But many hedge fund investors who neither understand nor care about transparency nor understanding the business—they couldn’t care less. All they see is a return that places them among an elite group of «gifted» investors, who manage to turn a profit even in difficult years thanks to cutting-edge techniques, alternative and uncorrelated, which only the smartest can decipher, and these are the ones who don’t invest or those who manage it.
Ponzi, Madoff and many others, both anonymous and well-known trainees, disappeared either before or after the lights came on. However, other vital and well-established businesses are coming closer than is desirable to dangerous practices, at a time when liquidity is drying up and a recession looms. For example, savings banks paying double-digit interest rates to attract funds to plug liquidity gaps, or a National Insurance system striving to maintain the healthcare system at the expense of the pension system.
In the current climate, where money vanishes in exchange for bricks that nobody wants or gets tied up in companies that are closing down, when money is rice, many large, reputable companies are looking more and more like Khufu, Khafre and Menkaure. A dramatic transformation that could prove even more devastating than the Ponzi scheme, only this time it must have been unintentional.