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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Peter Ecclesine who wrote (24509)	12/15/2007 2:05:57 PM
From: axial	Respond to of 46821

Money wanted a way to escape the confines of regulated markets and oversight. Hedge funds found the way. We now have trillions of dollars whipping around the globe every day, unaccounted for. If nothing else, the shortfall realized on Collateralized Debt Obligations should make us understand that no longer can anyone control, or even measure the risks to the world's finances. I read a comment from an investor in the UK; he stated that this year, he saw something not seen since the Great Depression - a run on a bank, with anxious depositors lined up for blocks. Anyone following this thread (among others) ... Message 24094837 ... is aware that the stability of our financial systems, and the greater world order (financial and consequent), is in jeopardy. Some say there are Safe Havens, or that the construct of world finance won't be allowed to fail. Others believe we're all at risk, inescapably: there will be no Safe Haven. Jim

To: Peter Ecclesine who wrote (24509)	12/17/2007 2:05:51 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 46821

Hi Peter, and thanks for this most intriguing read. As you've probably deduced by now, when something as poignant as this Senate hearing transcript crosses my screen I take some time to cogitate over it before responding. Oddly, I found my first opportunity to do so on another board today, offering the following (slightly edited) version of a reply I sent to a member of the Cook list. I begin by quoting him, here: -- Your comment below seemed to be a good segue for something I've been mulling over for a couple of days now: "I have never really understood what a 'free market' is." Peter Ecclesine recently posted a document to the Silicon Investor Forum that bears my name that relates to a Canadian Senate hearing on the matter of hedge funds and derivatives trading, which I've found to contain many parallels to the current debate over regulation that is taking place in this discussion group today: tinyurl.com Proceedings of the Standing Senate Committee on Banking, Trade and Commerce Issue 21 - Evidence - April 25, 2007 Whereas banking and brokerage both are highly regulated and derivatives markets are not, one sees a parallel to common carriers and ISPs, where the former have been historically rigidly overseen , and the latter nay. It's an intriguing read, which I highly commend to all here, describing how the notional value of hedge funds today stand at upwards of USD350T (that's a capital "T", for trillion), with derivative positions going up by 30% annually, and no one is able to clearly see what is taking place "inside". Pay note to the reply Peter received from Jim Kayne tinyurl.com , who states: "Money wanted a way to escape the confines of regulated markets and oversight. Hedge funds found the way." ... which one can readily equate to how the dominant carriers were able to escape regulation by becoming ISPs. An abstract from the paper, where one Senator Goldstein from Quebec has the following to say to the main witness, Eric Sprott, CEO of Sprott Securities, CA, which participants at the hearing regard as one of the better-behaving (if not one of the more successful) hedge fund plays of the day in Canada: -- Begin snippet: "We are concerned about issues of transparency. We are not concerned about regulation for regulation's sake, but we are concerned about regulation to the extent that that is necessary for the protection of the public and the market. We are very concerned about the potential effect of these mammoth-like, hugely leveraged organizations on the market as a whole. We are told that, far from limiting liquidity in the market, they enhance liquidity in the market, which is difficult for some of us to understand. .. In terms of transparency, regulation, liquidity, we understand that the parties who are supplying the leveraged money, the dollars, the loans, are themselves regulated. They are looked at, and they are responsible and disciplined people. They make mistakes like everyone else does, but they are not likely to do things that are reckless in terms of their lending. .. What kind of regulation, if any, would enhance transparency and reduce risk? What kind of regulation would be appropriate if, in fact, as we know, a number of these funds, a very significant proportion, are situated in the Cayman Islands and a variety of other places where Canadian regulation is irrelevant? My third question deals with your suggestion that these funds be called upon to take auditors from a list of auditors. In fact, our Canadian banks, as I understand it, need to have two auditing firms from a list of auditors, just to play safe. We have a pretty solid banking system here. However, if they are situated in the Cayman Islands or an equivalent area ? and I am not in any way denigrating the Cayman Islands; I would not intend to do that ? what use would anything we would try to do be in terms of protecting the market and individuals?" End snip Thoughts? FAC ------