A Quick Primer On Hedge Funds

Looking for a good, basic primer on hedge funds? Tim Carney has written an excellent introduction to hedge funds in his Heckonomics column at Culture11.com. We suspect that most of our readers will find it a bit too basic. These folks should skip straight ahead to his third page, where he explains why Capitol Hill is so eager to regulate hedge funds.

From one way of looking at it, it’s odd that Congress should want to impose SEC-style regulation on hedge funds. Why should our government pay to protect rich people from losing money? Shouldn’t folks with millions of dollars to invest be left to their own as far as deciding who is a worthy trustee of their wealth?

One factor advancing hedge fund regulation: existing hedge funds will benefit from any regulations that make it harder to enter the business.

Another: all this talk by politicians of regulating and increasing taxes on hedge funds has driven a huge a boom in hedge funds’ contributing to these politicians’ campaigns — and hiring the politicians up as lobbyists.

As the financial crisis shakes out, you’ll see hedge funds return more prominently into the headlines. If you’re in Washington, you’ll also notice more of these folks around town. If you see one, ask them why they all live in Connecticut.

Full disclosure: Tim Carney is related to me, according to sources familiar with my mother.

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