A hedge fund is simply a company that borrow money or use its money to hedge against changes in value of an investment. For example if you think that the interest rate in a country will increase then you will pay more interest. You can hedge by investing in a way to gain advantage of this interest rate increase. Likewise any change in market condition will cause causes losses in one type of investments and gain in other investments. Hedge funds try to gain advantages by investing in investments so that they gain whether the market condition changes one way or another. In the recession if shares increase hedge funds buy shares low and sell high gaining a profit. If shares fall they borrow shares, sell it high and then when shares fall they buy the same amount of shares to return them to the owner getting a profit. As you can see hedge funds can find ways to profit in any situations. Howether i think that the hedge fund is a scapegoat. The hedge funds did not borrow money to buy big houses, they did not borrow with credit cards, they did not cause the trade deficit and budget deficits. Surely if you look around you you can see that we are in a large part responsible for this mess by our senseless and large scale borrowing. Trying to blame hedge funds will not help us to solve the problem. We will pursue something while at the same time continue our ill ways. Next time if someone tell you that hedge fund is responsible ask him about the following. 1. Lowest saving rate on record. 2. largest trade deficit and budget deficit 3. Billions spents recklessly in iraq 4. REckless spending with credit card 5. Living beyond our means 6. industries that are outdated 7. increasing public debt The list can go on. Surely to get over this problem we must agree that we are in large part(90%)responsible.

nothing, we caused our recesion... think about it, if we were never told we were going into a recession, we wouldn't have stopped spending money. So the businesses wouldn't be losing money, and people wouldn't be getting laid off, thus causing a recession. We scared ourselves into a recession. They will argue that the rest of world is in a recession too... blah. We stopped buying things, so the companies overseas stopped making money too, and started laying of their employees, so their people stopped spending money, etc.etc.etc.

manipulated stock prices causing panic selling or crazed buying