How Friedrich Hayek Helped Me To Understand China’s Economic Tragedy

BOOK REVIEW

The Road to Serfdom, Author: Friedrich Hayek.

By Yang Jisheng – Reading The Road to Serfdom gave me a new perspective on economics, politics, the state and society. Hayek helped me understand China’s tragedy; my research into the disasters China suffered helped me understand Hayek.

Whether or not Beijing will admit it, China is beholden to Hayek’s thinking in relinquishing the highly centralized planning of its economy in favor of competitive markets and private enterprise. This choice is making China prosperous and has elevated it to the world’s second largest economy. more> http://tinyurl.com/kkz2kyf

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Wall St. on the silver screen: Pros pick top movies

By Chris Taylor – In the annals of Hollywood, Wall Street has not been treated very kindly.

From “Wall Street” to “Boiler Room”, “Trading Places” to “American Psycho”, the halls of finance are usually portrayed as places of shiny excesses and dark hearts.

Now buzz is building over a new contender, which could become one of the defining films of Wall Street. Starring Leonardo DiCaprio and directed by Martin Scorsese, “The Wolf of Wall Street” is slated to come out this November. more> http://tinyurl.com/pnupcjq

Bernanke’s Dilemma: No Good Moves Left

By Michael Sivy – There’s a term in chess called zugzwang, which describes the point in a game when it’s your turn to move but every move you could make would worsen your situation. That’s pretty much what the chessboard looked like for Federal Reserve chairman Ben Bernanke when he testified before Congress this (May 22) morning.

What everyone most wants to know is when the Fed is going to start tapering off its bond-buying program (called Quantitative Easing), which has flooded the banking system with money for the past five years and kept interest rates abnormally low. And that was something Bernanke couldn’t answer.

Bernanke’s hedging isn’t primarily a sign of indecisiveness. His real problem is that given current economic conditions, there aren’t any good moves he can make. more> http://tinyurl.com/ol4fe7b

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• Anticipating the end of the Fed’s bond-buying spree, David Randall, Reuters
• The Federal Reserve, the Centennial Monetary Commission, and the Sound Dollar Act, Rep. Kevin Brady and Mark A. Calabria, cato.org [VIDEO 37:58]
• The Sound Dollar Act, US Congress
• How the Fed could ruin your summer holiday, Luciana Lopez, Reuters
• Column: Five trends that favor stocks over bonds, John Wasik, Reuters

How Hedge Funds Transfer Wealth From Investors To Managers

BOOK REVIEW

The Hedge Fund Mirage, Author: Simon Lack.

By Steve Denning – Once upon a time, hedge funds earned their outsize compensation by, guess what? Hedging their investments.

Today, most hedge funds have morphed into something very different: aggressive, highly-leveraged, speculative vehicles that are desperately chasing returns to outperform their benchmarks, that make huge returns for the managers regardless of the fund’s performance and end up transferring wealth from investors to hedge fund managers.

The fee arrangements are a wealth transference mechanism, systematically moving money from investors to hedge-fund managers. Some of the statistics amassed by Simon Lack’s The Hedge Fund Mirage (2012) are astounding. more> http://tinyurl.com/nzz5e2g

Prosperity without power

By David Rohde – Economic liberalization has sparked vast economic changes in the BRIC nations – China, India, Russia and Brazil. A middle class that was once made up of government servants is now dominated by private-sector employees.

At the same time, government institutions that once provided the basics of life – education, healthcare and employment – are crumbling. Frustrated members of the middle class are demanding change, but traditional power holders, from Russia’s Vladimir Putin to India’s large political parties, remain entrenched. more> http://tinyurl.com/q5bksfn