Tuesday, June 07, 2011

Why are markets slowing right now?

There are of course many reasons. An over-inflated market in China which is slowing down affecting sentiment regarding all emerging markets; governments coming to the end of the money they have permission to plough into the biggest institutions; the challenges for the Euro; the feeling that commodity prices may be already too high and equity and bond prices likewise....

Well, let's take a step back to consider another important factor:

One of the most important pieces of legislation passed by the Obama administration is the Dodd-Frank Act (sometimes called the Frank-Dodd Act).

If implemented according to the schedule set down in the Act itself, it would go a substantial way towards sorting out the crisis which started in 2007.

However, because of vigorous blocking action by the Republicans, and lack of will on the part of the Administration, there is almost no chance of the implementation commencing on schedule.

More than 100 new rules are supposed to take effect On July 16, but regulators do not seem to have finalised them, or at least have not yet announced them.

The result has been uncertainty for financial institutions as well as the players in the global shadow economy (no bad thing, the latter). Sphere: Related Content

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