How a Regulatory Makeover Can Fix the Financial Crisis

By Shah Gilani, Contributing Editor, Money Morning

Editor Note: Shah Gilani is a retired hedge fund manager, a contributing editor for Money Morning and a noted expert on the U.S. credit crisis. Yesterday, Shah posted an open letter to Barack Obama with a plan to fix the economy. Along with the rest of the world, we are hopefully optimistic about our new president, the future and our nation’s potential. Shah’s words of encouragement and suggestion seem to strike the right balance of concern and hope. Attached below is his letter and plan.

Dear Mr. President-Elect:

The people of the United States have spoken. Their collective voice resonates loudly and overwhelmingly in praise of your vision and promises for America the beautiful.

Over the many voices, the chorus of a common refrain resounds: There is nothing we as a people cannot do if inspired by

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” The United States must engineer a new transparent, non-partisan, “systemic-centric,” economy-oriented regulatory apparatus that facilitates innovation in capital formation, product efficacy, public protection and open, fair and equal market access.”

Dear Mr. President-Elect:

The people of the United States have spoken. Their collective voice resonates loudly and overwhelmingly in praise of your vision and promises for America the beautiful.

Over the many voices, the chorus of a common refrain resounds: There is nothing we as a people cannot do if inspired by confidence in our president, honest and transparent democratic government, and equal opportunity in pursuit of our happiness.

Fundamental to our pursuit of happiness is confidence in the viability, integrity and safety of our capital markets institutions. The public’s confidence and reliance upon these institutions to create employment opportunity, to provide protection of the many from the greed of a few, and to shepherd our savings and nation’s wealth have been dangerously

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A couple of great questions came in on the Seeking Alpha version of this morning's post about run-of-the-mill bear markets and I thought it would be useful to post the questions here and how I answered them.Why do you think we won't have a decline similar to what we had in '00-'03, which was a lot more than 30%?Markets cut in half every so often; the great depression, the mid 1970's; the start of this decade and I also know there was a depression in the 1870's but do not know what the market did then, there was also a bank panic in 1907 that lead to a 37% decline that year. If you notice you see the gaps in time ranging from 22 years on up.I believe the reason for this is that the market "can't" cut in half so soon after doing ...

Exchange traded funds (ETF) and Exchange traded notes (ETN) are derivatives underlying investment assets (stocks, indexes, commodities etc.). Issuer are big investment banks.ETF represents in fact ownership for underlying assets. Therefore especially big institutional holders could and also do asking to redeem their ETF position for underlying stocks. This makes ETF price staying closely along underlying stocks. For example this is not the case for Closed end funds - CEF.Contrary ETN is kind of structured product issued as a debt note. And that's why credit risk is here. Of course nobody really expect Barclays' goes bankrupt. ETN are lack of tracking risk. It means that price exactly reflects underlying index. ETF can differ from NAV.http://stockweb.blogspot.com/atom.xml