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Politics : American Presidential Politics and foreign affairs
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To: TimF who wrote (28354)5/9/2008 3:12:39 PM
From: DuckTapeSunroof  Read Replies (1) of 71588
 
Re: [Like I said: ALL trades have risk.] "If you agree with me on that,"

(Actually thought it was you agreeing with me on that.... ;-)

Re: I can't see what your issue was when I said "Regulated trades also create risks."

That's easy.

Certainly is true (as you say) that 'regulation' (ANY) can add to market perceptions of 'risk'. (Particularly loosely-defined or sloppily administered rules....)

However you seem to be ignoring the other side of the ledger that is just as true: regulation can also serve to REDUCE market perceptions of 'risk' by establishing a more uniform and dependable market. (One example: an exchange's assumption of counter-party risk, and the promulgation of standardized options and futures makes the market more transparent and perceptibly LESS risky... and thus actually expands the trading volume of the market.)

That is the example I was describing with my comments about the totally unregulated global market in C.D.S.s (Credit Default Swaps) that we have right now.

It's like a massive game of Liar's Poker, that's at least ten times the size of the entire global market for US sovereign bonds... non-standardized... unregulated... with no regulatory cop working the beat --- and yet (because of the 'too big to be allowed to fail' nature of many of the market participant firms) taxpayers are always placed on the hook for the bad consequences of the inevitable collapses and failures.
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