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A valid opinion about the credit default swap products, credit default instruments and derivatives in the market collapse crisis – US and World Markets –
Don’t buy credit default and derivative instruments out of the game – undermine their premise and destroy the legal use of these credit default instruments. They are unregulated, unauthorized, unqualified and unsecured. Let everyone across the board lose on the “pretended” value of those and make it illegal to ever create them or trade in them again. They are not valid products in the marketplace because they weren’t secured in the first place.
Businesses cannot sell, create nor trade an “insurance” product that is non-collateralized, unsecured and without any real asset value, no matter what premium is being paid for it. That is untenable. Make them all illegal across the board – not the bonds they insure, but the credit default instruments that have been created back-room, over-the-counter, hand to hand.
That one action would insure the solvency of around 90% of the companies and funds that have been dealing in them. The other 10% of these entities can be made solvent by other more traditional means.
Install industry-wide accounting standards and remove (illegalize) all asset classes which are not secured and backed by real, tangible assets. There should no longer be anything that is considered “off balance sheet” accounting practices. That it was considered standard operating policy is a lesson for the future that it may never be tolerated again because of its destructive components.
Have all ratings agencies rate on the same basis of factual evidence and remove the magnitude of power held by these agencies. The ability of ratings agencies to call the shots and manipulate the markets is too great. That much power to force re-collateralization and depletion of resources as companies shift assets to do so has no business sitting in the hands of these ratings agencies.
Force the re-capitalization of those companies and financial institutions that are under capitalized within a specific set of parameters and definitions with a limited time period, even if that is two years out. Define the acceptable legal ways and asset types that are the only ones to be tolerated. And, demand this be done immediately to insure solvency across the markets. The impacts of this one element would go farther to stabilize world economic growth and US economic stability as a whole than any one other thing.
Written by Cricket Diane C Phillips, 09-19-08, USA