Sunday, February 22, 2009

Now Obama Wants To Subsidize Hedge Funds?

President Obama speaks to the press before a meeting with bipartisan congressional leadership in the Roosevelt Room of the White House, January 23, 2009. REUTERS/Jason Reed

From The Asia Times:

The New York TImes has just posted a story reporting that the Obama Administration and the Fed plan to subsidize hedge funds and private equity investors’ holdings of securitized assets. If so, they have gone bat screaming crazy, and the appropriate portfolio diversifiers are land in northern Idaho, gold coins, shotgun shells and bottled water. If I were paranoid, I would wonder whether the administration plans to seize the banks, use taxpayer money to segregate their bad assets, and sell the “good” bank to private equity players for a song, while the Federal Reserve subsidizes hedge funds who buy structured product. There is, after all, an opportunity to rearrange wealth in the United States on an unprecedented scale. There are lots of hungry Ivy League university endowments whose private equity investments vaporized during the past year, eager to claw back what they lost. And there are scores of bright professors hungry for consulting fees. It’s hard to believe that anyone could be so reckless and so crazy. But the NYT report is one of the strangest things I’ve read, ever, anytime.

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My Comment: It is not a surprise to me that it is the business journalists and pundits outside of the U.S. who are the first to spot what is happening in the U.S. markets today. We are witnessing the greatest transfer and manipulation of wealth in human history. The people and institutions that will have control of this wealth will in turn have the political power and influence that comes with it. President Obama and his allies want to make sure that this occurs favorably to their side.

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