Forum Post: How Unregulated Hedge Funds Are Causing World Financial Crisis

Because of money in politics and the power of Wall Street, Hedge Funds remain unregulated market manipulators today. Unregulated Hedge Fund managers met in 2010 and decided to collude and use their large sums of cash to attack leveraged sovereign nations. The hedge fund managers met in N.Y. and decided that Greece was their best bet because Greece was highly leveraged (had a lot of debt). Greece did have a lot of debt, but it was not any where near collapsing. The hedge funds caused that.

The hedge funds colluded and placed market bets at the same time against Greece. These massive bets caused a cascade of events. It caused investors to en masse pull out of Greece and thus devalued the Greek government bonds. Furthermore, the withdrawal of money caused Greece to incur even more debt because Greece lost all of the tax income on that money. And Greece, which already was leveraged was having to prop up its banks.

There is only so long that a country that has a lot of debt can withstand the bets (market attacks) by hedge funds. That is why hedge funds pick countries that have a lot of debt and bet against them because they know that they are not in a financial position to stave off the problems that the bets cause to their markets, banks, and the economy.

Hence, Germany and France have to come to their rescue and bail them out. So, hedge funds bet against the Euro because now the countries that were doing better are put in a worse position because they have had to take on Greek debt to stave off the speculators from causing Greece to collapse.

So the hedge fund speculators or vultures then look to the next highly leveraged countries: Ireland, Spain, Italy, and Portugal and one after another place massive market bets against them causing France and Germany to have to take on more of their debt.

The hedge funds are betting that the Euro will fail and are successively going after leveraged countries to make it happen. There is only so long that Germany and France can take on debt before and unregulated hedge funds are keeping up the pressure with $8 billion bets that the Euro will fail.

Do the hedge funds deny this? No. They say that they couldn't manipulate the markets in these countries and cause them to almost collapse if they did not have all of that debt. So, they say it is the fault of those countries that they have made themselves vulnerable to the unregulated vultures.

German Chancellor Angel Merkel attempted to ban the speculators as well as the Italian and Greek Prime Ministers. The problem is that the U.S. refuses to ban or regulate them because our government no longer represents the people -- only Wall Street, the wealthy, and big business.

All of our economic mess we are in now is the result of lack of regulation and deregulation of Wall Street and it will continue until we take our government back.

http://in.reuters.com/article/2010/02/26/markets-euro-hedfunds-idINN2515219020100226 http://www.globalization101.org/news1/Goldman_Sachs_Greece http://dealbook.nytimes.com/2010/02/26/big-hedge-funds-said-to-bet-against-euro/ http://www.bloomberg.com/news/2010-05-18/germany-to-start-temporary-ban-on-naked-short-selling-of-euro-bonds-banks.html http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aj9Qo2YqmFKs http://www.economist.com/node/16322566 http://www.independent.co.uk/news/business/news/soros-hedge-fund-bets-on-demise-of-the-euro-1914356.html http://www.bloomberg.com/news/2010-02-21/-next-greece-search-is-on-as-hedge-funds-circle-william-pesek.html http://www.spiegel.de/international/europe/0,1518,675196,00.html

http://www.bloomberg.com/news/2011-07-07/hedge-funds-move-past-greece-with-bets-that-sovereign-debt-crisis-expands.html

http://www.zerohedge.com/article/first-greece-now-spain-moore-capital-brevan-howard-paulson-well-jpm-and-goldman-implicated-s

http://seekingalpha.com/article/206376-hedge-funds-and-the-euro-crisis

http://www.economonitor.com/blog/2008/10/the-role-of-hedge-funds-in-financial-crisis/

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agj7D9vZDDvE

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8037870/The-vulture-funds-are-circling-Ireland.html