WEST PALM BEACH, FL (HEDGECO.NET) – Hedge funds have continuously been blamed anytime that things go wrong with the markets. During the Asian currency crisis, some managers of the Asian economieseven charged that hedge funds were responsible for the financial crisis confronting the region. Some world leaders like Mahatier Mohammed of Malaysia put forward the idea that large hedge fundmanagers, such as George Soros, are guilty of intentional crime because of their speculative currency activities. Mohammed charged that these activities were responsible for the currency crisisconfronting their region. The charges were serious enough that the IMF commissioned a study into the role of hedge funds in such crisis. The IMF study concluded that hedge funds were not responsiblefor the Asian financial crisis.
Now new accusations are being leveled against hedge funds. They regard the out of control oil prices that are approaching the $50/barrel mark. In recent interviews the Saudi Arabian foreign affairs adviser, Adel Al-Jubeir, told reporters that “massive speculation� activities of global hedge funds have helped to elevate oil prices.
Most of these complaints result from the speculative short selling strategy employed by some hedge fund managers to profit from declining prices, by initiating short positions. These strategies make money when prices of such stocks or derivatives lose value.
George Van, chairman and founder of Van Hedge Fund Advisors referring to such allegation about hedge funds said, “They’ve been scapegoats forever, it�s impossible to quantify,� Van added,� It would be disingenuous to say hedge funds haven’t contributed to it, but it would be uninformed to say that hedge funds are the primary contributors.�
Some energy analysts think there are more serious problems in the oil supply and demand equation. This problem is also complicated by the difficulties in the Middle East, Iraq, Venezuela, and Nigeria, where landlords are increasingly disrupting crude oil production. Moreover, data from the CFTC shows that many speculators in the oil markets have actually decreased their net long positions from 82,451 earlier in March to near 36,303 in the first week of August.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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