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Around the World…

Why some people are more important to listen to than others, a sigh of relief from UK hedge funds, a moral dilemma and the ongoing volatility in the Aussie…

Sometimes you ought to listen. Last week, an accusation was made that “banks [were] behaving irresponsibly and unethically in marketing derivative products to companies”. The comment was related to large mark-to-market losses recorded across the world but was actually focused upon Mexico and other Latin American nations. In case anyone wants to dismiss this as the ranting of a politician (similar to the Italian FinMin’s rant against hedge funds two week’s ago), the speaker was Guillermo Ortiz – governor of the Mexican central bank.

A sign of relief in the hedge fund community? Last week, the director of UK’s Financial Services Authority was quoted as saying that hedge funds were weathering the current financial storm reasonably well, and that there was no need for further regulation. Not sure how well that went down among certain Italian politicians who recently wanted to abolish hedge funds as enemies of the capitalist system!

Talk about a moral dilemma. Last week, some of Australia’s superannuation funds (the country has the fourth biggest pension pool in the world) announced a halt to withdrawals from their funds. The move was designed to ward off knee-jerk reactions from panicking investors, and is probably prudent for both parties in the long run. But telling people they cannot access their own savings? Is that really going to enhance confidence in the financial system?

Seven bid, looking for the offer. Last week, we reported that according to NabCapital research, five of the Australian dollar’s busiest ever days in percentage terms, had occurred in October. That number is now at seven and with another week to go, there has to be a chance its going higher. It’s not just in emerging markets that extreme volatility is hitting home – hard.

Profit & Loss

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