There remains a general misunderstanding of just what a hedge fund is in Rhode Island. I just wanted to share a few definitions here to improve one’s grasp of this topic. As such this is not intended to be reporting as much as an aggregation of several important facts.

The first comes from Dr. Michael Hudson’s excellent book Killing the Host, which I cannot recommend enough for everyone to read.

By 2006, hedge funds – collections of wealth for raiders to use as a basis for borrowing to take over companies – were accounting for nearly half the trades on the London and New York stock exchanges, and their share is substantially higher today. Although they only control a small percentage of equity, their aggressive behavior has gained support from pension funds and other investors that join them in subordinating the industrial economy to financial managers.

He explains elsewhere that, despite testifying to the contrary with regards to the 2008 economic crash

Bankers and hedge fund managers knew quite well what was coming, and they had the foresight to put in place a political strategy to make the government bail them out when the crash did hit. But for the losses to be borne by “taxpayers,” the collapse had to seem as if it all were a surprise, an act of nature rather than bad policy and outright fraud.

He equates their nature with an organism that metastasizes and grows until it consumes the host, namely a parasite. He describes this behavior as “debt deflation”, a process that cripples economic growth while enriching a select 1% of the population. This 1% has as a long-term goal the creation of a political order where everyone is beholden to them via debt. Hudson, whose student David Graeber formulated the Occupy Wall Street slogan “We Are the 99%”, calls them the FIRE (Finance, Insurance, and Real Estate) sector and points out their ultimate goal the recreation of a rentier economy akin to the feudal system.

SEE ALSO: Michael Hudson interviewed on DAYS OF REVOLT
SEE ALSO: Pension Funding and the Economy: Would “Proper” Funding Cost Jobs? by Dean Baker and Nick Buffie
SEE ALSO: The Origins and Severity of the Public Pension Crisis by Dean Baker

Consider this recent headline from The Wall Street Journal, “Teachers Union and Hedge Funds War Over Pension Billions”. It seems that Randi Weingarten, president of the American Federation of Teachers, has begun what the Journal called “a battle for the ages” with hedge fund industrial giants Paul Tudor Jones, Daniel Loeb and Paul Singer due to their support for the expansion of charter schools over the past decade in New York and other municipalities. If these Wall Street players fund charters, Weingarten is promising to take her business elsewhere, which is basic common sense.

Perhaps it bears mentioning here that a major player in the charter industry currently is known as the First Gentleman of the State of Rhode Island, Andrew Moffit. Does that seem just too coincidental? Not when one considers how financial analyst Charles Ortel recently described the hedge fund industry as “incestuous” and “insidious” in a telephone interview.

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