Regulating The Markets and the Banks!

August 23, 2011

Yep, the super rich have a problem, what to do with their Finance.

Its toxic housing bubble pyramid has collapsed in the US and Ireland; the OTC and exchange traded derivative associated scams built on it have yet to be unravelled.

People’s pockets and Government’s pockets have been picked again.

In the 80′s under Greenspan the game of deregulated exchange traded OTC derivatives was invented and the super rich made a pile of dough.

The effect of this has been well documented and researched in the US by both Elizabeth Warren and Brooksley Born:

Elizabeth Warren: Research/Writing on Disappearing Middle class. See end of

Elizabeth Warren

“In 2001, more men and women went bankrupt than filed for divorce or graduated from college (1.5 million versus 1.1 million and 1.2 million, respectively). In 2002 those who declared bankruptcy far outnumbered those who suffered heart attacks or were diagnosed with cancer. At present rates, one in every seven children in America will live through a bankruptcy between now and the end of the decade. And it’s not the working poor, credit-crazy youth, spendthrift “DINKs” (dual income, no kids), or fixed-income seniors who are swelling the ranks of the insolvent. The hardest hit are middle-class families, says Gottlieb professor of law Elizabeth Warren.”

Brooksley Born

Last January, Financial Crisis Inquiry Commission FCIC

Attacks Greenspan:

We need to take on the banking and financial sector and regulate with decent handcuff laws.

An audit of practices in the financial services industry should examine malpractice and examine risk.

OTC’s should be banned. Proper laws enforcing decent regulation of exchange traded derivatives should be enforced.

In Ireland a proper inquiry into banking should examine the ‘loan to own’ lending practices in our banks that handed out mortgages to high risks.

The problem is Governments have been taken over by a modern version of the banker Yangs, Omega Glory starship episode:


Fascinating article here:

dark pools, gun slingers, day traders, owning the house and the ending of the uptick rule

“But the biggest advantage these venues have is that they “see” what orders are coming into them. And, regardless of whether or not it’s legal, they trade against them and take advantage of knowing the specifics of other pending orders that can be used to backstop losses. I’ll get to that is a moment.”

“The New Abnormal

Wall Street finally got what it wanted on July 6, 2007, when the Securities and Exchange Commission (SEC) did away with the “uptick rule.” As of that day, it was no longer necessary to wait for a stock to go up in price before short-selling it. Without the uptick rule, short-sellers can short any stock, at any price, at any time.

There’s plenty more that Wall Street has done to ratchet up volatility. It has flooded the world with derivatives that aren’t regulated, and blessed high-frequency trading. It also introduced innumerable securities and financial instruments that it can arbitrage for healthy profits against unsuspecting institutions and the public.

Not surprisingly, market volatility is now a tradable product. And now that Wall Street has taken us down this path of entrenched, institutionalized volatility, there’s no going back.

Don’t expect any respite from what’s going on in the markets now. On the surface, it’s all about Europe, debt, downgrades, earnings, fundamentals and technicals. But underneath all those prime movers are the real shakers, the greasy palms of the markets hidden hands.

Abnormal is the new “normal.”

Progress of civilisation itself could depend on how we clean up these financial opium Houses! Unfortunately, Merkel, Sarkozy and Obama the blind, can’t see the dangers posed above:-

Currently the banks control the resolution of toxic mortgage debt; through NAMA the Government has virtually been turned into a bad bank that guarantees bank commercial property and toxic lending and continues to attempt to falsely inflate a housing bubble in Ireland through withholding property from the market place.

We are far form a humanitarian approach that would take control away from the banks with the setting up of a NAMA for homeowners facing a mortgage debt crisis:

Here is the outline of some suggestions to relieve the burden on families and on the state of mortgage debt arrears:

1. Reform of the bankruptcy laws in this country to be brought in line with best practice in UK and US. The homeowner gets to hand back the keys to the banks but falls under a 3yr bankruptcy system similar to same in the US.

2. A NAMA for homeowners with toxic mortgages: the State offers to buy back the mortgage at an agreed discount, which maps that used by NAMA to buy toxic commercial loans from the banks.

3. The homeowner gets to choose 1 above or alternatively can choose a Family Protection Bundle. The FPB would be a binding contract on the homeowner that:

a) They get to occupy the house for life.

b) They pay a TBA Rent or Lease on the property which is a percentage of their income. The percentage would be scaled from say 5%, if they are on Social Welfare, to 40% if they reach income ceilings to be decided. If the contract is broken, the property reverts to the state.

c) Upon death of the property owner, the same offer is extended re Rent/Lease is offered to the person’s next of kin to whom the property reverts per Will of the deceased.

d) A clause in the contract allows for the state if it chooses at any time to make an offer against the property to the Rent/Leaser, to allow the Rent/Leaser buy back the property.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: