Reuters – Why do American hedge funds make so much money? Macroeconomic Resilience reckons that most of it comes, ultimately, from the government:
Just because hedge funds do not directly benefit from a state guarantee doesn’t mean that central bank policy towards the banking sector is irrelevant in determining their returns… the “alpha” that Magnetar generated would likely not have existed if it were not for the skewed incentives faced by bankers which in turn were driven by the rents they could extract from the state guarantees provided to them.
