (Investopedia What is the difference between a hedge fund and a private equity fund? 2014, December. Investopedia, https://www.investopedia.com/ask/answers/121614/what-difference-between-hedge-fund-and-private-equity-fund.asp

[v] (Investopedia, what is the difference What is the difference between a hedge fund and a private equity fund? | Investopedia https://www.investopedia.com/ask/answers/121614/what-difference-between-hedge-fund-and-private-equity-fund.asp#ixzz5CfxlD8i6

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3 comments:

  1. Trump prepares to pardon one of the worst war-criminals in the Bush-cheney murder/genocide regime. Iraq inundated with radioactive hell, in the form of depleted unranium. 1 million men, women, children murdered. Fallujah, has some of the highest number of birth defects, in the world from the genotoxic, depleted uranium in the air, water, food, soil. It will not go away for genererations, if ever. This is in the wake of another senseless, murderous, bombing by Trump. The usa still uses depleted uranium munitions.

    https://www.opednews.com/articles/Dirty-Tricks-vs-Democracy-by-Tom-Hastings-Corruption_Democracy-Decay_Democrats_Dirty-Political-Tactics-180414-989.html

    There are upwards of 1 in 15 children in many k12 schools, around the usa, that are homeless. National disgrace.

    ReplyDelete
  2. Shaun King

    112 tomahawk missiles launched at Syria. Each costs $1.87M to make. That's $224M total. 1/3 of syria is occupied by us troops now. Iraq, is a mess , us troops in yemen, afgahnistan, all over africa. Troops and warships by korea. Usa stuck in syria. A few weeks ago murica was pulling out. Bailing out reactors on the verge of meltdowns with perry. Nuclear wastes stored in barrels over aquifers by doe perry. Trump says nothing about radioactive food or goods coming from japan, says nothing about fukushima. 3/4 or more of americans living from paycheck to paycheck.

    Massive homelessness, because people cannot afford rent. People cannot afford healthcare, become homeless.

    Trillions spent on wars, we initiated for no good reason, that conthinue, with no end.

    Uranium mining in the grand canyon. Food , health and transportation services cut to the bone, to the poor, children, the disabled, the elderly.

    2500 sliding scale health clinics , that help everyone, across the us, ctback or closed losed, since trump took office. Trump does not believe in mass transit. Does not believe in food banks. Trump wants to close all public schools while Betsy Devos make the billiknaire, makes millions thru inside investing, with here war mercenary, war criminal neocon-brother , eric prince. The criminal corruption occured a few days before the syria bombings. The illgotten money, from illegal weapons investments.

    ReplyDelete
  3. Who has killed more people by poisoning them? Assad, in 7 years, or Scott Pruitt, in one day?

    ReplyDelete