diego

Hedge Funds, Oil Prices and Resulting Recession

I strongly disagree with this post. Today's problems are related to leverage in the OTC markets, not in the exchange traded instruments. CDS total 65 USD trillions and pretty much this is what has the world on its knees. In futures volume traded is about 600 trillion USD a year, ONLY for the CME; have you see the CME collapesed yet? No, only the dark OTC markets.

OTC's losess created a negative externalities because hedge funds and other speculators were forced to fliy to cash, either with or without a yearly positive return.

If you are going to blame the manipulation in the crude market for such volatility, then you should post about the index funds, not the hedge funds who, according to the CFTC, there is no evidence of price manipulation by those institutuions. So the finger should be pointed to index funds and not hedge funds.