In what is being viewed as the sharpest condemnation of the hedge fund industry to date, the European Central Bank says HFs pose a “major risk” to the stability of global financial markets on a magnitude similar to the effect of an avian-flu pandemic on the markets. For the first time, the ECB’s annual financial stability review devoted a section to hedge funds and the prognosis, in the bank’s eyes, is not good, with no cure in sight. The analysis pointed to the fact that hedge funds in growing number merely adopt strategies of others, and that the correlation of HF returns has reached epidemic proportions, beyond “levels seen just before the near-collapse of Long Term Capital Management in 1998.” The ECB notes, "The increasingly similar positioning of individual hedge funds... is another major risk for financial stability, which warrants close monitoring despite the essential lack of any possible remedies." ECB V.P. Lucas Papademos used the occasion of presenting the report press anew for greater transparency, saying it “is clearly warranted,” based on ECB’s findings. The Alternative Investment Managers Association says the report is one for the birds, charging the ECB with using “extremely selective statistics [in order to] reinforce existing prejudices.”