Are hedge funds partially responsible for last week's decline?

The hedge fund industry, now numbering several thousands funds with
$1.25 to 1.50 trillion (unleveraged) under management has become a very powerful market force. However, the hedge funds utilize a myriad of strategies, so that the total leveraged positions are not all in the same asset classes. For example, there may be a convertible hedge fund, a short only one, a distressed securities one, etc. The only similiarity among them is that most have the same legal structure, a partnership that can go short as well as long and most have incentive compensation agreements, and most can borrow against the assets. There is one theory that hedge funds reduce volatility in the market because they sell short as well as buy long.
My opinion is that they can be destabilizing at this point in time. The amount of money now in them makes the strategies very crowded. That coupled with the need for performance to justify the enormous fees in my judgment creates pressure to go out further on the risk spectrum, which could ultimately lead to a purging of hedge funds. That happened in the 1973-1974 bear market.
A specific example is the so-called unwinding of the "yen carry" trade. Basically, the Bank of Japan has set a very low short-term interest rate, now .5%, recently raised from .25%. According to my friend, Bob Aliber, who taught currencies at the University of Chicago Business School, a hedge fund now has to pay 1.5 to 2.0% to borrow yen, which is still much lower than borrowing in the U.S. The problem is that the yen may appreciate against the U.S. dollar. One could hedge the currency by buying yen futures, but the cost of doing so would eat up the interest rate advantage. So the hedge funds have been borrowing cheap yen and buying assets in other countries. Last week, the yen APPRECIATED against the dollar by about three percent. That is one year's carry advantage gone. The quick reacting hedge funds probably sold the assets the yen purchased to pay back the yen borrowings. This put downward pressure on the prices of those assets and upward pressure on the yen since they had to buy yen to pay back the loan.
This is becoming wordy. Tune in for more ramblings.