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Benedicte Gravrand, Opalesque Geneva:

In a keynote address on the implications of sovereign risks and financial markets at last month’s Terrapinn’s Hedge Fund World conference in Zurich, Dr. Philippa Malmgren, a well-known policy and markets analyst, made the following remark on the hedge fund world: “I find it is an industry where people have become accustomed to a certain way of thinking… they have to put a number to things.” However, she said, politics, policy, geopolitics are not quantifiable.

The hedge fund world has no understanding of the social function of inflation that is going on in the emerging markets at the moment, she said. They believe there should not be any great unrest, and the environment is not likely to be as unstable as it was in the 70s because of the economic growth that started in the 80s.

But “the social fabric is being ripped apart by inflation,” she said.

Combined pressures for hedge funds Malmgren listed a number of combined pressures for hedge funds:

- The inflation caused by the supply side shock in global economies. For example, farmers are very credit dependent; if they can’t borrow, there will be lower seed purchases and therefore no food produced.

- The mining sector is not getting any loans from banks, so mines are either closed or closing. “They have too much need for working capital, given their debt levels, and banks a......................

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