"You don't know me; we've never met. But I fear you are being encouraged to dislike me. Let me explain: I'm a speculator. I manage a hedge fund. Apparently I profit from your misery. Accordingly, our political leaders are keen to see the back of me.
Only yesterday, Germany and France were calling for the "fastest possible" adoption of new rules to put an end to financial speculation. But before you write me off I ask that you listen to my side of the story." [read full article at Daily Telegraph]
How long will this debate go on for? I agree with him that speculators are not to blame for anything. In my opinion, if there was more price transparency when dealing with credit default swaps and/or other over-the-counter hedging vehicles on public company debt (now sovereign/munis), nobody would have an excuse to blame anybody for anything. I remember Soros made a speech that CDS should be outlawed because bond investors had a bigger incentive to bankrupt a company than reorganize ["It's like buying life insurance on someone else's life and owning a license to kill him"-Soros]. Soros, John Paulson and Burry of Scion Capital made a lot of money buying CDS on subprime mortgage portfolios. CDS gave signals of the coming mortgage slowdown -> meltdown in 2006. When things start to turn for the worse, price signals in the private financial insurance market matter to not only the hedge fund manager hedging or speculating on a $2B default, but as we've seen, everybody who lives on planet Earth who has a job or owns a business/investment. If CDS started trading on the secondary market would the market become too efficient?
Hugh Hendry also spoke recently at the 2010 Russian Forum with Marc Faber, Nassim Taleb etc (link).