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Yesterday, five hedge fund managers — billionaires all — appeared before Congress in order to defend their profits and try to stave off regulation. They weren’t attacked nearly as badly as executives of failed companies were (AIG in particular got pretty rough treatment), but they were questioned a bit sternly. Nearly all of them, recognizing that they would have to pay lip service to greater regulation, acknowledged that it was probably necessary. But they were quick to point out that reactionary over-regulation would probably not be a good idea.

My favorite moment, though, had to be Falcone’s defense of his enormous salary. (Although Soros’ shameless shilling for his book was pretty amusing as well.) Even though he did point out that he was making money based on returns to investors, he also intimated that, since he didn’t grow up rich, that was partly a justification for his billions later in life. Um, right. It also seemed sort of like he was implying that because his father made only $14,000, it made him immune to the greed that has swept Wall Street for the last decade. Whatever.

At any rate, some of what was said in the hearing did make sense. Hedge funds probably do need to be regulate, but not over-regulated. And I do like that some of the hedge fund managers recommend that a clearinghouse be set up for derivatives and credit default swaps. If people are going to continue to invest in these things, there should be a more transparent place for them to do it in. I also agree that the wild use of leverage, as well as large risks taken, are major contributors to this financial meltdown — and I suppose it is natural that the hedge fund managers would downplay their roles.

At any rate, I think Simons pretty much summed up the general feeling of the fund managers there:

“In my view, the crisis has many causes: The regulators who took a hands-off position on investment bank leverage and credit default swaps; everyone along the mortgage-backed securities chain who should have blown a whistle rather than passing the problem on; and, in my opinion the most culpable, the rating agencies, which allowed sows’ ears to be sold as silk purses…”

He was smart enough to avoid throwing blame on consumers, though. Despite the fact that they deserve some of the blame as well.

You can see a video of the hedge fund managers’ hearing here.

Right now, as the price of oil continues to drop, the energy sector is struggling on the stock market. Today that’s no lone feat; the broader market is falling as well. However, oil prices are sending energy stocks lower, and that means that an entire sector is having problems.

Brighter future for alternative energy stocks?

Even though alternative energy stocks are dropping along with the rest of the energy sector, there is hope that they will gain in the future. It is true that lower oil prices make alternative energy less desirable (the urgency to wean us away from fossil fuels is reduced). However, by many estimates, the current problems faced by oil are due to a bursting commodities bubble. There is plenty of speculation that an energy crunch is on the way, and that oil prices will have to rise in response to that — although it may take the next two decades for this to be realized.

What this means, though, is that at some point the energy sector is likely to rebound. And alternative energy stocks are likely to rebound as well. Indeed, Barack Obama’s victory in the election is seen as an indication that alternative energy is about to play a bigger role in satisfying America’s energy needs. This means that alternative energy stocks may be a good choice right now. After all, they are very low and represent a good buying opportunity. It is, however, important to consider your options. Some alternative energy investments won’t pan out. For the future, though, I personally like JA Solar (JASO) and the Wilderhill Clean Energy ETF from PowerShares (PBW).

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Yesterday, the Chinese government announced that it will be providing a $586 billion economic stimulus package. Like the rest of the world, China has been seeing some slowed economic growth. And the Chinese government, like other governments in the world, is determined to do what it can to stimulate the economy and try to limit the effects of what is now being seen as a global recession. As a result of China’s action, the stock market is getting a boost today.

China takes the lead in economic stimulus

The Chinese economic stimulus package puts it squarely in the lead for the race to spend the most on preventing recession (or even depression). Stock Trading To Go has a handy list of the three contenders for the top spot, after China:

1. U.S.: $168 billion.
2. Japan: $51.5 billion.
3. Germany: $29.9 billion.

You can see that, combined, the next three don’t even come up to half of what China expects to spend over the next two years on economic stimulus. (It should be noted that the $700 billion bailout passed in the U.S. does not *count* as stimulus money. It is considered rescue money. Which, in thought of as different. I’m not sure how, but there you are.)

Of course, this means that the U.S. will be under more pressure to pass another stimulus package here. While some say that at least $100 billion will be needed, chances are that another package would be closer to $300 billion.

Stock market confidence and economic stimulus

The fact that world’s next economic superpower is entering the economic stimulus fray is helping to boost the stock market. There is increasing confidence that governements around the world are unwilling to let markets fail, and this is buoying the U.S. stock market as well as other markets. Indeed, Asian markets closed significantly higher today, and there seems to be deterimination amongst U.S. investors that the stock market here will follow suit.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.