Thomas Cooley Defends Hedge Funds
Question: Are hedge funds good for the American economy?
Thomas Cooley: Well, I don't think that-- I don’t see hedge funds as being particularly detrimental, you know, they're just-- hedge funds is a very broad category that represents different investment strategies. Now, one of the things that is true is that hedge funds rely on complicated securities, trading complicated derivative securities, which people don't understand very well. And they rely on high degrees of leverage. So if they have, you know, a billion dollars in their hedge fund, they might borrow as much as $30 billion to trade with. And so, their strategies are backed by high amounts of leverage. And that creates some problems. But what we've learned is that the investment banks were very highly leverages as well, some by 35 or 36 to 1. And that means that if you're leveraged that heavily when the market's head down, you can be brought to your knees very quickly. It's like having only three percent equity in your home. So if home prices fall by three percent, you might as well walk away. So that was the status of Bear Stearns, that's what brought Bear Stearns down.
NYU economist Thomas Cooley explains complicated derivative securities.
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The Oxfam report prompted Anand Giridharadas to tweet: "Don't be Pinkered into everything's-getting-better complacency."
- A new report by Oxfam argues that wealth inequality is causing poverty and misery around the world.
- In the last year, the world's billionaires saw their wealth increase by 12%, while the poorest 3.8 billion people on the planet lost 11% of their wealth.
- The report prompted Anand Giridharadas to tweet: "Don't be Pinkered into everything's-getting-better complacency." We explain what Steven Pinker's got to do with it.
Moans, groans, and gripes release stress hormones in the brain.
Could you give up complaining for a whole month? That's the crux of this interesting piece by Jessica Hullinger over at Fast Company. Hullinger explores the reasons why humans are so predisposed to griping and why, despite these predispositions, we should all try to complain less. As for no complaining for a month, that was the goal for people enrolled in the Complaint Restraint project.
Participants sought to go the entirety of February without so much as a moan, groan, or bellyache.
- Facebook and Google began as companies with supposedly noble purposes.
- Creating a more connected world and indexing the world's information: what could be better than that?
- But pressure to return value to shareholders came at the expense of their own users.
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