You’ve probably been staying up nights worrying about how hedge fund managers are going to weather the credit crunch stemming from the subprime mortgage storm. These men are expected to really suffer since they borrow so heavily to finance their gambling in global financial markets. Many were also stuck with piles of mortgage-backed securities when these paper assets plunged in value. A few funds have already stumbled, and Moody’s credit raters have warned of a 50-50 chance that one of the big ones will crash soon.

For these troubling times, some reassuring thoughts:

He’ll always have the pictures

Kenneth Griffin, head of Citadel Investment Group, chose Versailles as the site of his nuptials a few years ago and last year made a sum that would have made even Marie Antoinette’s eyes pop: $1.2 billion. Now that heads are rolling from the mortgage meltdown, the image of the finance world’s royals has lost a bit of its luster. And yet, unlike the ill-fated queen and and her Louis XVI, Griffin is expected to survive and maybe even come out ahead. He has already swooped in to take over the assets of one collapsed rival and is busily buying up the stocks of other battered companies. Go, Griffin!

He’ll always have Marilyn

Steven Cohen’s SAC Capital fund dropped 6 percent during the first three weeks of August, reportedly one of its worst months ever. On top of that, Cohen now has to worry about a move afoot in Congress to cut off mortgage-interest tax deductions for mansions. Under the flimsy guise of “combatting climate change,” Rep. John Dingell, D-MI, is going after owners of homes larger than 3,000 square feet. The size of Cohen’s Georgian mansion in Greenwich, Conn.: 31,600 square feet (not including the ice skating rink, tennis court and beauty parlor). At least Cohen was able to enjoy his $1.2 billion windfall from last year while he could. On one spending spree, he picked up an Andy Warhol image of Marilyn Monroe, “Turquoise Marilyn,” for an estimated $80 million.

The Pentagon is hiring

James Simons’s reign as the top-earning hedge fund manager may be short-lived. After making $1.5 billion in 2006, the Renaissance Technologies chief is expected to take a cut in personal earnings this year, as his biggest fund’s value has remained flat, compared to a 21 percent return in 2006. However, if things really go sour for Simons, he could probably always go back to his former employer, the Pentagon, where he once applied his numbers know-how to code breaking.

Nest eggs

The average take for the 20 highest-paid private equity and hedge fund managers last year was $657.5 million. Without earning another penny, they would still have $10.9 million per year for the next 60 years, probably enough to maintain the yachts and private jets they might have purchased before the bubble burst. They can also take heart in the knowledge that in that one single year, 2006, they made 18 times the earnings of the top 20 highest-paid executives of publicly held companies and 22,255 times the pay of an average American worker. Suckers!

Tax breaks

Even if their earnings decline, hedge fund managers will likely still be able to take advantage of a convenient loophole that allows them to be taxed at a lower rate than common folk. That’s because a substantial portion of their income is in the form of a cut of their funds’ profits, which is treated as capital gains and taxed at 15 percent, rather than the 35 percent rate that applies to ordinary income. Some cranky class warriors in Congress are trying to plug this loophole. But luckily for the hedge fund managers, there is strong opposition, including from some Democrats. Whew!

No guff from shareholders

Chief executives of troubled publicly held corporations have to dread facing shareholders at their corporate annual meeting. Rude questions, angry placards, anything can happen. Sometimes they don’t even vote the right way. Hedge fund managers, on the other hand, don’t have to answer to stock-holding hordes or even report on their business activities to the federal Securities and Exchange Commission.

So, dry your tears for the hedge fund managers. While hundreds of thousands of families are losing their homes and tens of thousands of workers are losing their jobs as a result of the mortgage crisis, at least the guys who helped inflate the bubble are going to get along just fine.

Sarah Anderson directs the Global Economy project of the Institute for Policy Studies in Washington, DC.

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