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Guardian Unlimited - Lights flicker and numbers flash up on small dials at the front of two computer servers nicknamed Meg Ryan and Jamie Lee Curtis by traders at the London headquarters of hedge fund giant Man Group.
The shiny new technology is part of the nerve centre of AHL, one of Man’s most successful hedge funds, which has notched up returns of 7 per cent in the past month alone, despite the financial turmoil.
Others in the industry have been less fortunate. Analysts warn that global hedge funds are facing the biggest bloodbath since their rapid expansion in the early 1990s, especially in Britain, where about half of 2,000 firms are expected to be taken over by larger rivals or liquidated.
But don’t expect the funds to shout from the rooftops about their travails. They are notoriously secretive, preferring to work quietly in a sector conservatively estimated to account for around $2trn at the height of the boom.
Telegraph.com.UK – Sources close to Mrs Lagarde said that she had called the US Treasury Secretary – a close personal friend – well before the ailing bank’s collapse imploring him to act, but he chose not to.
Lehman Brothers’ demise sparked the biggest shake-up on Wall Street in decades and sent shock waves around the world that triggered a massive bailout plan in Britain and Europe.
Mrs Lagarde – attributed with playing a key role in brokering a bailout deal among G7 finance ministers in Washington last weekend – dubbed Mr Paulson’s decision to let the bank go under "horrendous" as it triggered panic in markets and banks to the brink of a 1929-style financial meltdown.
In an interview with the Daily Telegraph, she warned that the world’s hedge funds could be the next institutions to be hit by the financial turmoil.
Myrtle Beach Sun News – The financial turmoil has pushed the Obama campaign into the lead, and this is mostly justified. Barack Obama is more thoughtful on the economy than his opponent, and his bench of advisers is superior. But there’s a troubling side to the Democratic advance. The claim that the financial crisis reflects Bush-McCain deregulation is not only nonsense. It is the sort of nonsense that could matter.
The real roots of the crisis lie in a flawed response to China. Starting in the 1990s, the flood of cheap products from China kept global inflation low, allowing central banks to operate relatively loose monetary policies. But the flip side of China’s export surplus was that China had a capital surplus, too. Chinese savings sloshed into asset markets ’round the world, driving up the price of everything from Florida condos to Latin American stocks.
That gave central bankers a choice: Should they carry on targeting regular consumer inflation, which Chinese exports had pushed down, or should they restrain asset inflation, which Chinese savings had pushed upward? Alan Greenspan’s Fed chose to stand aside as asset prices rose; it preferred to deal with bubbles after they popped by cutting interest rates rather than by preventing those bubbles from inflating. After the dot-com bubble, this clean-up-later policy worked fine. Not so with the real estate bubble.
West Palm Beach (HedgeCo.net) – The Group of Thirty released a new report, ‘The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace’.
The report was issued after the meeting of G7 finance ministers and central bank governors in Washington DC. The Group of Thirty is an international body composed of central bank governors, leading economists, and private financial sector experts,
"The financial turmoil that has unfolded over the last year has tested the ability of regulatory authorities to respond effectively to financial crises. It is evident that a number of countries need to revise and reform financial regulatory structures," said Paul Volcker, Chairman of the Group of Thirty’s Board of Trustees.
Volcker underscored that improvement in regulatory approaches is essential at the national and cross-border levels. The G30 report compares and analyses the financial regulatory approaches of 17 jurisdictions, including the UK, the US and Australia, in order to illustrate the implications of the four principal models of supervisory oversight: (1) the Institutional Approach, (2) the Functional Approach, (3) the Integrated Approach, and (4) the Twin Peaks Approach.
The US structure, which falls outside of these four approaches, combines institutional and functional approaches with the added complexity of a number of state level agencies and actors.
Roger W Ferguson, President and CEO of TIAA-CREF, former Vice Chairman of the US Federal Reserve Board and the Vice Chairman of the G30 Working Group, said, "As we start to re-examine regulatory structures, the G30 report can play a role by building the fact base that regulators, politicians, and financial market participants will consider."
In March, the US Treasury released its ‘Blueprint for a Modernized Financial Regulatory Structure’, which proposes a major restructuring of financial supervision toward a regulation by objectives approach, in some ways similar to the twin peaks model to supervision and regulation. The UK has already introduced modifications in its highly integrated approach.
In preparing the report, the G30 conducted interviews with key officials in the relevant jurisdictions, as well as practitioners, regulated parties, and those who may have been involved historically in the development of the current regulatory arrangements.
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Independent – The FTSE 100 Index tumbled more than 200 points today after a weekend of financial turmoil in Europe.
Investors took scant comfort from Friday’s backing of a US financial rescue to leave the FTSE 100 Index down almost 5 per cent or 240.5 points at 4739.
Banks were under pressure after German mortgage lender Hypo Real Estate became the latest to receive state aid.
Analysts said the impact of the latest crisis crossed all sectors amid fears of slowing demand.
Halifax Bank of Scotland – soon to merge with Lloyds TSB – plunged 15 per cent in the sell-off, while Royal Bank of Scotland suffered a 10 per cent drop.
The market was also hit hard by hefty falls from heavily-weighted mining stocks after experts warned that the sector’s earnings could almost halve this year.
