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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (26717)	1/22/1999 9:22:00 AM
From: donald martin	Read Replies (1) \| Respond to of 116785

<<For the sake of a free economy!>> Indeed. Your personal losses aside, of which I do not make light, free economies need free markets. And participants in free markets are, inherently, moral. So no, hedge fund operators are not immoral, and they're not so worthless or despicable either. They seek profit, yes, as I'm sure you do yourself. The goal of any good hedge fund is to seek out and, yes, profit from, irrationalities in the market place. The first person to popularize hedge fund bashing, Mohammend Mohatmir or whatever his name was from Malaysia, griped because the financiers of the world more or less told his countrymen that they were in essence a bunch of janitors getting doctor's pay. (That's a fair assessment of what citizens of a country with an overvalued currency are.) LTCM is a very special case. They bet that certain irrationalities in the market place would eventually become "rational". (Spreads in Treasuries that existed due to unusual preferences between older and newer issues that affected liquidity.) Instead of becoming more "rational" the spreads became more irrational. And their leverage did them in. Therein lies the rub. LTCM was margined up past their eyeballs; some FREE market participant WILLINGLY lent them the money. Someone THOUGHT giving LTCM money was a safer bet than raising the limit on my credit card. That was their FREE choice. The RISK was theirs to assess...and theirs to bear. (Or, it should have been.) It's the implication that a bail-out is always around the corner if an institution f***s up that skunks the discipline of the free market. No, if anything, LTCM and the currency plague shows me that not only do we not need MORE controls, that what is needed is for there to be a ban on all future bail outs. It's not something that people like to hear, but being part of a free market also means free to fail.