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SCOTT JAGOW: Europe's Central Bank says hedge funds are dangerous to the world economy. Even more so than a bird flu pandemic. Stephen Beard reports from London.
STEPHEN BEARD: Not open to the general public, hedge funds are aimed at wealthy investors and are largely unregulated. They're highly speculative, borrow heavily and trade in complex financial products like futures and options.
In an age of low interest rates and rising markets, hedge funds have boomed. They're now thought to control as much as a trillion dollars. But as markets fall and interest rates rise, trouble is brewing says, analyst Robin Geffin.
ROBIN GEFFIN: Their credit's got a lot more expensive and we've actually seen a lot more pain in the hedge fund community. And the losses in the equity markets have been really magnified by leveraged hedge funds.
He says the ECB's warning could foreshadow European legislation curbing hedge fund activity.
In London this is Stephen Beard for Marketplace.