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Barack Obama's affair with hedge-fund managers, sparked in happier economic times, is over. A year ago, it was hard to move in Manhattan without hearing a money manager coo over Obama's brilliance, pragmatism and global perspective. Now these erstwhile fans talk about him as if he were a Central Park mugger.
The catalyst has been the deal to save Chrysler, which gave 55% of the carmaker to its unionised employees and left the firm's senior bondholders, mostly hedge funds, sucking air. If the hedge funds complained, the White House allegedly warned, their names would be leaked. The President told them everyone must do their part. Bondholders had to wait their turn behind unions and the government.
Obama put a full nelson on an industry that had previously adored him. The hedgies feel hurt. And they have found a spokesman in Clifford Asness, head of AQR Capital, a $20 billion fund, who gave money to both Democrats and Republicans last year. He wrote a public letter this week, attacking the President.
“The President's attempted diktat takes money from bondholders and gives it to a labour union that delivers money and votes for him. Why is he not calling on his party to sacrifice' some campaign contributions for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.”
He concluded: “This is America. We have a free-enterprise system that has worked spectacularly for 200-plus years. When it fails it fixes itself. It is not an owned lackey of the Oval Office, to be scolded for disobedience.”
* Wonder why the American newspaper industry is in such trouble? The New York Times Company, which owns The Boston Globe, had to threaten to shut the money-losing newspaper before its unions would concede that keeping 400 employees in “jobs for life” was unsustainable.
* An outsized turquoise egg with a purple bow, by the artist Jeff Koons and owned by the New York investor Daniel Loeb, is to be auctioned at Sotheby's this month. Its estimate is $6 million to $8 million. Last October, Baroque Egg With Bow was reportedly offered privately for $20 million, but failed to sell. Is this the artistic symbol of the 2009 bust?
