Asness Thinks New Financial Reform Bill is Ass Backwards

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While Sen. Chris Dodd’s financial reform bill is one giant 1,300 page tome, it’s so vague that almost any financial product known to man will come under its purview.

That’ll create the “largest and most powerful crony system in history,” Cliff Asness, comic book collector, and his AQR colleague Aaron Brown write in their latest Op-Ed in the WSJ. (FD: Asness gave $4,600 to Dodd's campaign in 2007, but only $409 last year.)

The definition of “swap,” for example, could entail anything from a Maxine Waters back rub to a Goldman CDO. There’s also no clearly defined parameters of what a “major swap participant.” You could buy one tiny swap contract and immediately be labeled an enemy combatant, and you don’t want to find out what that means.

In the bill, a "swap" is defined as "any contract or transaction that has financial, economic or commercial consequence involving purchase, sale, payment or delivery with any contingent clause." We challenge lawmakers to think of any contract or transaction that doesn't meet that definition—from buying detergent with a money-back guarantee to getting a rain-check at the car wash. If you maintain a "substantial" net position in swaps, or if your failure to perform under your swaps could cause "significant" losses, you are considered a "major swap participant." And you really don't want to be one considering how you'll be regulated.

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Cliff Asness Wants To Be Thanked For Paying Taxes, Is Pissed Cash For Clunkers Didn't Involve Killing Nazis

Something you may or may not know about Cliff Asness is that by day, he is a hedge fund manager but by night he is the second coming of his hero, Captain America. Like the Captain, the AQR founder believes his duty is to defend America, only instead of fighting Axis Powers, Asness's enemies are liberal Commie Socialists hell-bent on destroying this country. Because his shield has been in the shop for repairs for the past couple years, Cliff has been forced to use other weapons to pummel his foes, namely writing amazingly witty1 emails to his friends and colleagues about how much Obama et al suck. Most recently, Captain Asness circulated "Some Useful Definitions to Understand Our Modern Progressive World," a little glossary of unalphabetized terms he put together sure to cut his adversaries deeply. (The Captain also helpfully pointed out in a footnote that many of the definitions were "written sarcastically as a faux left-winger, [while] some [are] just conservative/libertarian interpretations of what the left really means," in case that was lost on his audience.) They include: - The 1% Definition: Those who pay more than 1/3 the total federal income tax and are never thanked for it. More generally, they are responsible for all evil in the world today (unless they work in Hollywood or hitech in which case they are “honorary 99%-ers” regardless of income, tax rate, and lifestyle). - Cash for Clunkers Definition: What we came up to replace World War II as stimulus. Many perfectly good cars destroyed, no Nazis defeated. - Rights Definition: A more extreme form of “entitlement” defined above. Note that modern usage throws out the long tradition of natural rights only of a negative nature, that is, the right not to have something done to you, for rights of a positive nature, that is, the right to certain goods and services, like health care, Apple products, and soy milk. Since, no matter how important these items are, these modern positive rights must still be produced and taken from others, essentially the word “rights” now often stands for a system of slavery and theft.2 Some Useful Definitions [PDF] 1Definition: ... 2The fuck?

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