World Economic News
Hedge Funds Are the 'Achilles' Heel' of the International Banking System
So stated Philipp Hildebrand, board member of the Swiss National Bank (SNB), at a conference in Berlin on Nov. 9. In particular, the extreme use of credit leverage by some hedge funds is very worrisome, he said. This leverage, in the form of bank credits to hedge funds, means that the fate of hedge funds and top banks is correlated. It can therefore not be ruled out, Hildebrand said, that a possible crisis emerging within the hedge fund sector could disrupt one, or several, of the large banks. As in the case of LTCM in 1998, he added, hedge funds could thereby become the trigger for a global systemic crisis. He called on financial supervisors not to burden themselves with secondary tasks and, instead, to fully concentrate on "systemic risks."
Avian Flu Pops Up in Two South China Provinces
Despite the strict control measures China has recently put in place to halt the spread of H5N1 avian flu in poultry, the country has not been able to quell the outbreaks. They have culled 6 million birds in the northeastern province of Liaoning, the site of last week's outbreak, but the virus has popped up now in Hunan province in southern China. Three human cases of pneumonia in Hunan are being scrutinized by World Health Organization (WHO) experts, and 192 others are under medical observation.
China, which has requested WHO help to stop the spread of the bird flu, has now banned the sale of live poultry in Beijing, and has closed wet markets as well.
Meanwhile, these other developments:
* The WHO announced on Nov. 7 that two new cases of human avian flu were confirmed in Indonesia, including the death of a young woman on Oct. 28. Her eight-year-old brother contracted the disease, but survived.
* Russian agriculture officials have confirmed H5N1 avian flu outbreaks in 12 locations over the course of the year, the most recent in Omsk, Siberia.
* Thailand has announced that it will proceed with manufacturing a generic form of Tamiflu, as Roche, the licensed manufacturer, has no patent in Thailand.