Hmm, very interesting stuff about the flattening the yield curve. It is good to know that they are on the case to figure out why it is happening. It is pretty strange and I hope it isn't the calm before the next recession. This is a real eye opener though:
"After its recent very rapid advance, the hedge fund industry could temporarily shrink, and many wealthy fund managers and investors could become less wealthy," Greenspan said.
"Significant numbers of trading strategies are already destined to prove disappointing."
He said, however, that the financial system should escape widespread damage from hedge fund woes as long as banks lending to them managed risks effectively.
If the bigger hedge funds start to freak out I think this would torpedo the markets. Some funds have to unravel large and complicated positions so there will be tons of market volitility. We have seen how oil markets traded erratically because of possible hedge fund activity. This would be even worse depending on which funds "prove disappointing."
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You might very well be true. There are as many signs of recession as there are good signs. We have consumer confidence going down, we have manufacturing slowing, talk of a soft patch, and a potential housing bubble that every home builder is playing down. We could very well be cruising for a bruising here.
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