Hedge Funds

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Comment, Jul/Aug 2012
Sebastian Mallaby

If the eurozone splinters, it will have been an avoidable disaster. After all, the European Central Bank has already gone to great lengths to shore up the continent’s financial system. Now, the choice lies with Germany, which can save the monetary union if it allows for policies aimed at debt relief and growth, not just slashing deficits.

Essay, Jan/Feb 2012
Barry Eichengreen

Confidence in the dollar and the euro continues to falter, threatening the international monetary system. The world has faced such monetary collapse before: in the 1930s, with disastrous results, and less catastrophically in the 1970s. Understanding these two precedents is crucial to successfully navigating the crisis today.

Comment, Mar/Apr 2011
Ian Bremmer and Nouriel Roubini

In the wake of the financial crisis, the United States is no longer the leader of the global economy, and no other nation has the political and economic leverage to replace it. Rather than a forum for compromise, the G-20 is likely to be an arena of conflict.

JC de Swaan

Chinese companies and government-sponsored investment vehicles are increasingly purchasing U.S. assets. For all the concerns about China’s large holdings of U.S. Treasury bills, its investments in American companies could be met with even greater sensitivity.

Roger M. Kubarych

Are the bank bailouts a reward for bad behavior? Maybe. But keeping large financial institutions in business still makes sense.

Martin J. Gross

Hedge funds did not cause the crash. But they need to get over what the markets did to them and what they did to themselves.

Essay, Jan/Feb 2007
Sebastian Mallaby

The massive growth of hedge funds has sparked warnings of instability and demands that the industry be regulated. But the fear of hedge funds is overblown, based on a misunderstanding of their role in the international financial system. In reality, hedge funds do not increase risk; they manage it -- and policymakers, rather than clamping down, should make sure hedge funds have the tools to perform this function well.

Essay, Mar/Apr 2000
Martin N. Baily, Diana Farrell, and Susan Lund

Mahathir Mohamad and others love to blame buccaneering hedge funds for sparking Asia's recent financial crisis, but they have the wrong suspects. The "hot money" that rushed in and out of emerging markets came from irresponsible banks, not hedge funds. In fact, hedge funds are minor players in international finance. Rather than worsening financial turbulence, they might even help curb it.

Comment, Nov/Dec 1994
Larry W. Schwartz

Developing countries seeking economic vitality should court venture capitalists, the gutsy investors bent on creating Silicon Valleys from economic deserts.

Essay, Jan 1975
Harold van B. Cleveland and W. H. Bruce Brittain

In the summer of 1929 a few prophets foresaw the coming stock market crash. Only one gifted with second sight could have foreseen the sequel-a world depression historians would single out by calling Great. In the United States at any rate, most of the business community continued to believe in permanent prosperity, until the bottom fell out. In contrast to this optimism on the brink of the abyss, the mood of business in the United States, Western Europe and Japan today is deeply pessimistic. The doomsayers among us see the current world economic slowdown not as an ordinary recession of the familiar postwar variety but as the onset of something closer to what happened in the early 1930s.

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