The good news about amaranth.Recent visitors to the offices of both Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke say there was a common theme expressed at least on one issue: Amaranth amaranth (ăm`ərănth') [Gr.,=unfading], common name for the Amaranthaceae (also commonly known as the pigweed family), a family of herbs, trees, and vines of warm regions, especially in the Americas and Africa. . Amaranth of course is the Greenwich-based hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" whose trader in Calgary. Canada. recently lost as much as $9 billion when the price of natural gas took a nose dive nose dive Noun 1. (of an aircraft) a sudden plunge with the nose pointing downwards 2. Informal a sudden drop: when we fail our self-confidence takes a nose dive Verb earlier this fall. Paulson and Bernanke expressed the identical thought, namely that it is amazing how quickly and seamlessly the global financial markets absorbed this loss with barely a hiccup hiccup or hiccough, involuntary spasmodic contraction of the diaphragm followed by a sharp intake of air, which is abruptly stopped by a sudden, involuntary closing of the glottis (opening between the vocal cords); the consequent blocking of air . By comparison, in the 1990s the hedge fund Long-Term Capital Management Long-Term Capital Management (LTCM) was a hedge fund founded in 1994 by John Meriwether (the former vice-chairman and head of bond trading at Salomon Brothers). On its board of directors were Myron Scholes and Robert C. ran into problems (with losses much smaller in dollar amounts than Amaranth has experienced), resulting in a near-meltdown of the global financial system. Paulson and Bernanke. separately, marveled at the way credit spreads failed to widen out as the losses were quickly absorbed. Both agreed that the Amaranth incident is a positive sign for the world financial system, albeit an ugly period for a hedge fund that claimed to have had serious risk control procedures in place. |
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