There is a problem in this scenario of horror

They were, with major banks, the last Lords of Wall Street, the great fund investment that culling the Chronicle people with their antics and guided the economic news with still more spectacular operations. They were seen to offer automakers (Chrysler), the EDF to Texas (TXU), the Canadian Telecom (ECB) France, they were seen us enter in Carrefour, try to Vivendi, talked to IBM, the sky was the limit. He has them falling on the head. The largest purchase of business by a Fund, the ECB, for $ 41 billion, made a year and a half, just to explode in flight.

It would have been surprising that these financial of high pass through drops of lead in the crisis who already crushed fellow investors on the stock exchange or "hedge funds" cousins who use like them the use of the credit to boost their investments.

Since their creation in the 1980s, the practice of the Fund has not changed. They collect money from major investors (insurers, pension funds, sovereign wealth funds...) and use that money to buy companies, if possible at all, and resell them with profit a few years after. Their spectacular rise from the years 2000 is obviously at a very low cost money that allowed them to play the maximum leverage to acquire more business in larger. The system worked, since the continued increase in the stock market between 2003 and 2007 could always sell more expensive.

It collapse enough to imagine that, since the stock market collapsed and that the use of the loan is impossible, the martingale As if the current market conditions prevent these investors to new redemptions, they threaten also seriously their portfolio companies. They address the crisis in a delicate position because they are weakened by debt of acquisition that they must repay. The caricature case being that of the Tribune group, generously ballasted by its purchaser, financier Sam Zell, a debt of EUR 12 billion at the time where the press took head-on a major advertising crisis.

Businesses see also their value on the market melt like snow in the Sun. The funds that have will therefore have to reinvest to relieve those who collapse, except to see their investment reduced to zero. What happens when they won't have the means to do so

This is why some wonder squarely if investment funds will not be the next crisis falling dominoes. As pointed out recently by a U.S. institutional investor, a "armagedon" scenario is no longer excluded, affecting both companies under management (5,000 for 1.5 million employees in France alone) and finance (funds and their sponsors) who did not need it.

There is a problem in this scenario of horror. The short term, institutional investors are household, stall widely said of "alternative" sector investment funds ("private equity") and "hedge funds" and the Madoff case should accelerate the phenomenon and at the same time, it is one of the few areas in which they intend to put more money in the future! According to a recent survey of the "Financial Times", 30 of surveyed pension funds say wanting to increase their commitments in the "private equity", while the same number want to reduce their purchases of action in the stock market.

The explanation is simple: there is more remunerative investment. Government bonds worth much nothing, oil or contents first, or of course the stock market. But the promise of funds is not only financial. Normally, the increase of value they promise rests on three pillars: the leverage of debt, natural inflation of assets (increase in the stock market) and the improvement of the performance of the company. The first two to have disappeared in the financial storm, remains the third. It relies on the competence of the funds to buy the most promising companies and to monitor their management and guide their strategy. For the former, back to the fundamentals of the craft, which are cousins of venture capital.

Because if the bubble of debt has created this segment of the "mega LBO" which should disappear, the economy still needs professional shareholders, a trade which was never much interested banks. To ensure the transition of family business or the sale of subsidiaries of large groups. This does not mean the funds to a severe diet should be disappear very much, while the return on investment will be much more modest for investors.