Hedge funds gain from QE at expense of savers, pensioners

Dec 31, 2012

Fund run by Conservative party donor Michael Hintze made a return of 32 per cent in 2012

Shutterstock - Adrian Reynolds

HEDGE FUNDS have been the main beneficiaries of the Bank of England's £375 billion programme of quantitative easing, with some funds making returns of as much as 32 per cent. But the Daily Telegraph reports that older people have seen a nine per cent drop in real incomes as a result of QE since 2008.

Hedge fund expert Philippe Bonnefoy said: "The masters of equity and credit trading strategies have done their homework in 2012 and reaped benefits turbocharged by an ocean of government-sponsored liquidity."

CQS, the hedge fund run by Tory party donor Michael Hintze, made a return of 32 per cent in 2012 at its main $3.9 billion multi-strategy fund by betting that QE would boost stock markets. Crispin Odey of Odey Capital Management turned in a 26.6 per cent rise in the 12 months to the end of November - reversing an 11 per cent fall in 2011. Red Kite, the fund run by Tory party co-treasurer Michael Farmer, rose 15 per cent.

One hedge fund expert quoted by the Telegraph said: "While economic fundamentals have been poor during 2012, with sluggish or negative growth and depressed confidence, the use of QE has pumped tonnes of money into the system which has to go somewhere, so it usually winds up in equities or bonds."

Savers and pensioners have been badly hit by QE, however. Interest rates on deposit accounts have remained rock-bottom and yields on UK government bonds have dropped drastically since QE began leading to annuity rates falling in lock step.

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It was entirely obvious when QE was announced that the benefactors were never going to be the ordinary person. The stench of self-serving interests and even corruption is overwhelming in the UK and the US and that's why the US is about to commit suicide by going over the fiscal cliff and we'll be following them soon.