Dispatches from Davos the Wannsee Conference for hedge funds:

The German crusade to do something—anything—about hedge funds continues this weekend in Essen, Germany. The finance ministers of the G7 (G8 member Russia is sitting this one out) are set to meet in the industrial western city to discuss a variety of topics, but apparently none more important than hedge funds.
German Chancellor Angela Merkel has made doing something about the systemic risks allegedly posed by the largely unregulated funds a cornerstone of her country’s presidency of the G8 this year.
In the wake of Deutsche Börse’s failed LSE courtship [of ‘05], then-Social Democratic Party leader Franz Müntefering—now vice chancellor in Merkel’s government—derisively referred to the funds as “locusts.”
The outcome of the talks is uncertain. Thomas Mirow, the German deputy finance minister, has sought to play down the potential for the meeting at the Villa Hügel, the one-time seat of Krupp steel family, stressing that there will be “no far-reaching consequences.” And the Bush administration is unlikely to accept any sort of new international regulation. But, as the German magazine Der Spiegel points out, simply getting the Americans and British to agree to talk about hedge funds is something of a victory for the Germans. Greater New York and London, of course, are the world’s largest hedge fund centers, and the funds contribute a large amount to both cities’ economies.

Muentefering later recommended a law forcing hedge fund managers to wear yellow, locust-shaped patches on their suit jackets.
Hedge Funds High On Agenda At G-7 Pow-Wow [FINalternatives]