Monday, September 29, 2008


Couple of items inspired by Gawker, which is strange, because I don't read it any more. I feel bad to do this because, according to Gawker, the New York Sun's demise is imminent, but it ran a right loan of old nonsense this morning about hedge funds.

[Digression: I can't say I'll miss the Sun at all, and not only because its several thousand degrees of magnitude less amusing than its boisterous British namesake. If you ever wonder how it's possible to be a part of the media conversation while operating a shoestring reporting operation, here's your answer: you can't. Also useful confirmation: there aren't enough right-wingers in New York to buy a paper that takes its policy cues from Richard Perle.]

Anyhow, the Sun's business reporter, Jule Satow, produces a very peculiar article right now about how New York is going to lose top financial talent to hedge funds based outside the city. I picked up on it by watching In The Papers, and knew before reading it that it was going to start from a disastrous premise.

In fact, even Mrs. Cutesome, who doesn't spent her time bitterly throwing rocks at prominent financial journalists like I do, felt moved to chime in. "Doesn't she know that all of the big hedge funds are based in Greenwich anyway?" Mrs Cutesome knows this only too well from a fruitless phase of interviewing at one or two of these funds.

So what's going on here? The city's investment banking titans are indeed shrinking, and are indeed losing people. So far so depressing. So, the conclusion is that hedge funds, despite producing some horrible returns, and what the normally staid Pensions & Investments is calling a Bloodbath ahead, are going to start sprouting like plants after a desert rainfall.

This is presumably based upon two, largely unspoken, assumptions. That hedge funds will emerge stronger because they're not publicly-traded, and their managers are more humble than investment bankers (they're not), a trope of which Tom Wolfe, writer of one of the most epically bad discoveries of the hedge fund industry I've ever read, is very fond.

The second is that New York City, with its punitive tax rate, is somehow not doing enough to make them happy. Because extremely tasty tapwater, decent public transportation, over-the-top shopping options, and a vast pool of inexpensive labour is the least that they can expect. I suspect that the industry analysts that pepper Satow's piece are going very soon to start angling for subsidies to keep them in the city.

And I pray that the normally very lucid Barry Ritholz was given a question along the lines of "how easy is it to run a hedge fund outside Manhattan" rather than asked to opine on the likelihood of the rest of the world stealing our investment funds. He certainly included enough caveats to suggest he doesn't agree wholeheartedly with the article's thrust.

Actually, to be fair, most of the last two third of the article doesn't agree with the thrust, so I'm going to be generous and suggest that the Sun's precariously perched subs massacred the piece. The Sun always worked from this subtext that New York suffered as a solidly Democratic liberal playground that wasn't grateful enough to its capitalist overlords. Strangely enough, this didn't help it build a mass readership here.


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