HEDGE FUNDS AND PRIVATE EQUITY – savvyessaywriters.net | Savvy Essay Writers
HEDGE FUNDS AND PRIVATE EQUITY – savvyessaywriters.net | Savvy Essay Writers
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Let me first summarize the general consensus on the “GLOBALL thought experiment” – the hypothetical global currency. Your discussions were both on point, thoughtful, and enjoyable to read. Most of the class was of the mindset that it would not likely work (particularly in the short run) for various reasons — most important being loss of monetary sovereignty, political frictions, and various market imperfections including lack of complete labor mobility. The recent European crises with several countries having excessive debt and their effects on the Euro further highlight the difficulties in maintaining or growing a common currency. These concerns often show-up in sovereign yield spreads as redenomination risk – the risk that euro assets will be redenominated into a devalued legacy currency. While the euro is an important recent test case for examining and quantifying redenomination risk, there is an extensive literature that has examined direct and indirect forms of redenomination risk as many countries overtime have used an external currency as their sovereign currency or have redenominated their own sovereign currencies. In terms of a broader perspective, redenomination risk was an important issue in, for example, the wake of the Mexican financial crisis of 1994–1995, the Asian financial crisis of 1997, and Argentina’s financial crisis in 2001–2002 with a movement away from a dollar-based economy. The break-up of the Czechoslovakian currency union in 1993 and the break-up of the Ruble currency area between 1992 and 1995 are additional examples.At this point in time, it is difficult to imagine a single global currency as a viable alternative to the existing mix of fixed and floating exchange rates, though regional currency unions are likely to continue to grow. However, the ultimate size of these “currency unions” has yet to be determined, consistent with those who see a future in the GLOBALL. Not surprisingly, international surveys generally suggest that outside of the US, much of the world is not as averse to “international systems” that subordinate nations (save for Britain recently as well as others), whereas those in the US have difficulty with “international systems” unless we are at the center of the system (e.g., the US dollar as the GLOBALL!). You can argue that these results have to do with the relative costs and benefits as well as with differences in political views on the nature and power of government systems and institutions, which brings us to our next course related investments topic on hedge funds.Now that we are moving into the international financial markets and investments portion of the course, let’s first talk about financial products. Hedge funds are an ongoing topic of interest to many investors, policy makers, and the general public. The ongoing potential financial risks posed by hedge funds and the large compensation amounts received by hedge fund managers also often draw the attention of the popular press. With a not so tiny compensation of billions of dollars over the last few years, James Simons (a former math Professor) was at the head of the pack.Theattached New Yorker articleprovides some interesting background on hedge funds, while theattached Economist articlediscusses the hot market for private equity firms and hedge fund managers in Brazil. To what extent do you agree or disagree with the articles?