I’m writing this in hopes that the OWS movement can have a better understanding of the hedge fund industry and the financial markets. With OWS being the zeitgeist of current politics, I think it’s important to know how exactly the hedge funds, along with the financial markets are destroying the 99%.
Hedge funds. These guys are basically the vehicles of choice for ultra-rich people to get into the financial markets, besides family offices and private wealth managers. What are hedge funds? They are funds that have a 1-5 million deposit minimum, cater to the mega-rich, and can invest in anything without regulatory restrictions, use leverage to pump up their exposure by 15x, and pretty much eat up a vast majority of the industry’s profits.
These guys invest in EVERYTHING. Instruments you’ve heard of - stocks, bonds, forwards, futures, currencies, and instruments that you, me, or anyone else have never even heard of, much less know anything about: commodity future swaptions, FRA/OIS swaps, CLOs, exotic future options, p-notes, index/commodity/equity exposures, and a huge array of OTC (over-the-counter) instruments that no regular investor would ever have access to.
Why I bring this up: the financial markets are rigged.
From David Graeber:
Nowhere is [the] disjunction between what ordinary Americans really think, and what the media and political establishment tells them they think, more clear than when we talk about democracy.
According to the official version, of course, “democracy” is a system created by the Founding Fathers, based on checks and balances between president, congress and judiciary. In fact, nowhere in the Declaration of Independence or Constitution does it say anything about the US being a “democracy”. The authors of those documents, almost to a man, defined “democracy” as a matter of collective self-governance by popular assemblies, and as such they were dead-set against it.
Democracy meant the madness of crowds: bloody, tumultuous and untenable. “There was never a democracy that didn’t commit suicide,” wrote Adams; Hamilton justified the system of checks and balances by insisting that it was necessary to create a permanent body of the “rich and well-born” to check the “imprudence” of democracy, or even that limited form that would be allowed in the lower house of representatives.
The result was a republic - modelled not on Athens, but on Rome. It only came to be redefined as a “democracy” in the early 19th century because ordinary Americans had very different views, and persistently tended to vote - those who were allowed to vote - for candidates who called themselves “democrats”. But what did - and what do - ordinary Americans mean by the word? Did they really just mean a system where they get to weigh in on which politicians will run the government? It seems implausible. After all, most Americans loathe politicians, and tend to be skeptical about the very idea of government. If they universally hold out “democracy” as their political ideal, it can only be because they still see it, however vaguely, as self-governance - as what the Founding Fathers tended to denounce as either “democracy” or, as they sometimes also put it, “anarchy”.
If nothing else, this would help explain the enthusiasm with which they have embraced a movement [OWS] based on directly democratic principles, despite the uniformly contemptuous dismissal of the United States’ media and political class.
After the Arab League hypocritically suspended the membership of Syria amid the mounting pressures of NATO and the United States, the resurgence of violence in Egypt and the increasing use of excessive force in Bahrain and Yemen, and the unrelenting massacre of innocent civilians by the barbaric regime of Al Khalifa and Ali Abdullah Saleh once again attracted the attention of conscientious observers in the international community.