Hedge fund crisis on shedule

Robert Waldmann

In a particularly silly op-ed Sebastian Mallaby argued that deregulation wasn’t the cause of the financial crisis and presented as evidence the fact that hedge funds, which are regulated even less than investment banks, are doing fine.

Of course the reason that there wasn’t a run on hedge funds is that investors can’t cash in whenever they want to. Mallaby wrote his op-ed just before some (not all) investors had an opportunity to take their money out.

Unsurprisingly, as predicted here, the crisis has spread to hedge funds having been delayed only by the fact that they aren’t bank like, do not borrow short term and are vulnerable only to slow runs (a walks ?)