http://www.spectator.org/dsp_article.asp?art_id=11130

"The most sought after jobs in the United States now are jobs in finance in which basically almost no money is raised for new steel mills or coal mines, but immense sums are raised to buy companies, recapitalize them -- which means pay the new owners immense special dividends and other payments for going to the trouble of taking over the company. This process results in fantastically well-paid investment bankers and private equity "financial engineers" and has no measurably beneficial effect on the economy generally. It does facilitate the making of ever younger millionaires and an ever more leveraged American corporate structure.

An entire new class of financial entity has been created called "the hedge fund." It is new not in the sense that there were not always funds that hedged by selling short or buying assets uncorrelated with other assets. The new part of this phenomenon is that it is based on a demonstrably false premise: that these entities can consistently outperform wide stock indexes. They have not and cannot, and yet their managers and employees for a time are paid stupendously well.

As with the private equity function, the main effect is to siphon money from productive enterprise into financial manipulation. Or, to put it another way, to siphon money from Main Street to Greenwich or Wall Street."


Can someone explain what this means? It sounds like an incoherent rant...not something Ben Stein would write. Investment banking has been around forever and to my knowledge serves a valuable purpose in the financial world. Those guys make good money but so do doctors, lawyers, athletes, movie stars, small business owners, landlords... Hedge funds invest rich peoples money; if their returns are less than the stock market indexes then the rich aren't getting richer relative to most people