HorsesAss.Org Thoghts on Regulation of the Fanicial Industry.

@15 Real American

I think that regulations for its own sake happens too often and to no end. One obvious fact, from biology and economics, is that survival mechanisms are nearly infinite. No matter what regulations we create, someone will find a way around them.

That said, you are correct in one way ... transparency does require some form of regulation. The problem is that I am not sure what this might be and how it avoids the likely evolution of yet more complex strategies.

I do not know enough to suggest the sort of regulations that would be most robust but here are two suggestions:

a. Wealth Tax. This would diminish the incentive for leverage by taxing this sort of gain in wealth. A big part of the incentive of mumserem like Madoff is that there gains were hidden or not taxable even if visible.

b. The Madoff Rating We should establish a quasi government but for profit entity that assesses risks. We can call the product of this firm the Madoff Rating. MRs would be provided by the Madoff Rating Institute (MRI .. inside joke?).

MRI would have full access to the financial records of any firm seeking an MR, including confidential documents such as tax returns.

Because MR ratings would be very strict, there would be a huge incentive for investors to determine their investment based on these ratings. Obviously this preserves the freedom of investors to take risks by suing investments with low MR or no MR. t.