Wednesday, July 29, 2009
Obama's Economic Regulations Are Like a Law Which Makes Arson Illegal, But Exempts Convicted Arsonists
Obama's regulation of credit default swaps leave loopholes large enough to drive the biggest trucks through. Specifically, it forces over-the-counter credit default swap transactions to be traded through an exchange unless it is a non-standard cds. So all that the "financial innovators" who melted down the economy have to do is get a little creative in drafting their cds' - or just to tell regulators "oh no, that wasn't a standard contract", and they are excepted from the regulation.
Similarly, the Obama administration has just passed a new set of regulations "getting tough" on the naked short selling of stocks, which independent economists say can manipulate stock prices and bring down otherwise healthy companies.
But the regulation will exempt hedge funds, and allow them to continue hiding their shorts from regulators.
That's like passing a law outlawing arson to publicity and fanfare, but quietly exempting convicted arsonists from the new law.