David Nason - US Treasury He has been conferring with Hank Paulson over the credit crunch crisis. He is in favour of having 5 bodies to regulate the US financial system. This includes a reformed FOMC. It looks very like the scapegoats for the crisis will be speculators - that's us traders. The top bankers plus an ageing Greenspan and a too slow Bernanke may well declare themselves clean of the blame which is wholly theirs. THE BASIC law of banking for the last 700 years has been don't lend money to people who can't repay it. Yeah well - they DID forget just that en masse !! The Government won't be trusting the bankers to do even that simple task now that they have failed so dismally recently !! Their failure may seriously affect our business. Speculators got the blame unfairly for the 1929 crash and look odds on for this debacle too.
Yup. Even Bill 'Oreilly in a recent diatribe blamed speculators for the price of Oil and demanded an increase in futures margin requirement as the immediate solution. Just like stock traders, pre 2000 bubble, took it in the shorts via enactment of PDT, Something similar will likely occur for some, if not all, futures trade. JMHO. Misinformed, meglomaniacal, fruitcake, arsholes. Ethanol will set us free! sure thing.
All the speculators in the OTC derivatives markets are from the big banks. They can try to blame us, but since the credit markets are 100% institutional, I'm not sure how effective that will be.
Agreed, I have absolute doubts that traders like you and me could have had any part in the credit crisis, or the commodity bubble. It's the leveraged hedge funds and i-bankers who shoulder, oh, maybe 99.4 percent of the burden for that. Retail traders like you and me are infinitesimally small.
The average person won't imho appreciate the difference or even know the difference ! Maybe not even care too much as long as someone else is the target
Traders merely provide liquidity to the market. It's the ETFs that are screwing everything up. Futures markets used to be used as a price discovery mechanism and as a hedging platform for the actual industry professionals. Nowaday's people are using them as investment/speculation vehicles.
Anyone too young to remember when personal residence mortgage loans rquired: 1. 20% down or 5% down + Private Mortgage Insurance until the equity in the property was 20%. 2. Income qualifications...verification and a maximum amount of income which could be committed to a mortgage (wasn't that 28%?) And banks made mortgages to hold as an investment. Even selling individual mortgages to other banks was not common. Bottom Line... GREED... neither the Gummint nor banking regulations should have ever allowed "no money down, no income documentation, mortgage asset securitization".