P.a.p.-Blog, Human Rights Etc. | Human rights from the perspective of politics, art and philosophy (hence P.a.p.), but also law, economics & statistics

P.a.p.-Blog, Human Rights Etc. | Human rights from the perspective of politics, art and philosophy (hence P.a.p.), but also law, economics & statistics

Hedge Fund plutocrats

John Paulson tops Alpha hedge fund pay list

By Bloomberg
Published: 11:15AM BST 16 Apr 2008
John Paulson, founder of New York-based Paulson & Co, was paid an estimated $3.7 billion last year, the most in the hedge fund industry, according to Institutional Investor's Alpha Magazine. Paulson, 52, surpassed George Soros and 2006's top earner James Simons in a ranking of the 50 highest-paid hedge fund managers. Soros ranked second, earning about $2.9 billion. Simons was third, making an estimated $2.8 billion last year.

Paulson & Co, which oversees about $28 billion, made money betting on the collapse of subprime mortgages in 2007. The Paulson Credit Opportunities Fund soared almost sixfold, helped by bets on slumping housing and subprime mortgage prices, according to investor letters obtained by Bloomberg. "Paulson made all that money because his returns were absolutely exceptional - he called the market right," said John Godden, managing partner of IGS, a London-based hedge fund consultant. "The lucky people in his funds also made fabulous returns."

Average compensation for the top 25 fund managers was $892 million in 2007, up 68 percent from the previous year. The minimum compensation included in the ranking was $210 million, Alpha said. Those salaries may be a high-water mark for the $1.9 trillion industry, which had its worst start in nearly two decades this year. Hedge funds lost 2.8 percent in the first three months of the year after gaining 10 percent in 2007, according to Chicago-based Hedge Fund Research Inc.
"Right now it's looking like 2007 was that peak year, but it's dangerous to make a 12-month assumption on one quarter," said Godden. Many funds may benefit from volatility this year, he said.

Hedge funds managers make most of their compensation by keeping a percentage of profits, typically 20 percent. The get no performance fees unless their returns are positive, though they do typically keep a 2 percent management fee.
Five of the managers on Alpha's list of 25 best-paid managers in 2006 didn't make it in 2007 because their funds underperformed or lost money. Edward Lampert, the hedge fund manager who is now chairman of Sears Holdings Corp., didn't make the list because he lost money in 2007, according to Alpha.
Paulson was a partner at New York-based investment firm Gruss Partners and a former managing director at Bear Stearns Cos. He has a master's degree in business from Harvard Business School.

Alpha estimates managers' earnings based on assets under management, fees, returns, personal investments in the funds and ownership stakes in their firms.
Hedge funds are mostly private and unregulated pools of capital where managers can buy or sell any assets, participating substantially in the profits of the money invested.

TOP 10 MONEYMAKERS IN THE HEDGE-FUND INDUSTRY IN 2007
1 $3.7 billion, John Paulson, Paulson & Co
2 $2.9 billion, George Soros, Soros Fund Management
3 $2.8 billion, James Simons, Renaissance Technologies Corp.
4 $1.7 billion, Philip Falcone, Harbinger Capital Partners
5 $1.5 billion, Kenneth Griffin, Citadel Investment Group
6 $900 million, Steven Cohen, SAC Capital Advisors
7 $750 million, Timothy Barakett, Atticus Capital
8 $710 million, Stephen Mandel Jr, Lone Pine Capital
9 $625 million, John Griffin, Blue Ridge Capital
10 $520 million, Andreas Halvorsen, Viking Global Investors

Disparity

The greater the disparity in wealth between the very rich and everyone else, the more unstable an economy becomes . Our nation has now created a larger gap in distribution of wealth than the massive chasm that helped fuel the Great Depression. In 1928, one year before the global economic collapse, the wealthiest .001% of the U.S. population owned 892 times more than 90% of the nation’s citizens. Today, the top .001% of the U.S. population owns 976 times more than the entire bottom 90%.

Capgemini & Merrill Lynch Report on Wealth

Assets held by America's very richest people advanced 18%, compared to 14% in Europe

The first plutocratic threat was over a hundred years ago. Milford W. Howard wrote of their rise, "As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until all wealth is aggregated in a few hands and the Republic is destroyed...

... The money power now came upon the scene and peeped cautiously around at first, but seeing that the people no longer were zealously guarding their liberties, seeing that craft politicians were steering the ship of state, and that the people were blindly following their leaders, who continually fanned the flames of sectional bitterness, it became bold and threw off its timid, fawning air, and assumed a most insolent swagger. It began to stretch out its long arms in all direction as and grasp with its greedy fingers the products of the people's toil; yet the people, blindly deluded, heeded not, but wen on shutting their eyes and closing their ears to the perils which surrounded them. So it became an easy matter for plutocracy to strengthen its foothold, and soon it began to fasten the shackles of slavery upon the people, and all the while they kept on chattering of the past, forgetful of the duties and dangers that surrounded them, and blind to the future.

Characteristics of a Plutocrat

A Plutocrat

• is 1/2 of one percent of Americans
• owns one third of America
• pays less taxes than others
• donates to political issues
• does not consider himself responsible
• Demands control

Definition of Plutocracy

Plutocracy in America is a class of people. They are more than rich for they are powerful. They effect Legislation and Court decisions. This is achieved by money used to buy attorney's and politicians, enabling them to acquire more assets.

They seek a constant array of social issues to distract the majority of people from the explicit intent of the Plutocratic aims and goals. They have doubled their wealth in one generation. They own one third of America, meaning two thirds is available for 99.5% of the population.

Plutocrats drain public resources such as parks, schools and public services. They want to contract every service, assuring their control over their agenda.

They seek greater control without any responsibility.