Saturday, April 30, 2011
Say hello to your next bubble
Tiny Tim Geithner has once again ridden to the rescue, of his Bankster buddies who were about to be cruelly forced into exchanges to provide transparency (a/k/a the bright light of day) to their dealings.
Zach Carter reports on a blow to efforts to regulate the runaway derivatives market. Just as most derivatives are set to be put onto clearinghouses, Treasury Secretary Timothy Geithner exempted a large group of derivatives, foreign currency swaps, from the regulations...At a stroke, Tiny Tim has given his Wall St. buddies a bypass to all useful regulation called for in Dodd-Frank. The only question now is how soon the Banksters can drive us off the cliff this time.
Even beyond the foreign exchange market’s problems post-Lehman, which are well-documented, simple common sense would dictate that you don’t keep a $30 trillion segment of the market unregulated. When I wrote about this possibility in March, I said just that: “It’s obvious that whatever financial innovation exists in the shadows will be the one used most frequently to maximize risk. So it’s not the type of instrument but how well-regulated it is relative to others that matters.”
The other fear is that derivatives traders could attain an exemption simply by attaching a ForEx trade to their standard derivative deal. So this decision could be a cro-bar to pry the entire derivatives market away from regulation. Before long the entire market could wind up back in the shadows. And your humble blogger isn’t the only one saying this: it’s the argument of CFTC Chairman Gary Gensler, the guy who would be responsible for regulating the derivatives market.
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