“Speculation is Evil… You Greedy Bastard Covel!”

Alexander Ineichen writes:

“The financial crisis was not ’caused’ by a single event or a single group of investors. More likely, a series of conditions needed to be met for the dominos to fall one by one and the system to crack. The idea that hedge funds were the first stone to fall and thereby causing the chain reaction, seems infinitely improbable from what we know today. However, a disproportionate amount of regulatory zeal and political energy is spent on regulating ‘alternative’ funds. This we find odd, especially given that the ‘too big to fail’ issue is the single most important aspect related to systemic risk and is far from being resolved.”

He adds:

“Politicians blamed speculators for ‘causing’ oil to go to $147. However, politicians didn’t thank speculators for ‘causing’ oil going back to $35. This seems odd. In the Greece situation, it’s again the speculators who get blamed. Bismarck often remarked that if one likes laws and sausages it is best not to see them being made. This is probably also true for the price mechanism in a free market economy, as the impact of the market responding to bad news isn’t always pretty.”

Ineichen stop being so right.