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MARCH 31, 2012 4:50PM

Jobs Act Removes Limits To Hedge Fund Marketing Put In Place In 1933

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Republicans have just introduced another bill gutting a regulation set up in 1933 .  This now means private investment firms, aka hedge funds, will now be allowed to market their products to the mainstream investor. 

This development is consistent with two long term theses we have held on here.  One, that the hedge fund industry will go the way of the Dodo Bird as this cycle ends and two, the investor class will be obliterated.  What better way to help create that dynamic than by allowing investors to place their assets in schemes that rely on methods unproven beyond the rise of Frankenstein finance.  Ahem.  There is a reason the hedge fund bubble is a recent phenomenon.  And why similar previous schemes ended unfavorably.  We have crucified Wall Street’s voodoo incarnations endlessly on here. 

A fool and his money soon part ways.   Investors and society as a whole oftentimes need to be protected from their own ignorance.  Private betting schemes will now be marketed to the investor class unencumbered by protections.  (Marketing in today’s world is fancy word for outrageous claims and propaganda in most industries.)

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One more law to reinforce the rescinding of the Glass-Steagall Act. You say you see light at the end of the tunnel TL, and respect your opinions, but to me it looks like an oncoming train!
I think you are misquoting me. Since starting to blog half a dozen years ago, my downside target for the S&P is 200-450. That's a 90% drop from here. There's not a lot of light either in a post where the hedge fund industry collapses, the investor class loses everything and the S&P effectively goes to zero.

I have said we will fix this mess. But, I have also said it might be horrific beforehand.
TL I was looking for you to say something optimistic. I have always found your posts to be sobering as compared to the doom and gloom of the cessationists.

Jokes aside there is going to be a blood bath in this country TL, everybody knows it and all the signs are there. The barometer is dropping and we are squarely n the path of a force 5 hurricane. These guys are all just trying to get as much as they can why they still can. The Times ran this headline about a year and a half ago: ‘Will the Federal Reserve Cause a Civil War?’.


At the same time they were running that I remember reading unverified intelligence estimates that it was about a year and a half away.