“There’s a Sucker Born Every Minute!”
Investment banking in this country led to one of the worst economic crises since the Stock Market crash of 1929 because of greed. Bundling of strong and weak mortgages to sell them to others was simply a sly way of dumping what they knew were bad or weak loans. It showed that banking and the stock markets, not just in this country but around the world, are nothing more than casino operations, speculating with the fates of millions of future retirees. The advent of computer trading has made it possible for these “traders” to buy and sell millions of times a minute, taking small profits per share but also collecting fees for trades on both ends, from buyers and from sellers. It’s a racket, nothing more. There is a solution to this, but so long as the “foxes are in charge of the hen house,” nothing will be done. Transactions need to be slowed down so that everything is easily transparent. While I can’t prove it, I have a sneaking suspicion that some traders are using computers to “buy” stocks that their clients have ordered at one price, raising the price a few cents, and then turning around and delivering the stocks to their clients at the “new price.” On top of that, they charge the client a transaction fee. What a racket! Imagine if real estate agents did that! At least they are regulated and only charge a fee to the seller. Of course, the buyer is paying that fee, but the buyer doesn’t care because his price is what he has negotiated. If he had to pay a commission on top of the negotiated price, imagine the anger there.
New rules for stock/bond transactions:
- Commissions are paid by the seller only.
- Transactions are not complete until funds are transferred and confirmed by both banks. (No kiting of stock/bond purchases. Minimum “cooling off” period of 5 days.)
New IRS rules for stock/bond transactions:
- All stock/bond transactions are treated as profits or losses for income tax purposes. Capital gains tax differences for short or long term gains and losses are abolished.
- Stock/bonds must be held for six months before they can be sold. (This will significantly put a dent in speculating on stocks/bonds)
- Day Trading is abolished.
You have to wonder how much fraud would exist if these simple rules were in place!
The other area of great concern is commodity sales. Speculation in commodities has driven the price of many goods through the roof in this country and around the world. It’s time to end some of this. I would suggest the following:
- Commodities can only be sold by producers to direct users. (Example 1: wheat can only be sold to mills for processing. They, in turn, can only sell to manufacturers who actually us the processed wheat in foods.) (Example 2: oil can only be sold by production companies to refineries. They, in turn, can only sell to companies who use the petroleum products in their manufacturing processes or distribute directly to consumers.)
- ” Middle men” who only buy and sell as speculators should be outlawed. It only drives up the prices of end products.
- Commodity exchanges should be banned in so far as food and fuel are concerned. While some minerals probably belong on that list, I will leave that to those who know more about this than I do.
A final proposal is to return to stricter regulation of banks and other financial institutions.
Stability must be a priority. Credit availability and abuse by both borrowers and lenders has gotten out of hand and should be better controlled.
- Interest rates must be fixed according to law-PERIOD! My belief is that banks should only be allowed to charge Six Percent APR.
- Fees and charges must be closely monitored and approved before banks can change them. All customers should be equal and subject to those charges. Whether rich or poor, charges should be the same.
- Credit cards should have a set interest rate of Eight Percent APR. Late Fees must also be fixed and the same for all credit card issuers. Limits should be at the discretion of the card issuers.
While these changes will not prevent bankruptcy and the kind of financial instability which has so damaged the economy of this country, they will go a long way to eventually put us back on an even keel. The financial well-being of not only this country but the entire planet should not be left to the whims of the wealthy or the “gamblers” among us who would rather make money at the expense of others. When someone makes a “gain” on the sale of a stock, someone else is “losing.” My suggestion is get a regular job and work hard like most people do. Go to a regular casino if you want to risk your savings. Buy antiques and speculate that way. Buy an old house, renovate it, and resell it at a profit. That is a decent way to increase your savings. Stocks and bonds were never meant to be a medium for gamblers. They were a means for a company to acquire cash to invest in a business which hires people, creates needed products, and supports this country.