- Posted by Jeff Carter
- on August 17th, 2012
When people talk about markets, they talk about transparency. This word is being construed to mean different things than what transparent markets are really supposed to be about. There are two editorials today, one here and one here, that illustrate how damaging the past four years of excess regulation added to the books really are. Most of the really bad stuff in all the things Obama has passed come after the election, which is why it is critically important that he be defeated. Ironically, a lot of the things that take effect after 2013 affect personal liberty. If you are a fiscal conservative and a social liberal, things on the social liberal front will get a lot more regulated in January.
Dodd-Frank was one of the worst laws ever signed into history. It’s that bad. One of the things many people payed lip service to was transparency. But because of the way the regulations are being written, markets will be less transparent than ever before.
For example, if you are perceived by the government to be a risk to the financial system, they can go through every bit of data you have line by line. Right down to checking accounts and credit card statements. That’s not transparency, that’s fascism.
Do you save for retirement? Guess what. Dodd-Frank could eliminate your retirement account.
A study last year by the Oliver Wyman Group found that the Fiduciary Rule could result in higher retirement account minimums and cause 7.2 million individual retirement account (IRA) holders to lose access to investment advice. Even the Labor Department was unable to show that the rule’s illusory benefits outweigh its substantial costs.
We know that the far left wing of the Democratic party would like nothing better than to mimic what they did in Argentina and seize retirement assets to pay for bigger government. Heck, at the end of the Bush administration, there was even a sub committee hearing where that idea came out.
Dodd-Frank will affect you in ways you never dreamed about. For example, everyone is sensitive to the price of gas. Dodd-Frank will make energy trading less transparent, and drive up costs for every one artificially. Jack Gerard writes,
The SEC has broad discretion in determining what the disclosure requirement under 1504 will be. Yet indications from meetings with SEC officials are that it may favor a draconian approach that would irreparably harm U.S. oil and natural-gas companies.
The danger arises if publicly traded energy firms are required to release—for public consumption—commercially sensitive, detailed payment information about every foreign project. This means they would have to reveal extensive data, including the names and locations of their most important personnel and capital assets, in addition to how much they pay for licenses, taxes, royalties and other fees.
The Green Agenda has seeped its way into every corner of government.
Market transparency is really about price and quantity. Seeing a public price and knowing how many widgets traded at that quantity. It’s about being able to bargain efficiently, with knowledge that the trade will be backed up and made. No counter party risk. Transparency is about entities coming together in one central place to compete on price. As they bargain, the best price is arrived at and critical information is passed on to the entire market and they adjust their behaviors based on that price.
Dodd-Frank will drive many of these bazaars underground. Trading will become a secret. A dark pool where only a few have the privilege of transacting. Dodd-Frank has the potential to screw up markets in ways we have never imagined as it implements bureaucratic agendas into places they were never intended to go.
Not only were the policies of this administration bankrupt and bereft of any sort of intellectual thought. The regulations that they passed might be even worse.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)
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