CAMBRIDGE: There was a clear mood of schadenfreude around the world last week when the U.S. hedge fund Long Term Capital Management (LTCM) collapsed. There were several reasons for the hidden pleasure among many international critics of U.S. economic smugness over the past year. First, of course, was the irony that the firm's management included the very pinnacle of the finance industry - two brilliant Nobel prize winners and one of the most envied hot-shot traders from the investment banking world. Second, after a year in which the U.S. and IMF had lectured Asia to avoid government meddling in closure of failed financial institutions, the New York Federal Reserve stepped in, very Asian style, to coordinate a rescue of the failing LTCM. It turns out, not surprisingly, that the world is more complicated than the U.S. and IMF had acknowledged.
CAMBRIDGE: There was a clear mood of schadenfreude around the world last week when the U.S. hedge fund Long Term Capital Management (LTCM) collapsed. There were several reasons for the hidden pleasure among many international critics of U.S. economic smugness over the past year. First, of course, was the irony that the firm's management included the very pinnacle of the finance industry - two brilliant Nobel prize winners and one of the most envied hot-shot traders from the investment banking world. Second, after a year in which the U.S. and IMF had lectured Asia to avoid government meddling in closure of failed financial institutions, the New York Federal Reserve stepped in, very Asian style, to coordinate a rescue of the failing LTCM. It turns out, not surprisingly, that the world is more complicated than the U.S. and IMF had acknowledged.