You want to blame the regulators but imho any system that relies solely regulators is going to be fragile. The regulators always have a chance of being captured by the industry or just plain incompetent.
We have a culture of people not feeling the negative repercussions of "bad actions". Buying multiple homes was irresponsible, mortgage brokers immediately selling every loan is a moral hazard and Wall street levering up on CDOs were all problems. All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me
> All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me
What bail outs are you referring to? Are you talking about the TARP program? Because didn't most of that go to banks (not hedge funds) and wasn't that actually a net benefit to tax payers? I'm not asking rhetorically, I'm honestly just not that well informed on the details of the TARP program being from the UK and having not been old enough to have direct experience of the GFC.
I do agree that more should have been done to help those struggling with mortgage debt, but again it's weird to blame hedge funds for this. To blame the hedge funds you would first have to assume they planned to take down the global economy, and then secondly assume that they have some level of responsibly over the government's decision to purchase toxic assets from the banks. It was the government who took the tax payer's money and gave it to the banks.
It's also not like all hedge funds were involved in the GFC either. I guess I don't really understand what Melvin Capital did that was so bad that people now want to bankrupt the company. Being angry at certain individuals and companies for taking on the excessive risk that caused the GFC is understandable, but being angry at all hedge funds or all of "Wall Street" is silly. A lot (and I'd assume most) of these companies are perfectly responsible and acting within the law.
And to be honest it's worse than just targeting random Hedge Funds, a lot of the posts I've seen on Reddit seem to be complaining about capitalism and the financial system in the general. I think this is partly why I'm feeling the need to question what and who we're angry at here. I want to make sure we're justified when we're bankrupting these companies and making their employees redundant. A mob as big as this without a clear target should worry everyone.
I agree with you that the regulators are to blame, but wall street (regulators, ratings agencies, banks, funds) seem to consistently break the law with no consequence. All of these are largely responsible for the deregulation that allowed these financial instruments to become legal. We need consequences or this system will remain broken, I think. Fraud is a crime that many lower class people consistently go to prison for. It's times like these that I personally realize that MLK was right when he said the system we have in place is not justice, it makes a mockery of justice. These people/institutions continue to get richer without repercussions, and ready to benefit during the recovery from every crash meanwhile poor people get shafted.
> To blame the hedge funds for this you would first have to assume they planned to take down the global economy
No, you absolutely don't. Consider criminal charges - they differentiate between intentional harm, reckless harm and negligent harm, but they all blame the guy being charged.
Sorry I should have been more specific – I don't understand why people are blaming the hedge funds for bail outs. If you're going to blame anyone for the TARP program surely it would be the government?
I do get why people are angry at those who recklessly over leveraged, although I would still argue that this is more of regulatory issue. If you allow people to take reckless financial risks some percentage of people will always do it.
It's also no reason to be angry at hedge funds as a collective, in the same way it would be silly to be angry at all mortgage owners (past & present) for the GFC.
However, if you're saying it's fine to blame the individual hedge funds involved in the GFC for reckless harm and negligence then I would would tend to agree, but that doesn't appear to be what's happening.
I think maybe lay people are using hedge funds as a catch all for market participants in securities / equities. Everyone was buying CDOs, banks, pension funds, sovereign wealth funds, hedge funds etc
We have a culture of people not feeling the negative repercussions of "bad actions". Buying multiple homes was irresponsible, mortgage brokers immediately selling every loan is a moral hazard and Wall street levering up on CDOs were all problems. All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me