A Center reporter recently spent some time with a friend from high school who had gone to Columbia University and from there to Wall Street and, ultimately, to management of a hedge fund. The hedge fund manager had retired "early" as a multi-millionaire "master of the universe."
Strangely, after a couple of days of somewhat intense political/business discussions, it was apparent to our reporter that his Wall Street friend had no more idea as to what stock or company would do well than the reporter or anyone else. What our "master of the universe" did know, however, was the phone numbers of his Ivy League friends and classmates who were high officers in government and business and who had access to inside information the rest of us lack.And so we see a hedge fund financial wizard who engineered billions in profits from the issuance of collateralized debt obligations (CDO's) testify in federal court that he is "not sure" what the industry-wide acronym CDO stands for.
And we see one of Wall Street's most prominent hedge funds hire a provably corrupt "Ivy League" trader whose primary qualification is his past membership in an "insider trading group" at his previous firm.
And, finally, we see the indictment of that prominent hedge fund, SAC Capital Advisors, on federal charges involving insider trading that was "substantial, pervasive and on a scale without known precedent in hedge fund history."
And the Fed continues to pump $85 billion a month into this sewer.