Good common sense regulation is at the root of successful Capitalism. That statement is contradictory to many who believe capitalism is about little to no government intervention and oversight of markets. Well that is not the case. The lack of regulation is as much a risk to capitalism as too much regulation. The key to restoring our place as the safe haven to the world’s investment capital is to have just the right amount of common senseregulation of global financial markets. Too much regulation and you choke off growth and send players overseas in search of better terms and without enough regulation and you send the same participants overseas in search of more stable financial markets. I see this balance as crucial to any long term recovery.
For example, what would happen if NBA games were played without referees? You would have a messy game with a lot of interruptions and heated discussions. On the other hand what type of game would you have if there were 5 referees on the court all at once? Much the same, a lot of interruptions and a lot of heated discussions…
Obviously, part of the risk in ANY free capital market is the innate ability of some individuals to bend the rules to their advantage no matter how much regulation is enacted. That will never change and is part of human nature. What we can do is enact strict and enforceable penalties to those who break the rules of the game and put the whole system at jeoperdy!
Is short selling a problem? absolutely not! The problem lies in the current system of oversight and regulation that allows a Fannie Mae and a Freddie Mac to reach such levels of leverage and overall mismanagement. The problem lies in allowing a 70 trillion dollar credit default swaps (CDS) market to go unregulated!
In my estimation, the biggest long term challenge our markets face from the recent turmoil is the loss of investor confidence in the transparency of our financial system. Retiring Baby Boomers for example, who had been told to invest in equities through their retirement in order to bolster growth in their portfolios to account for potentially living 35 to 40 years in retirement have all but given up on the markets. You can bet those dollars will not find their way to our stock markets any time soon unless we enact tighter regulation of global markets.
Regulatory Overhaul Is A Must…
Tags: business, economics, economy, finacial markets, finance, market commentary, options, regulation, stock market, stocks, trader
Good common sense regulation is at the root of successful Capitalism. That statement is contradictory to many who believe capitalism is about little to no government intervention and oversight of markets. Well that is not the case. The lack of regulation is as much a risk to capitalism as too much regulation. The key to restoring our place as the safe haven to the world’s investment capital is to have just the right amount of common sense regulation of global financial markets. Too much regulation and you choke off growth and send players overseas in search of better terms and without enough regulation and you send the same participants overseas in search of more stable financial markets. I see this balance as crucial to any long term recovery.
For example, what would happen if NBA games were played without referees? You would have a messy game with a lot of interruptions and heated discussions. On the other hand what type of game would you have if there were 5 referees on the court all at once? Much the same, a lot of interruptions and a lot of heated discussions…
Obviously, part of the risk in ANY free capital market is the innate ability of some individuals to bend the rules to their advantage no matter how much regulation is enacted. That will never change and is part of human nature. What we can do is enact strict and enforceable penalties to those who break the rules of the game and put the whole system at jeoperdy!
Is short selling a problem? absolutely not! The problem lies in the current system of oversight and regulation that allows a Fannie Mae and a Freddie Mac to reach such levels of leverage and overall mismanagement. The problem lies in allowing a 70 trillion dollar credit default swaps (CDS) market to go unregulated!
In my estimation, the biggest long term challenge our markets face from the recent turmoil is the loss of investor confidence in the transparency of our financial system. Retiring Baby Boomers for example, who had been told to invest in equities through their retirement in order to bolster growth in their portfolios to account for potentially living 35 to 40 years in retirement have all but given up on the markets. You can bet those dollars will not find their way to our stock markets any time soon unless we enact tighter regulation of global markets.