Why I’m Pro Regulation

45 | By Shah Gilani

Here’s the thing: “You can’t fix stupid.”

That’s a great line by the very funny comedian Ron White. Really, he is hilarious.

He strings out some funny lines about what stupid people do, and as you’re laughing your head off, he tags you with his famous punch line to the punch line you’re already laughing at, by explaining a sad but funny reality: “You can’t fix stupid. Stupid is forever.”

Here’s another thing (it’s my takeoff on you can’t fix stupid): You can’t fix fraud.

People do stupid things because, well, they’re stupid. And people commit fraud, well, because they’re crooks. Maybe they don’t start out contemplating how to commit fraud. Maybe they do. But, in the end, they do it, it’s done, and it can’t be undone.

So, that’s why we need regulations, stupid.

I’m not calling you stupid. That is, unless you are stupid enough to think that by simply expecting people to always do the right thing, they will, in fact, always do the right thing.

You see, here’s the thing: That’s stupid.

The reason I’m pro regulation is because, without regulations, people will do stupid things. They will also commit fraud. Why? It’s about the money, stupid. Some people will do anything for money.

When I say we need more regulation, not less, I don’t mean we need more stupid regulations.

I mean we need fewer, more black-and-white regulations that make it easy for stupid people to understand what is right and wrong. And we need hard and fast enforcement of prudent, simple regulations. And, of course, we need more jails, stupid.

I read all your comments, always, and there were a lot on my last post about regulation. That’s why I’m clarifying my position on regulations and addressing the fanciful, if not exactly stupid, notion that people should just have a north-facing moral compass and we wouldn’t need all the burdensome regulations we have.

I wish it was that simple. I also wish there was a Tooth Fairy and a Santa Claus.

Here’s My Case in Point

Actually, there are two obvious ones this week to point to.

First, in spite of all kinds of regulations, Russell Wasendorf Sr., the head of collapsed brokerage firm Peregrine Financial, committed fraud for something like 20 years, for the love of money.

Okay, maybe he didn’t start out wanting to or thinking about committing fraud, but he did it. Maybe his business was in trouble and, by fudging a few regulations, he was able to keep it going (that’s why he says he started). Maybe he liked the net result of committing his fraud, which included a jet, a handsome lifestyle, a sterling reputation as a stalwart, stand-up guy in his community and in business circles, and as a member of an advisory committee to one of the regulatory bodies that he was screwing over.

See, you can’t fix fraud.

The other case in point is JPMorgan Chase’s traders and management.

That little tempest in a teapot, that little $2 billion loss that’s ballooned into over $5 billion and counting, that little hedge that was really a prop trade, that little thing is mired in fraud.

The traders on that gem and the managers who oversaw the gem polishers all decided to commit fraud. Maybe they didn’t start out that way (that’s what they’ll say). Maybe their trade was in trouble and, by fudging a few regulations, they were able to keep it going by not admitting (okay, by fraudulently mispricing) how big the hole was that they dug for themselves while gem digging. Maybe.

But whatever, they did it.

See, you can’t fix fraud.

Now, forgive me. I’m going to be completely up front with you and tell you that in my Capital Wave Forecast newsletter subscription service, we recently sold 12 winning positions to take profits and go to the sidelines. And now we’re about to start loading up again. But that’s not what I’m asking you to forgive me for.

I’m telling you that there’s been a discounted offering price for the Capital Wave service, which a LOT of you have taken advantage of, and that “sale” price, if you will, is ending tomorrow, Monday, at midnight. So, if you’ve been sitting on the sidelines waiting to get on board, now is the time. Not just because the service is on sale, but because we’re about to start loading up on new positions, too. Again, here’s the link.

And remember, you can’t fix stupid; stupid is forever.


45 Responses to Why I’m Pro Regulation

  1. Joseph p bell says:

    FRAUD :Beginning ?or accidental ? It all starts with the Government . Then they pass it down to their banking constituents

  2. fallingman says:

    2 quick points:

    1) Fraud is a CRIME. We have laws against it. People who commit fraud need to be prosecuted. It isn’t happening, because the Justice Department is a ho.

    2) You know as well as I that there are hundreds of agencies and a gazillion regulations. So, why do we have a massive problem then? Because of regulatory capture. The fascists…uh…I mean the corporatists OWN the regulators and the politicians. The SEC and the CFTC are lapdogs. The Senate committee “investigating” the London Whale trades spent the entire time kissing Dimon’s…uh…ring.

    Here’s a truism for ya. You can’t prevent the insider power “elite” from taking over a government that’s powerful enough to deal favors and willing to look the other way when a crime’s in progress (silver suppression).

    To put faith in regulation and the regulators is to assume they can’t be bought. They can always be bought. Whaddya gonna do? Reform the existing corrupted agencies? Get rid of the Gensler/Goldman run CFTC and replace it with something else? And who would run that? Somebody from JPMorgan?

    We’re hosed. The banksters have engineered their quiet coup. Only the likes of Ron Paul would have had even the slightest chance of fixing the mess. With Rombama, they have their ho’s. Heads they win. Tails they win.

    The government PRETENDS to protect us. In reality, its the government we need protection from.

    • tex-girl says:

      Ron Paul, the guy that fraternizes with Nazi’s… No. Ron Paul is TOTALLY WRONG. His idea of freedom is anarchy. That is messed up. I live right next to Ron Paul’s district. In the aftermath of Hurricane Ike, which decimated sections of his district, Representative Ron Paul, who is supposed to represent HIS CONSTITUENTS INTERESTS, VOTED AGAINST THEM.

      This country is supposed to be united. We are supposed to help each other in times of crisis. Ron Paul voted AGAINST help for his own constituents. He just gave a big FU to his own constituents. That is wrong. This country is supposed to be the United States, not the Divided States. Ron Paul is wrong and would only further deregulate financial regulation with his wacko ideology. No. You are wrong about Ron Paul. Ron Paul would have less regulations and therefore even more crooks gaming the system.

      • nonasumpsit says:

        I WANT MY MOMMY!,TOMMY HIT ME AND TOOK MY TOYS,MOM!,I think if peaple in general would lern to wipe their own butt,unfortunaly,americans love victemhood and cant take charge of their own lives,this create the legal disability,that allow this giant trust known as the US government to think for you(by the way,the same government declaired you a enemy a long time ago(trading whith the enemy act))and,since you are obviously ignorant of your own constitution,yes,the state are seperate countys under international law,the fed is just suppose to handle defense and interstate comerce,SOUND LIKE YOU DIDNT GET YOUR FEMA CHECK,MAYBE YOU SHOULD READ THE FINE PRINT,GEE,WHAT WOULD THE PIONEERS HAD DONE?(clue;their was no government “safety net”,but hey,they stold it from you in the first place,wonder what the total “float” is minus the payout?)

      • fallingman says:

        Well, you got your wish hon. He’s an electoral non-person, so you can breathe easier. Phew. The threat is gone.

        Now we can allow the wonderful regulatory apparatus to do its spectacular job unimpeded by the real threat…anarchists.

        Christ, what’s the point? The world is overrun by morons.

      • Robert says:

        We excelled in corruption, USA is THE BEST IN CORRUPTION
        MONEY and POWER corrupt people, systems and governments
        ABSOLUTE money and power, CORRUPT ABSOLUTELY
        USA is better at CORRUPTION than the best of the third world
        corrupt government wannabes, forget Zimbabwe and all those shitty poor countries.
        USA is the best at IT and of course one of the main properties of corruption is the ability of the corrupt to hide it and to make it appear as CLEAN BUSINESS the USA system is excellent at that.
        But when the toilet overflows, you will see all the cockroaches running for cover and that is what is begining to happen in THE WORLD MONETARY system and economies.
        The toilet has been flushed and now is starting to overflow.
        And by the way … who mentioned Ron Paul?.. why are you scared shitless of him?, what he has to do with this article?
        The clogging of the toilet started in USA when the RICHEST guys of the planet; behind the Federal Reserve took over this country’s monetary system now the system is bursting, YES.. END THE FED to begin with; is that what you are afraid of in your little doghouse?
        Don’t worry the rigging of the system, the guys that choose for us who will be president won’t let it happen, but NO MATTER WHAT, finally the Sht will Hit The Fan, it’s beginning to and NOTHING will STOP IT !
        mark my words.

  3. Don says:

    I agree fully. We need clear and smart guideline rules for all areas of government and markets to establish a true trustworthy free-market system. Otherwise the system gets out of control and extremely bad consquences happen to innocent people.

    I would add that we need to stop this stupid overuse of unintended consequences to avoid repsonsibility and accountability so that we can get to that good moral compass. If the body of knowledge in a field possses the knowhow on a matter, then there is no unintended consequence, rather there is stupid professional malpractice, or if intentional avoidance of the existing knowledge we have fraud of the worst kind!

    Having recently self-report my company to Office of Inspector General because of some stupid people, I have first hand experience that once started people grow confidence that they’ll not get caught and they increase their fraudulant activities.


  4. Edward Maddox says:

    I just joined you recently so have not been able to profit from past investments but I do look forward to the next round of recommendations and will follow you closely on them.

    Of course you are not the only writer that I am listening to, but I have great hopes for your news and picks.

    Go to it, and don’t be stupid!


  5. Mike says:

    For your info. Shah, It is Bill Engvall that does that bit, “you can’t fix stupid”. Ron White is called “tater salad”.

  6. Bruce Montgomerie says:

    While we certainly need more smart regulations, and a lot fewer stupid ones that seem to fill massive volumes, no regulation is better than those who enforce it.

    For example, the SEC has glossed over, or been stupidly blind to, fraud for years. See, e. g., Bernie Madoff, Allen Stanford, and this latest crook Wasendorf to name just a few. Even our illustrious Treasury Secretary, Mr. Timothy Geithner, appears to have known about LIBOR fixing years ago and did nothing–despite worldwide adverse consequences.

    What we really need are leaders and regulators with real intelligence (not just political savvy) and most of all a very large dose of character– know of any ??

    • tex-girl says:

      What is really shocking is that the oil industry has gone through this already – where they self-reported prices to the reporting industry to produce a composite price. And it was supposed to be based on actual trades they would or could do or did. Problem was that this practice was manipulated by traders or companies, for whatever reason, and went on for years. Until the industry was examined for price fixing in light of the Enron Ponzi scheme. People were indicted and went to jail. And LIBOR, functions the same way. And traders/companies are reporting fictitious prices, higher or lower for their benefit. Why aren’t people going to jail? Supposedly, there is nothing that provides for their going to jail. Really? No direct law that says you cannot misrepresent the prices, but surely, there is a law that applies whereby the misrepresentation of prices creates fraud under other laws affecting other investments.

      We obviously need to have more regulations, and that are enforced to the full extent of the law, not to mention the obliteration of Graham-Bliley-Leach Act (of legal raud and idiocy) and the reinstatement of Glass-Steagall. I want to start seeing all these white collar criminal banksters in the pokey for years and years, at least 30 without parole, for their crimes. Rob a bank and you are in for life, defraud the banking system and you get a bonus? People need to start going to jail for a long time before things change.

  7. Peter Weldon says:

    As I pointed out earlier Jail/Prison purpose is to scare the middle class and the poor.

    That is why it fails.

    God’s Structural Design which is Nature demands that you obey these laws, if not, then you are punished and all those around you. This is very easy to prove via logic..

    Our Justice System refuses to obey Gods Structural Design’s laws. The punishment – failure.

    When you do not obey Gods Laws, usually your punishments is both Emotional and cumulative. All Emotional punishment creates physical punishment.

    If you do something stupid, Gods punishment can be either corporal or Capital punishment.

    Thus if you pattern a Justice System upon Gods Structural Designs teachings, then you must employ both Corporal and Capital Punishment. Further there must be a cumulative component.

    Thus if a Judge/Jury finds you guilty, then their job is done..

    Then you are brought before a committee who decides the severity of your act of Evil.

    If a simple act of stealing with no Emotional or Physical Injury your are not assessed any extra convictions.

    If you have caused Emotional or physical Injuries, then you may be assessed extra convictions, especially if you have a history of such behaviour..

    A conviction will result in 1 year in Prison, with 6 months of hard labor, and six months of counseling, complete with 1 year probation.

    Should the severity of your crime or the cumulative effect of previous convictions add up to 8, then you are referred to a further committee whose job is to determine if all convictions were warranted.

    If the Committee decides that you earned each conviction, then you have 21 days to get your affairs in order, after which you are Executed via a comparative painless method..

    Should your act of Evil, be extreme, then the first committee may assess you a extra 7 or more convictions, thus you have reached the 8 conviction level, thus Execution is your future.

    Thus the punishment is both fair and cumulative, thus Gods Structural Design will reward Society for obeying Gods laws.

    Contrary to popular belief Nature was not created to serve Man, but Man was created to serve Nature – Gods Structural Design, or Gods Hardware and software if you will.

    Should anyone who has earned a conviction/s, and has lived a life without any new convictions, then s/he shall be rewarded via the removal of 1 conviction. Gods Structural Design always provides for redemption.

  8. Tom says:

    Regulations are a fool’s game. Otherwise you make good points.

    Regulations are written by lobbyists for self-serving politicians and their crony organizations. Regulations are administered by hapless bureaucrats who inevitably are out-foxed and inadequate in their role. The citizens are misled to believe they are protected and end up paying a hefty bill.

    No, what we need is enforcement of common sense laws we’ve had all along. People who commit fraud, theft, murder and such malicious acts go to jail and pay penalties. Regulation is a costly mechanism that derails that direct accountability that our society needs so badly.

    • tex-girl says:

      You do realize that a regulation is a law in essence? Regulation is NOT a costly mechanism to derail direct accountability. Regulation is there for protection but the regulations are not being enforced. Regulations without penalty become meaningless. The right wing has made sure enforcement is low on the priority list, if at all. It is a free for all, get yours while you can.

      It is a sad day when people like you think that regulations are a fool’s game. Is anarchy your preference?

  9. Peter Weldon says:

    Changes – the second to last paragraph should read ‘Designed to serve Nature”

    the last paragraph – without any new convictions for 10 years.

  10. Peter Weldon says:

    As shown above you can fix fraud and you can fix stupid. When someone has earned 4 convictions, their attitude changes or they will be eventually be Executed.

    Further knowing that fraud has a Emotional Component to it as well as Monetary component, only the stupid will engage in Fraud, as when caught they can expect 8 or more convictions on the first offense depending upon the severity of their offense.

  11. ken says:

    very glad that you want fewer regulations, just more black and white, which i agree with. We have a long history however of promulgating laws and regs which are summarily ignored and not enforced and small fines used to satisfy breaking while large sums were stolen or lost. I’d be interested with what you would repeal or do away with and what you’d put in their place. Me, I’m for making it a mandatory prison sentence plus restitution of ALL misused funds plus interest or penalty to all members of a companies BOD. That is after all one of their major fiduciary responsibilities is it not? keep it coming

  12. Frank says:


    I certainly appreciate your comments and even more so appreciate your investment strategy. However, and with all respect, more rules and regulations will never work as greed sets in and someone figures out how to circumvent the rules for their exclusive benefit. I say, reduce the rules and regs and simply leave policy. Police the hell out of individuals, not corps, who direct and manipulate the policy against the marketplace. Set substantial and detrimental fines and penalties against those who allow the greed to rule the roost. this would facilitate a freer marketplace without governments rules and regs.

  13. Steve Cahill says:

    How about a game plan for what ifs, cause the what ifs are definitely going to happen. What if the blues win, what if the reds win. Other than life ceasing to exist as we know it, there has to be money to be made. Anyone can predict the future, accuracy might be suspect. Certainly we know one side or the other will win and depending on how we prepare will dictate staying or moving to Costa Rica where what few dollars I still have can be enjoyed for a short while.

  14. H. Craig Bradley says:

    10,000 Laws to Enforce the 10 Commandments

    Here’s what an old outfitter-guide from Kremmling, Colorado told me in 1975 when I was a newbie guiding trail rides near Minturn, Colorado:

    ” Ten Thousand Laws to enforce the Ten Commandments”.

    You may or may not believe the Bible or even read it at all, but the truth is still the truth and the road to perdition is a long, slippery slope. America has been on this road for a long time and consequently, become too decadent and apathetic-that’s right because most people I know don’t much care.

    The fruits or our collective “errors and omissions” are just now becoming visible to the average John (notice the many potholes and numerous cracks in the asphalt? Brown-outs in the Summer heat? ). Its called decline, stupid.

    No single election or candidate will solve this now engrained, systemic problem quickly or with another clever sound bite. True healing must begin at the grass-roots level with the individual voter first.

  15. Tom says:

    I always enjoy your commentaries, explanations, and solutions. I appreciate and respect your honesty, financial expertise and experience, and insight.

  16. Gary Semlak says:

    What Wall Street folk need a code of honor that resides within their very souls and which directs them toward the greater good without the need for government regulation. Their existing code can be summed up in this corrupted Boy Scout type of motto:

    On my honor I’ll do my best,
    To help myself
    And screw the rest.

    Shah, I’m with you. I say, throw ’em (the stupid ones) in jail and lose the keys.

  17. Jay Curtis, author of THE CODE says:

    Wow, how right you are.

    First simple regulation = Commercial banks that take deposits and is insured by the FDIC (or credit unions etc.) cannot be a part of a “Wall Street” bank that invests in the stock market, not even blue chip stocks let alone derivatives, swaps, options, futures or any other creative casino gambles. They must be restricted to taking deposits and lending money to businesses and on real property.

    Second simple regulation = No financial institution that initiates a mortgage can sell it off risk free. All mortgage originators must guarantee every mortgage they make, whether retained, serviced by them or sold in a package as a security.

    Third simple regulation = All political advertising, whether for a specific candidate’s campaign or the clever “issue” adds must include in writing and orally the name of every contributor who has paid more than $10,000 to the organization responsible for the ad.

    I have 97 more if you want to hear them but I think you and I are on the very same page here. I’ve read your stuff a long time now, and damn it, I wish I had said it all as you are one smart cookie with whom I seem to always agree.

    Are we related ?

  18. mardoc says:

    Well,I’m doubtful about Santa Claus, and the tooth fairy, and even the easter bunny;;)but hopefully you are there for us………..Nah,you I can believe in..

  19. md sahwaz says:

    Hello Mr Shah gilani Good Day,
    I am galaided to said your point of view is very nice now i want to need some finantially support for further it get back to you. if possible kindly give me reply above email id.
    Your’s md sahwaz.

  20. Pat E says:

    Shah, Thanks for giving me your views on the case of Jérôme Kerviel. But do you really think his superiors were unaware of what he was up to? Although he admitted hacking into the bank’s computer system and losing all sense of reality he is claiming that his superiors knew what he was doing and used him as a skapegoat to cover up part of the bank’s losses on the subprimes.

  21. Michael Perine says:

    Thank You Shah for speaking out against the Big Banks, Wall Street and The Fed.
    As a solution to the fraud, manipulation, control and destruction of private banking-
    How about looking into and recommending (or, explaining why if you decide against it) PUBLIC BANKING expansion in the States (modeled similaly to North Dakota’s State Bank) and, public banking for the Unites States of America to replace The Federal Reserve?
    Link for you and all your reform followers:
    Also, please reference Ellen Brown who has done great work exposing the “Web of Debt”. Link:

    Michael Perine, , retired 25 yr. independent trucker, Capital Wave Forecast charter member
    Las Vegas, NV
    P.S. ” It’s Federal Reserve Private Banking Control, stupid!”

  22. A.J. says:

    Please don’t build more jails, Stupid! With all do respect Shah, and I REALLY do respect you, WE HAVE FAR TOO MANY JAILS! Let’s legalize and REGUALTE the hemp plant in all its uses, cut the prison population by 20% and do something substantive about our national debt. ALSO, most of these white collar criminals don’t deserve to go to jail! No one should go to jail for stealing, in my opinion, unless they’ve done physical violence to others. They should be held liable and should have to pay pack what they owe to those from whom they stole, plus more. Total liquidation of assets should be the norm for these a$%holes. And from then on they should have to pay a special ‘criminal tax’ on any income they receive to go into the compensation fund until they have paid back what they owe. JAIL just takes people who could otherwise be productive and screws them up forever.
    Trust me, if Bernie Madoff were to have all his assests liquidated and were then allowed to try to find a way to work and make a living and have to pay it back for the rest of his life, that would be a lot more JUST than having tax payers feed him 3 sqaure meals and give him health care etc…

  23. Michael says:

    Hi Shah, Could you please explain the difference between “Market Fixing” through Fraud and “Market Fixing” through “Exploitation” of the Fraudsters?
    I follow your publications and greatly appreciate your revelations on “The Matrix”… I’m a VERY small time Trader. Basically I can barely afford food and the monthly power bills, let alone a Mortgage, Internet, ect. Actually, I’m not even a trader. Nearly every cent I have has gone into buying and keeping real Tangible Asset’s. That’s quite a feat when living on a fixed income and trying to find a “spare” penny now and then to buy an ounce of Silver, or a Battery that might add to my “off the Grid” ability once this whole house of cards comes crashing down. I have no doubt about a coming crash, it’s more a matter of when – that’s the main reason I read you, so I know, or have a better idea of when the Titanic is going to sink. I’m sitting patiently in the Life Boat with my grab bag, just waiting for your “Abandon Ship” order!
    I’m not into manning the bucket’s any longer bailing out Greed. I’ve worked my butt off for many years and would just like to take a nap really, then go fishin, or tend my nice big Garden of Tangible Edibles.
    Please help me understand how and when to get out of the way, not how I can exploit the current Matrix in the System! Fraud, Stupid and Exploitation = Not Interesting to my humble self…
    Michael Wolfe / New Zealand

  24. John wick says:

    I’m a brand new team member and very excited about the opportunities ahead. I just read your “stupid” email and laughed or cried all the way through it. See, you may not have realized it but you were talking just to me.
    I’ve been playing the street’s game for over 35 years and they have a lot of my money as a result. I have used a lot of newsletters and in almost all situations, they have lost me big $$$. Thus I’m a bit gun shy and sure hope that you are for real. As you say, fraud is not always intended but hard to stop once the ball gets rolling. I believe greed was the word you used.
    Know a little about me, you can probably guess that I’m a trader too and as you again said, traders don’t like to be on the sidelines. Thus, I really appreciate your comments about being patient.
    Now, a couple of housekeeping items. I need details on the conference calls and how to access them. Due to my current financial position, I work full time and can not get on the call until after 6 P.M. CDT. Are the calls recorded for later access? Second, I believe that you said not to get into the VXX call. Have you changed your mind about future volatility or will you be putting on a similar position later?

    Looking forward to the ride,


    • vdowdle says:

      Hi John,

      We will record the Cap Wave conference call and post it to the website (here) ASAP, within 48 hours at the latest.


  25. Maurice says:

    How come so many services try so sign up so many subscribers and they all show you (or usually just tell you) how well they are doing?
    If the service is so good why bother getting a few hundreds or I don’t know may be thousands of subscribers when they can just trade and instead of making hundred of thousands or millions (I don’t know) of dollars make zillion of dollars just trading?
    Hey Shah, if you give an answer I will certainly think that you are really honest as you appear to be in your postings.
    Hope to read before midnight tomorrow.
    Best to you

  26. Charles Stills says:

    I love reading your comments and out of all the newsletters I read I think yours makes the most sense. Long story short a bank was in charge of my daughters trust fund ( 2.5 mil ) and is now down to $40,000 and is no longer profitible for them. The judge approved the transfer of the trust to me but will take until 2nd week of August so I’m asking for an extension on your offer to join you at Capital Wave at the special price. Any help would be greatly appreciated.

  27. Charles says:

    Shah, I can’t give you enough credit for taking this position on regulation, even though it is not a popular one among conservatives. You are breath of fresh air among the writers I subscribe to. This point is something they never talk about. It’s always all of these platitudes about getting the government out of the way of big business. I would like the government out of the way too, out of big business and out of my business, but the fact is that almost every day there is a new story about fraud, just as you mentioned. Human nature is not going to change, and with today’s technology, there are almost an infinite number of ways to rip off the unsuspecting. I wish I could e-mail your article to all of the writers who don’t seem to get this fact of life.

  28. Paul Katchings says:

    Obviously we need regulators…I will put more faith in a traffic cop!

    But what about securities when the regulators and the justice department in Justice Scalia words…there is something stupid about this “rampant criminalization of business conduct”

    Are you saying that we much live with the protected civil servants stupid regulators because they are stupid, because stupid cannot be fixed?

    In this context yes I agree…they are stupid…

    But in the context of the SEC which came into existence mandated with full financial information disclosure…is no longer needed when we have the communicating technologies of transparency and real time financial ability by responsible public companies…technology can eliminate stupidity…

    If for example if it is identified how and why the US needs 4,004 new public companies now today to get the US out of this debt mess and permit 100% of the labor units to participate in capitalism fruits….the labor units fruits, the customer fruits for the first time…it is stupid to have a tiger regulator in place to impede these 4,004 formations in say 1 year.

    It is stupid to put into place regulatory bodies permanently when they become clearly not needed anymore in their present forms…

  29. Peter Simpson says:


    Could you explain what a prop trade is and why it is illegal and its ramifications in something like a “prop trading for dummies” type of explanation?

    Thank you.


  30. Wren Hyder says:

    perhaps we should have but one regulation.

    ” If it is not expressly permitted then it is expressly not permitted.”

    then like little children who must be taught right from wrong and must ask permission before embarking on a new adventure, will have to explain and justify their planed actions.

    punishment for violating the regulation should necessarily be so devastating as to deter crooks.

  31. H. Craig Bradley says:

    Roman historian Tacitus wrote, “corruptissima re publica plurimae leges.”

    An accurate translation is:

    “Laws were most numerous when the commonwealth was most corrupt.”

  32. Mark Doyle says:

    Though I don’t disagree that there needs to be a fairly limited number of “rules” (whether legislative or regulatory is better is a whole ‘nother discussion) to dissuade people from doing things that are wrong (eg: fraud, theft, extortion, bribery, etc.), I don’t think it will ever be effective unless the enforcers are held accountable. Current regulatory enforcement appears to me to be mostly ineffective and arbitrary and is used as a political club as much as it is used to improve the functioning of the financial system. While I’m sure regulation does work to some extent and we just don’t hear about successes, the huge number of well documented failures is a disgrace. Also, when there are “successes”, they usually take the form of fines that are a joke. Though it sounds impressive, fining a company hundres of millions when they improperly earned billions or tens of billions, is not a very good deterrent. I’m not sure where the blame for this lies: some is simple corruption (the return on investment from buying legislators and regulators is pretty phenominal considering the potential payoffs), some is pressure not to look bad, and some is pure incompetence. Contrary to popular belief, not all federal employees are lazy and incompetent, but those that are are nearly impossible to dislodge and can cause damage way out of proportion to their numbers. Until we can find a way to force enforcers to do their jobs, I don’t think the situation will improve.

  33. Gus says:

    One of the things I love most about Shah’s columns is that he isn’t afraid to tell it like it is. Really is. A lot of other financial writers are afraid to break the current orthodoxy, which has become almost a religion. The orthodoxy that the poor have to be held responsible, the middle class (what’s left of them) have to be held responsible, but if you even suggest the rich and the corporations take ANY responsibility for their actions, no matter how damaging, you might as well be saying there is no God. That you’re un-American. Maybe even a Commie. I don’t know about the need for more prisons, I just think we need to put people in who actually commit crimes. Fraud is a crime. Period. A murderer is a criminal who hurts one victim, same with a burglar or someone who commits assault. They are punished, often harshly. These corporate fraudsters hurt hundreds, maybe thousands (or more), not only are they not punished, but almost invariably, they are rewarded. What sort of message does that send? One I sure as hell don’t like.

  34. Tom Hegarty says:

    Just reflecting on the Middle Eastern banks where the bank has to share the risk if they grant you a loan. (Sharia Law?)

    To literally cut short Mr Weldons’ many layered juries and committees, why don’t we just cut the buggers hands off !

    Perhaps we can learn something from our Islamic cousins ?

  35. Don Fishgrab says:

    Unfortunately, regulators are just as prone to stupidity and fraud as other people. It is just as unrealistic to assume that regulators will do the right thing as to think others will, and if they mess up the consequences can be even worse than an unregulated system, It is impossible for a monopoly to exist without regulations that make it possible.

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