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Keynes, probability, asset pricing and the great clusterfuck | 157 comments (157 topical, editorial, 0 hidden)
Re: What now? (none / 1)
To paraphrase and mangle  Arthur C Clarke - any sufficiently stringent regulation is the equivalent of a ban.

If you need an example, as cigarettes and tobacco are increasingly regulated and taxed in the UK, so the volume of smuggling cigarettes and tobacco in from France has gone up.

So - people are always going to do hedging deal - delineate very simple hedges in regulated exchanges. For the rest, just remove court enforceability and FDIC backing etc. Let there be no question that if you invest in an institution that engages in complex derivatives, you will never be bailed out if they lose their shirt.

by Metatone (metatone [a|t] gmail (dot) com) on Sat Jul 21st, 2012 at 05:03:52 AM EST
[ Parent ]
Re: What now? (4.00 / 2)
Metatone:
as cigarettes and tobacco are increasingly regulated and taxed in the UK, so the volume of smuggling cigarettes and tobacco in from France has gone up

As cigarettes and tobacco are increasingly regulated and taxed in France, so the volume of smuggling cigarettes and tobacco in from Belgium, Italy, Spain has gone up.

That's "competitiveness" for you...

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Jul 21st, 2012 at 07:40:50 AM EST
[ Parent ]
Re: What now? (none / 0)
That's essentially what the Dodd-Frank act did in the US.  Formerly OTC hedging is now required to be done in official, directly regulated exchanges, with very limited parameters, if they want the protection of law.
by santiago on Sun Jul 22nd, 2012 at 01:47:55 PM EST
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Keynes, probability, asset pricing and the great clusterfuck | 157 comments (157 topical, 0 editorial, 0 hidden)
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