Nice list! I’m bookmarking, copying and distributing to my friends.

Looks like the “matters for discussion” if we could ever have a Constitutional Convention. But we could start this discussion in our towns and counties. We could take this list and begin the discussion in preparation for a new constitution. I would eliminate the Senate altogether in a new constitution. The Brits neutered their House of Lords and we should too.

Thank you, Hugh: a very detailed and well written piece. Although we don’t agree on every single point I think you’d have my vote if you were running for office.

All of it sounds good, but has the same chance a snowball has in hell of getting inacted. Wall Street has the Congress bought and paid for, on top of being buffalowed.
The people are just about as bad as the Congress, because they to think Wall Street and the stock market runs the world.
The whole Country needs to realize that our whole finacial system is set up to make money off other peoples money. That in itself being crooked from the start. Money should be made off providing products or services, not playing with other peoples money. Until we revamp the whole systen, throw the crooks to the wind, and return to honest dealing, in all our markets, and banking sectors we will get more of the same.
Wall street is now turning to life insurance to use it like they did mortgages, and are at the beginnings of an other boom before the bust.
The banks are trying to make up for their loses, by fee’s and charge on accounts and credit cards. Making the people pay twice with the Bail-out and then with their charges for the prolems they created.
Our Government has sat on it’s hands for a year, and not even renewed the Regulation they voted out. So all the talk of new regulation is that. “just talk.” Obama talks a good game but can’t produce.

I like most of what you have to say here.

But could you please clarify “Futures (2) Ban non-commercial traders”.

Are you saying that you want to limit retail traders to only use ETF’s, rather than futures? Are you referring to deliverable commodities only, or do you include index futures and interest (bond) futures?

What is the problem with Joe Trader being able to make a living off trading futures? If the Goldman Sachs of the world can, why can’t the guy at home? Just curious. Next, do you ban retail from going short, while letting “commercial traders” and brokers short? Only the rich and well-connected can profit from the workings of Wall Street?

It’s not like the retail trader is the problem, in my opinion. How about “ban commercial traders”? Or “ban automated trading”? But why ban me?

Thanks Hugh; we all know that the game is rigged. Especially regards “Audit the shadow banking system, especially Money Markets”

As Simon JOhnson said:

“SIMON JOHNSON: They persuaded us to allow them to take incredible risks. And then they pushed all the downside, all those losses onto us, the taxpayer, at the same time as really hammering hard all the people who were duped, essentially, into taking out loans. People lost their houses. It’s an absolute tragedy. This combination cannot go on. And yet, the opportunity for real reform has already passed. And there is not going to be not only is there not going to be change, but I’ll go further. I’ll say it’s going to be worse, what comes out of this, in terms of the financial system, its power, and what it can get away with.

BILL MOYERS: Why?

SIMON JOHNSON: That’s the.

BILL MOYERS: Why is it going to how is it going to be worse?

SIMON JOHNSON: Well, there’s four we used to have a dozen or so substantial big banks, now we’re down to four. Now we’re down to four big banks that have a lot more market power and a lot more political power. They make the campaign contributions. They shape agendas in ways that are that are really quite scary. If you look, for example, at derivatives. And the debate on whether or not derivatives should be regulated in a sensible manner. And at this point, actually, the Obama Administration has is leaning in a better direction. But the big financial players are absolutely against any kind of sensible regulation. And I think they’re going to win.”

From here.

I’m sure what Hugh means is not the individual trader but investment banks like Goldman Sachs who has already shown it’s capability to affect energy markets.

Recommended but the number of comments isn’t being updated even after 5 minutes of time going by.

Recommended. Thank you, Hugh. I don’t claim to understand all on your list but I’m sure for nationalizing the Fed and the rating agencies. That said…

Last week or so I heard/read blurbs that Geithner had met with the CEOs of Goldman-Sachs, Morgan Stanley and CitiBank eighty (that’s 80 !!!) times in the 7 months he had been in office. [about 3-4 times a week?]. That pretty well tells me who’s running gov and whether there will be reform in this administration.

Hi Hugh, Thanks for this wonderful and authoritative list. This is what Obama should have done if he really cared about Main Street and the American people. It’s really important for assessing what he does end up doing.

Well, GS probably affects much more than energy markets – much of which has been well documented. Even Jim Cramer admitted as much in an interview a while back – placing trades to move the market to a better price, and so on. What they refer to as a campaign.

I probably don’t know what he means by non-commercial. Hope it doesn’t include the retail trader/investor. Otherwise, I’m on board with this list!

Excellent, Hugh.

I’d only add, if you haven’t included it, putting teeth back into the anti-trust laws.

iremember54, if Obama and his team were going to act on reform they would have acted before now and much more strongly. They didn’t and the slide in the fundamentals of economy toward depression continues.

PascoBill, ubetchaiam has it right. I am thinking of Goldman and how it was let into the oil markets, through the Aron exemption, to use the futures as a “legitimate hedge.” I am not talking about regular traders. Goldman has no interest in the price finding function of the futures market rather it uses its weight and leverage of 15-20 to 1 built in by the margins to distort the price. Oil should be trading at half its current price of $70/bbl, given the state of the world economy and a glut of oil in the market. What I am saying is that we need to kick Goldman out of the commodities markets (did I mention that 70% of Goldman’s profits came from its machinations in the commodities’ market?) and restore them to their normal functioning.

ART45, anti-trust action is part of item 2 under regulation.

Sorry for the lack of paragraphing but for some reason, they are not appearing in this comment.

Excellent.

Can you clarify “Debt repudiation without bankruptcy”?

Here’s an article that discusses Goldman’s position in and history with futures markets.

http://www.marketwatch.com/story/spotlight-on-goldman-as-commodities-hearings-begin-2009-07-28

Debt repudiation is something we are going to have to come to at some point. The problem is that we have simply too much debt and service on debt at all levels to spark or sustain a recovery. There are really only two ways to get out of a situation like this. Inflate or default. Aside from reflation in stocks and commodities due to slosh over from the massive bailouts from the Fed and Treasury, most of the fundamental indicators, such as debt, credit, housing, and employment are decidedly deflationary. When government pulls back on its interventions, and it will have to at some point, the disastrous state of these fundamentals is going to be unmasked. Also inflating the dollar probably wouldn’t get you very far anyway because other currencies would inflate to match and we would be back to where we were.

That leaves default, also known as debt repudiation, also sometimes referred to as a debt jubilee. The idea is to get the benefits of a bankruptcy without the slowness, expense, and negative consequences of that process. It is rather like a national reset. If we don’t do something like this, we are either looking at depression or 10-20 lost years like Japan. I think depression is more likely. Some might argue that this isn’t fair but then a lot of the wealth transfers of the last 30 years haven’t been fair either. It is more about what is necessary to get our economy moving again.

I had the same problem with paragraphing yesterday. Maybe there’s something in the maintenance FDL just completed.

I think we have to keep in mind the point that the wealth transfers that have occurred since 1980 have not been fair. One way or another, those who have benefited most from those transfers are going to have to give back. Debt repudiation is one way. Another is restoration of taxes on wealth. We need to have wealth transfers from the top down instead from the bottom up, and we need not to be defensive or ashamed about it.

Great post Hugh. I’ve copied it onto my p.c., so I can look it over.

On mortgages:

I was watching a Senate committee hearing and during the talk about GSEs it occurred to me that much of the big banks toxic asset problem might be eliminated if, after the GSEs have modified large numbers of mortgages, they were to do swaps to replace the banks unvaluable assets with GSE mortgages.

Putting ‘fixed’ mortgages with the banks would let them be valued and help banks become more liquid. Then they could loan more freely.

Trading is the problem period. Stocks, commodities, and yes even bonds, should be bought from the issuer, not thru some trader. You see they have us all fooled to the fact that we need traders, in the first place. They have us fooled we need brokers for everything. You work your ass of make a few bucks and buy some stock or bonds, then some a hole makes his bucks moving your money for you. It doesn’t make your stock worth more, make your stock any safer, make you any bigger profits, it just takes some of your hard earned money, to move it for you. If you like this syetem, you are part of the problem. We have given our money to the tune of WAll Street, and they tap out the tune in there 20 million dollar houses, mega yachts, and high rise offices. Take a trip to New York and look up at all our money.
The Scott guy sells cheap trades, by flying around in His million dollar Helicopter, sure make me want to give Him some of My money.

In your discussion of swaps, you don’t mention interest rate swaps. They need regulation as well.

No one can complain about people making legitimate money like Bill Gates. To many of the billionaires made money from buying businesses and closing them, and pocketing the wealth. Others have made a fortune on your money. Most of us have had pensions or some form of our money invested and they made money on it. They make money on your money.

Even the fools that lost there savings in the markets, think that money just went away. Someone on Wall Street has that money, and it’s not you. Those dollars didn’t disappear when the market went down, they were just left in somebodies hands. Some body who is going to make a fortune with your money when the market goes back up. Then you will give them somemore of your money, so they can do it to you again.

That’s why the wealth is so concentrated, they have everybodies money.

I had the same issue, just refresh your page and voila, magic!
It’s fixed. Just learnt that tonight from Selise in another thread.

Great read Hugh, thanks so much for sharing it.
Bookmarked for referencing, as this issue begins to take center stage.

I was thinking about interest rate and currency swaps both more under derivatives, especially in terms of limiting the size of the positions. Parenthetically, an interest rate swap was how players like Goldman used to get the money they needed to play the oil markets back before credit dried up. It was also how the various slow movers involved could turn a fixed interest rate into a variable one. This was actually the first kind of swap I became familiar with.

Wonderful, thorough list, Hugh. Definitely a keeper. Kudos to you!

Actually money can go poof in a bubble but this does not invalidate your other point. Take the current stock market. Goldman and others have been bidding up stocks. This caused a lot of slow movers, funds, to enter or risk being left out. Now a lot of the insiders have been cashing out. The slow movers came late, missed most of the early gains, and will be left holding the bag at the end when the market falls. Some of what they invested will have been transferred to the likes of Goldman. Some will just go poof.

I may be pulling out my trusty scroll maker….

Concise, devastating suggestions, Hugh. This should be required reading somewhere.

There’s no poof, don’t fool yourself.

Yes, yes, yes!

Bring back the usury laws!!!

And stop using SS to balance the budget!!!!

Yes, indeedy.

But you need to add a list of the international agreements that the US should push for in order make sure that handling transactions offshore doesn’t end run these provisions.

If debt swapish derivatives walk and talk like insurance, then why are they not regulated like insurance?

Hugh,

I’ve posted this at Progressive Alaska.