Modern Day Gangsters

Hedge Funds - these are companies that take their investors money and use it to "sell short". That is, to place bets that a companies stock price will go down.

However, they are not required to say which companies they have shorted. The result is that they can massively short a company and regular investors won't know that this is what is happening. All they will know is that suddenly there is a LOT of negative sentiment about that company ... this causes THEM to sell (or buy shorts of there own) and further drives the price down.
... but wait, it get's better!
These hedge funds were allowed to short a company like Lehman Brothers (now out of business) and then buy insurance on them - betting that the company wouldn't be able to meet it's financial obligations.

The Securities and Exchange commission allowed these hedge funds to buy over 300 Billion dollars worth of insurance on the 100 Billion in debt that Lehman brothers had.


So here is the summary.
The Hedge funds made big bets that Lehman Brother's price would go down.
Then these funds were allowed to buy insurance (more then 3 times what they were worth) that paid them if Lehman Brothers got in financial trouble. Then the funds actively started rumors that Lehman was in trouble because the were so heavily shorted. This caused the companies to be downgraded by financial analysts. Which increased the stocks downward spiral and resulted in a capital problem at Lehman that kept them from meeting there debt and ran them out of business.


You get to pick up the tab.
So it seems that a major percentage of these more then 300 Billion in insurance policies that hedge funds were allowed (by the government) to take out against Lehman Bros. ... were written by AIG.
Since then the Government (our tax dollars) has stepped in and bailed out AIG, becoming part owners of that company.

So on Oct. 21st, you and I will have to pay these hedge funds the 300 Billion dollars worth of insurance policies they placed on 100 Billion in assets that they themselves then destroyed when they made a killing on there "short sells" of the company.

All of this was legal and had the blessing of lawmakers who are STILL screaming that "DEregulation" of the financial industry is the key to success.

Theirs perhaps ... but certainly NOT this country's.