G-20 Warned of Risks of Financial Regs: Global Anger

Bankers and regulators have warned G-20 officials of the threat of government regulations, and particularly the Volcker Rule which is a part of the Dodd-Frank Act. Folks, we are not the only ones wanting Dodd-Frank repealed. Bloomberg says there is “global anger:”

“The Volcker rule will diminish liquidity in the exchanges,” said Luis Tellez Kuenzler, chief executive officer of Bolsa Mexicana de Valores SAB, Mexico’s Stock Exchange. “It’s an issue that will affect and is affecting most of the exchanges around the world.” Read it at Bloomberg.

In the Bloomberg article, “global anger” at U.S. overreach is noted, but Geithner isn’t concerned:

While U.S. government securities aren’t included in the proprietary trading ban, foreign securities did not receive an exemption from the restriction…

Six Canadian bankers and top government officials have written to Treasury and regulators, arguing the inclusion of Canadian securities in the proprietary trading ban would violate the North American Free Trade Agreement as the pact guarantees equal treatment for U.S. and Canadian debt obligations.

In related reading, Death by a 1000 Papercuts has a piece up by Rob Bennett, on the demise of reliable investing techniques and trusting the Fed:

My message is not an amusing one. I talk about how the old model for understanding how stock investing works (Buy-and-Hold) has been discredited by the last 30 years of academic research. I talk about how we need to move to promotion of the new model (Valuation-Informed Indexing) or watch our free market economic system die.

And people laugh. Those who love free markets laugh. Those who hate free markets laugh. Everybody laughs.

They laugh for the same reason the Fed laughed. The logic of the case is undeniable. And they don’t want to take the actions that follow from acknowledging the case. So they laugh. Out of discomfort…

The Fed was wrong to laugh. But we need to remember that the Fed is a political institution. So long as we laugh, they laugh too. It’s the safe thing to do. A Fed Governor who took our economic problems seriously while most of us were still laughing about them could get himself into serious trouble. The Fed will lead us when we send the signal that we are good and ready to be led.

Small individual investors relied on Buy and Hold purchases based primarily on the Price-to-Earnings Ratio. Most looked for the desired expectation of a modest but safe earnings growth of 15%  – that was ‘back then.’  With the Tech bubble, everything changed for the Buy and Hold investor. Accounting methods could not be relied up and both past and future earnings were often predictable of disaster. That’s the simple explanation.

But I digress, the Death by 1000 Papercuts article is about the Feds and how they control everything and know nothing.  Sobering and important. Read it here.

Posted by Maggie @ Maggie’s Notebook

 

  • Such an interesting (and also scary) article. I’ve thought that the crisis must be over by this time, but I think that the healing form this catastrophe will last longer.

  • Francinne

    I have never read an article just like this…Anyway, thank you for the shared thoughts too…

  • Your article is amazing and helpful. thank you for giving your readers such a awareness regarding G20. thank you once again