FX Concepts was once the largest currency hedge fund in the world. It has now announced that it too is shutting down faced with poor performance and massive withdrawals of investment. They have announced that the asset levels have declined and are no longer viable to sustain a business.
As the G20 gears up to hunt down money, people are withdrawing their investments on a global scale and heading underground. This is drastically reducing the VELOCITY of money and shrinking LIQUIDITY. Those who continue to question whether we face deflation or hyperinflation will get a reality check as gold declines along with investment. The institutional money is being driven toward equities for plain vanilla investment. The hedge funds have generally misread the commodity trend, were long gold and short the dollar and these strategies have had an overall declining influence upon performance.
This is also driving pension reform as Insurance Companies have been lobbying to expand even further and manage private pensions plans. Senator Hatch (R- Utah), who introduced the SAFE Act to help insurance companies, seeks to create a NON-GOVERNMENT guaranteed plan where public pensions would be off-load to them relieving government of the risk. The Insurance Companies are selling the purchase of annuities. MetLife and the American Council of Life Insurers support the bill since they will get the benefit of these plans. This relieves government of the guarantees shifting to manage pensions to the insurance companies. However, we can count on the bankers trying to get involved. They get to trade with other people’s money, retain the profits for themselves, and owe only a fixed rate of return. Since it is an annuity, you are giving them your money for this return. It is not a system where you can redeem the cash.
The jurisdiction over rules prohibiting certain transactions involving individual retirement accounts would be transferred from the Labor Department to the Treasury Department under the bill.
The unfunded liabilities are now growing dramatically, and total assets have begun to shrink. Lately, Pensions have followed the Yale model and have allocated more towards alternatives. Pension executives are now concerned about their declining assets and are pushing to help manage 401k assets. Once these assets are collected, then phase two will be for government to take them over with full guarantees that will not really be worth much.
