Debt crisis will single out true hedge fund talent


It could be a crucial test not merely for hedge funds but for the whole system of capitalism.

With markets going through yet more gyrations—sparked partly by the S&P downgrade of U.S. Treasury securities and amid recurring concerns about European sovereign defaults—many investors will no doubt have spent an anxious August holiday. Many will have been thinking: Are we about to witness a rerun of late 2008?

It is not a pretty thought. Last time, after Lehman’s collapse, a complete meltdown was averted only by a huge bailout of the banks by Western governments. This time, the governments themselves are teetering, and nobody, it seems, has the resources to bail them