Will European policies ignite a hedge fund exodus?

FINAlternatives writes,

Many have predicted a hedge fund exodus should the controversial European rules—which once included draconian limits on trading and leverage, and now include equally unfriendly rules governing pay—be adopted. But few have gone as far as Michael Raffan, head of the financial services group at Freshfields Bruckhaus Deringer.

“No hedge funds will operate from within the EU,” Raffan told the Financial Times, noting that the exodus would be “rapid and decisive.”

“Hedge funds are much more mobile than banks,” he warned. “It’s much easier for three guys in Mayfair to pack their bags and move to Geneva.”

Regulations may frighten banks out of Switzerland

From Reuters:

Swiss bank UBS  is threatening to move its headquarters out of Switzerland if the authorities impose too many new regulations in the wake of the global financial crisis, Swiss weekly paper Sonntag CH said.

Oswald Gruebel, chief executive of Switzerland’s biggest bank by assets, made the threat in a speech to businessmen last week, citing the possibility that the authorities would force major banks to reorganize as holding companies, the paper said on Sunday.

Is there a direct effect of corruption on growth?

Transparency International has just released its 2009 Corruption Perceptions Index (CPI), which ranks public sector corruption levels in 180 nations.

The least corrupt countries are New Zealand, Denmark, Singapore, Sweden and Switzerland, while Iran, Venezuela, Turkmenistan, Uzbekistan, Chad, Iraq, Sudan, Myanmar, Afghanistan, and Somalia represented the most corrupt countries in the world.

So what is the effect of corruption on growth? In a new paper, Ratbek Dzhumashev (Monash University) examines this question.

His research “shows that direct and indirect growth effects of corruption can be statistically significant. Moreover, the empirical results confirm the existence of both negative and positive growth effect of corruption.”

On the negative end, corruption inhibits growth “by distorting the publicly provided productive externality and by deteriorating the overall business climate and perpetuating bad expectations about economic opportunities.”

On the positive end, he finds that “investment levels are higher with an increase in corruption levels, other things being equal.”

Dzhumashev concludes:

Nevertheless, the overall effect of corruption is negative, as the negative effects transmitted directly and through the public sector inefficiencies are greater than the positive effect through investment.

Swiss to tackle ‘suicide tourism’

From the BBC:

The Swiss government has laid out the details of proposals to ban or severely restrict assisted suicide as part of plans to tackle “suicide tourism”.

More than 100 Britons with terminal or incurable illnesses have used the Swiss centre Dignitas to kill themselves.

Justice Minister Eveline Widmer-Schlumpf has called for organisations like it to face stricter controls.

The proposals will now be subject to consultation, with a draft law due to be sent to parliament in March.

Ms Widmer-Schlumpf said groups like Dignitas would face prosecution if the proposals are passed into law and they do not comply.

Do people not hold the right to suicide? It is their own body, they own it. If they decide to die, however tragic that is, no third person is harmed removing any justification for government intervention.

R&D Spending Slows

A new study by the Democratic Leadership Council predicts that American investment in research and development will decline by its highest rate in thirty years. In 2009, R&D spending is anticipated to drop 2.4%.

To put American R&D spending in perspective, see the chart below:

Today, U.S. R&D spending accounts for only 2.5% of its GDP. In Sweden, Finland, Japan and South Korea, R&D spending accounts for in over 3% of national economic output.

Libyan Leader Gadhafi to Urge UN to Abolish Switzerland

According to Swiss minister Christa Markwalder, when Libyan leader Moammer Gadhafi arrives in New York on September 23rd, he will ask the United Nations to abolish Switzerland and divide its land between France, Germany and Italy.

The UN charter, however, dictates that no member nation can threaten the sovereignty of another, so not much should be expected.

Swiss-Libyan tensions began last year when Gadhafi’s youngest son, Hannibal, was arrested in a Geneva hotel for beating two servants with a belt and a coat-hanger.

The IMD Stress Test

The IMD – Switzerland’s international business school – published a “Stress Test” for countries facing the global economic crisis. The test contains 20 criteria grouped into 4 subcategories: Economic Forecasts/Perspectives, Business, Government, and Society. According to the report, the most significant conclusion is that small export oriented economies with stable socio-political environments will outperform other countries. Denmark ranked first, followed by Singapore and Qatar. The US ranked 28th, trailing 27th Kazakhstan. Israel beat the U.S. in every category.