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Saturday, May 30, 2009

Derivatives regulations must be strong!

We can't afford to let the powers that be slide on this.

President Obama says he has a heart for the people, well he should do battle for the American people on passing very strong derivatives trading measures.

I know it's a issue politically and logistically, but something must be done.

Here's what I was thinking:

1. We can limit the amount of trading on certain products which would in effect induce a trade ceiling.

2. We can limit what can be on the futures market, or the currency that denominates it, like the US dollar (Petro-dollar) should be replaced with a basket currency, - 20% mark up.

3. We can limit the amount of avenues trades have. We can implement a "freedom of information" act on derivatives and futures, such as CDS trades, to the consumer. Force financiers to state where they got this instrument from and, allow the regulators to put up an advisory if the debt has been collateralised or traded to third party participants.

4. Force firms to show, in detail, their overseas swaps.

This is a start. But, something must be done as well as beefing up the regulatory bodies that supervise them.
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