Tuesday, October 20, 2009

Hedge fund managers of the world unite!

You have nothing to lose but your gains!

One of the interesting things about this age is the way some people society considers the "bad guys" actually turn out to be amongst the loudest progressives.  In particular, I've been impressed by how some of the biggest guns in hedgefundlandia are actually pretty candid about how fucked up the system is, and pretty straightforward in terms of suggesting what should be done about it.  These are some of the wealthiest folks on earth, and you might expect them to circle the wagons and defend the status quo, but that's not actually what you hear. 

Consider two recent examples.  Here is David Einhorn of Greenlight Capital getting pretty much straight to the point:

The financial reform on the table is analogous to our response to airline terrorism by frisking grandma and taking away everyone's shampoo, in that it gives the appearance of officially "doing something" and adds to our bureaucracy without really making anything safer. 
And here is John Burbank of Passport Capital, telling us that we better grow some more food if we want to keep the Chinese fed. 

Current yield growth is around 1%, less than half the average rate during the 1960s and 1970s.  This trend towards a plateau in global yields, combined with limitations on current arable land, is leading to concerns about the ability to increase supply rapidly in response to tight inventories and rising prices.  This trend requires more capital investment into all aspects of agriculture, including infrastructure, proper soil fertility, seed technology, crop chemicals, and the development of higher cost acres.

Now, remember, these guys are not what you would call philanthropists exactly.  So it's remarkable that this is what people in our government would be saying if they had any brains or balls.  It illustrates the basic idea of markets, namely that you're only supposed to be able to make money by providing what the world needs and wants.  It's a weird world where we need to be reminded of this fact by progressive hedge fund managers.


Anonymous said...

They need to add a size tax, a multiple of market share. Say 3X market share.

Question is, how do we actually do this politically? When i ask that question, it make me fell frustatingly powerless

Clark said...

There are so many ways to reform finance, and we're choosing none of the above. The fundamental problem is clearly the way politicians are financed.