Wednesday, December 10, 2008

Regulating Derivatives

A friend from Hong Kong has just reminded me that I had organised and hosted a meeting six years ago, led by Dr Michael Ramsden of Oxford, on the need to (and approaches for) regulating derivatives.

No one took any notice in 2002, or in 2003, or in...

Not entirely surprising, then, that the bursting of that bubble has had results are unfolding so tragically....

Even though a friend tells me that the derivatives bubble has not deflated more than 8% from its maximum some months ago - so there is still a long way to go, unless proper regulation can be set in place - and no one in authority seems inclined to go for that

However, I am reliably informed that there is now talk of establishing ONE exchange for derivatives - on a purely voluntary basis

Of course there is no reason why anyone should be forced to trade in derivatives, but if someone does trade in anything, it must be according to sensible rules! It is the absence of such rules which has led to the current crash.

And only ONE exchange for derivatives when there are ... how many exchanges for the real-world economy?

Do let's keep in mind that derivatives are, at present, something like 20 times the value of the entire real-world economy.

So the enormous human suffering around the world will continue, and indeed increase ... because a few rich and powerful people do not wish to slim their outsize bellies. Sphere: Related Content

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