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To: Les H who wrote (190577)	9/5/2002 6:36:44 AM
From: stockman_scott	Read Replies (1) \| Respond to of 436258

Shall we clamp down on the Hedge Funds...?? Beware the Hedgehogs By WILLIAM SAFIRE Columnist The New York Times September 5, 2002 WASHINGTON — In the course of writing a Nixon speech imposing wage and price controls (I was only playing the piano downstairs, officer), I zapped "speculators" who were roiling the global gold and currency markets. Arthur Burns reminded me that it was Bernard Baruch who startled Congressional investigators in 1917 by asserting coolly, "I am a speculator." Arbitrageurs, speculators and short-sellers, Baruch and later Burns explained, all help spread risk and make markets more liquid. That was then; now it's gotten out of hand. The hidden hands of speculators, profiting from bad-news rumormongering, good-news insidership and no-news accounting, made markets unsafe for ordinary investors. Prosecutors hungry for publicity are subjecting billionaire suspects to "perp walks" in handcuffs before cameras. But few of the supposed watchdogs and gatekeepers deal with the market's structural weaknesses that go beyond ethical blindness and outright fraud. One cause of the unusual, unstable jerking around of the stock markets - with dizzying swings of 4 percent in a day - is the kudzu-like growth of hedge funds, which have quintupled in the past decade. These are not your usual mutual funds. Because these agglomerations of capital are set up by wealthy and supposedly sophisticated investors, the government leaves them largely unregulated, and the funds' managers can keep their investments secret. Because many of those managers take not just a fee but 20 percent of any profits from the funds' investments, their incentive is to borrow heavily from a friendly bank or broker and roll the dice. So what, you say - let the richies take their chances. But such leveraged risk-taking, now on a huge scale, adds to the volatility of all markets. Also, some managers who have hedged their investment bets - by selling short in expectation of a decline in a stock - have an incentive to spread rumors of bad news, just as buyers have an incentive to tout stocks with rosy predictions. Hedge funds are deliberately opaque. This concealment of investments protects them from competing funds, claim the 20-percenters. However, their secrecy masks an operation that the public would benefit from opening to the light of day. Stealthily, the S.E.C. in June began an investigation into this $300 billion world. Two months ago the commission sent demands for information to registered investment advisers about hedge-fund activity. More recently, unregistered advisers who are more active hedgehogs were sent similar letters from the S.E.C.'s Division of Investment Management. Though its acronym is DIM, the division's brighter staff members are at first looking into fraud in hedge-fund operations. These investment vehicles have long been unmonitored solely because they are supposed to be limited to institutions, university endowments, net-worthies and other high rollers. Later, as the investigation with its subpoena power moves into the audit stage, DIM's questioning is expected to broaden: What kind of new investors are being lured into hedge funds? Many of these funds have done less badly than stock indexes in the recent past's sinking market, and some shrewd managers earn the high percentage of profit they take down. (Such feigning of fairness is known in my dodge as the "to be sure" sentence; it is followed by a "but.") But one of those reputable managers tells me that in recent years his industry has attracted sharpies and crapshooters eager to get in on a deal that enables them to profit handsomely on no personal investment - while other investors take the high risk. Many hedgehogs will tell you that market volatility is caused less by their leveraged machinations than by the growth of program trading. They say the computer is the culprit, regularly forming what used to be illegal "bear pools" to drive down stock prices. I don't buy that. Hedge funds, with their bank-backed leverage multiplied by investment in derivatives, ought to be required to disclose their operations, same as mutual funds. "Protect the rich" is not much of a bumper sticker, but what the risk-prone hedgehogs do has a nervous-making effect on the rest of the market. In economics as in politics, secrecy generates suspicion. Disclosure, especially in detail, begets the bored yawn of confidence. We can use a little more of that trust this year. nytimes.com

To: Les H who wrote (190577)	9/5/2002 9:14:44 AM
From: Les H	Read Replies (2) \| Respond to of 436258

And the survey says BMW drivers are rudest on road New research says BMW drivers are the rudest on the road. They beat owners of Volvos, Vauxhall Cavaliers, Porsches and Nissans to the dubious title. The survey of 900 motorists found that bad manners were considered more annoying than dangerous driving. Nearly half of those questioned in the study commissioned by Mitsubishi Motors found ''not being thanked when appropriate'' the most infuriating aspect of driving. Only 20% found dangerous driving the biggest irritant, while boy racers enraged just 8%. However, 50% of men admit their worst flaw is failing to thank other drivers, while just one in six women admit the same failing. It's estimated that this month's new number plate will add 400,000 cars to the roads. Mitsubishi spokesman David Miles says: ''We would urge car users to be as courteous as possible on the roads. ''We also think the situation would be eased if the Government gets on with providing a fully integrated transport system using the taxation it squeezes from motorists to fund it.'' The survey also found three in five men admitted to being aggressive on the road while only one in five women believe they are capable of road rage.