The history of banking crises and the prevailing behavior of investors in the financial market lead to conclude, that the paradigm of efficient markets, especially of efficient finance markets, is not valid anymore and probably never was. The, in the economic theory dominant rational investor, the so called “homo oeconomicus”, who with the help of all relevant information maximizes his expected profit, is ideal to represent human behavior in economic models, but does not exist in reality.

The same can be said for the efficient market hypothesis developed by Fama (1970). The development of US real estate prices clearly shows, that market prices do not in- clude all available information, and that the price is not as postulated by Fama  always identical to the so called fair or fundamentally justified price. Herd behavior leads to extreme volatility and speculative bubbles.

Furthermore there is no self-regulation mechanism of markets in a way that a speculative price increase would lead automatically to a decline in demand. The market’s self-regulation, market equilibriums, and market prices, which enable an optimal allocation of scarce resources to market participants, are wishful thinking of the economic model world, which at least in financial markets is far from reality.

The business model bank a systemic risk

The rescue of banks with tax money in the financial crisis was justified with the argument of “system relevance”. According to this the insolvency of banks up to a certain size and high inter-connectedness endanger the entire finance system’s stability and must to that extent be rescued by the state. The finance system’s stability is a difficult to define term: primarily the danger of a domino effect is seen here, in the sense, that the collapse of a big bank endangers the liquidity of further banks in the finance system. With pending insolvency of one or more banks the economy’s credit supply is threatened.

Meanwhile a “bank run” threatens to occur, meaning that savers fear for the security of their deposits and withdraw them from the bank on short notice.

The problem is that the knowledge about system relevance and public rescue in an emergency stimulates banks or bank management to take even greater risks as to receive greater returns. In case of a success, the bank generates higher profits and the management receives greater bonus payments. In the case of failure and the bank’s pending insolvency, the state covers the losses.

Profits are privatized while losses are socialized, communized, marxized, fascized, aka; mafiatized.

The best example for such a “moral hazard behavior” aka; mafia by banks is the current crisis within the Euro zone. The status of a bank, due to its size and interconnectedness, to be considered as “system relevant”, is rather attractive. This reduces the bank’s credit risk substantially. Hence refinancing costs for raising capital are reduced, stock prices go up, and the unspoken-of public guarantee facilitates the acquisition of new wealthy customers with huge savings deposits (Demirgüç-Kunt & Huizinga, 2010). Consequently, in this case, for the bank management the false incentive to gain system relevance as quickly as possible by acquiring other banks subsists, especially considering that bonus payments and managerial influence correlate positively with the bank’s size.

Most derivatives have the leverage effect as a common feature, which means that a rather small change in the market price of the underlying leads to much higher change in the derivative price. In other words, on derivatives with a slight capital expenditure, a high nominal capital can be moved and so a multiple of profit or loss is achieved in comparison to spot market instruments. For the business model “bank”, large holdings of securities and derivatives on the asset side implicate a high daily volatility in assets values.

These risky investments of banks, in comparison to those of industrial enterprises, are financed by a rather small fracture of equity capi- tal on the liability side. Here again, on the liability side of the banks’ balance sheets, a leverage risk exists. Investment banks earn huge profits at high risk by working with a double leverage on the asset side as well as on the liability side.

A clear indicator for the leverage effect is the in- vestment banks’ return on equity, which lies above 20%, while the long-term average for real economic businesses lies between 10 and 12% (Bank for International Settlements, 2011).

• Former Reagan Treasury Secretary James Baker: Supports Reinstating Glass-Steagall To Stop Rothschild Banking Cabal!

Packer and Tarashev (2011, p. 43) are writing in the June 2011 BIS quarterly report:

‘Another reason banks’ creditworthiness is especially hard to assess is that their earnings performance is highly volatile, not least because of structurally high leverage. For instance, on the back of leverage roughly five times that of firms in other sectors, the volatility of returns on banks’ stocks over the past several decades has been consistently higher than that of non-financial stocks.”

The alteration of the business model has substantial macroeconomic implications. From an economic perspective, the banking system has the task of financing the real economy. In their function as an intermediary, banks transform macroeconomic savings into real economic investments.

For this task alone and not for issuance and trading of securities, the central bank privileges them with cheap refinancing. Out of financing an investment in the real economy, a real added value develops for the corporation; the GDP rise as more goods and services are produced, employment increases and this leads finally to a higher social welfare for the society.

Investments in a banking certificate imply that savings do not flow to the real economy, but remain in the nominal, monetary sector. Such an investment with no link to the real economy is mere self purpose, because no real added value comes from it. Thus, one investor’s profit is the other’s loss, because it is a zero sum game and assets are only redistributed in the nominal sphere.

On balance, the economy’s total assets remain unaltered if no real investment is financed.

(Flassbeck, 2010, p.25f.; Schulmeister, 2009 p.172f.).

• All The Money From Iceland Comes Back – Good News For Dutch Savers – 24 October 2012

With the investors’ herd behavior in financial markets, only the nominal value of assets rise, divert more and more from its fair value, until a clear price adjustment occurs. The extreme asset price fluctuations, for example of currencies or of derivatives on commodities and foods hinder and destroy real economic investments and activities. In addition, the share of economic savings, which are invested in bank bonds, hedge funds, and certificates, so in the purely nominal sector, increases steadily in relation to real economic investments.

Clearly, on short term perspective yields achieved by nominal investments are higher than those of real investments. However from an economic point of view, this inflow of scarce resources into the unproductive sector is a misallocation (“squander”), enforces the decoupling of financial economy from the real economy and increases the risk of financial crises. The market economy as a whole thereby becomes considerably more fragile and crises-prone.

The corporate governance bank failed

The great losses and the threatening insolvency during the financial crisis document the mal- function of the banks’ internal risk management and its surveillance by the supervisory board. Another critical aspect in respect to a lack of corporate governance by banks is the practice of awarding high bonuses to the management, even in times of crises.

Responsible for this malfunction of banks’ internal risk management are the following factors:

•   Generally, the business model bank involves a nearly incalculable risk. Large holdings of securities and derivatives of various types, various markets and maturity on the asset side financed with a minimum of equity capital induce a risk complexity that cannot even be managed with help of the best risk models.
•   The estimates of market risk and credit risk are based on ex-post data and subjective as- sumptions for future trends. The “Knightian uncertainty” as a factor, which cannot be calculated by mathematical models, remains existent.
•   The investment banks’ risk models focus merely on the risk of the own bank and do not include the systemic risk. This means, the domino effect, which results from the collapse of several banks, is not part of the risk observation.
•   The direct liquidity requirement of banks in the financial crisis, which results from not being able to sell securities in the market and the simultaneous collapse of the interbank money market as a refinancing source is only insufficiently, implemented in the banks’ risk models.The supervisory board’s job is to audit corporate policy and with that the risks taken by the management. Losses and threatening insolvency, de facto, document a failure in supervision.
• Positions on the board of directors, especially in banks with government involvement, are often- times occupied by persons lacking the necessary expertise for the banking business. A lot of times, individuals have a multiple number of mandates on boards of directors to work on, so that no effective control of corporate governance is guaranteed.

• Crowdsourcing Iceland’s Constitution

Closely related to this, is the question of the liability of directors as well as of the management of corporations.

According to Eucken, liability is a constituting principal of a market-based econ- omy. Eucken (2004, p. 279f.) introduces the chapter about liability in his work “The Foundations of Economics” with the request “Wer den Nutzen hat, muß auch den Schaden haben (Who is the beneficiary must also have the damage)”.

While private individuals and partnerships are directly liable, for capital corporations the corporation is liable as a separate legal entity. This legally limited liability to the entrepreneur’s assets causes a dilution of Eucken’s principal of liability, because the direct link between the manager’s economic decisions and the liability for economic consequences is not granted anymore. By German law, every board member of the public limited company is liable with their own personal assets according to §93 AktG, for damages to the company resulting from a violation of their duty of care.

But on one hand it is not a violation, when, in the case of a corporate decision, the board director could, on the grounds of appropriate information, reasonably assume that his action would benefit the wellbeing of the corporation (§93 AktG).

And on the other hand, capital corporations usually have a professional liability insurance for the actions of their boards (so called “Directors and Officers Insurance (D&O)”), which insures negligence risks. Factually, no individual liability is created with this additional security for the boards’ misconduct in investment banks, even when their fault can be proven.

The asymmetry between profits and damages is very distinct in investment banking. Salaries in the banking sector are much higher than in other corporate sectors. The main problem from a corporate governance perspective, in this case, is the variable compensation structures. The management’s bonus payments are often times tied to short-term business successes (profit or stock price development), so that false incentives are set to take higher risks.

Deals, that increase the corporate success short-term, and then prove to be a high risk and debit factor for the bank long-term, are actively promoted this way. Good corporate governance, in the sense of sustainable corporate development, looks different.

In their recommendation for sound compensation practices, the Financial Stability Forum has especially emphasized the correlation between bonus payments and risk taking of bank management: “High short-term profits led to generous bonus payments to employees without adequate regard to the longer-term risks they imposed on their firms.

These perverse incentives amplified the excessive risk-taking that severely threatened the global financial system and left firms with fewer resources to absorb losses as risks materialized.

The lack of attention to risk also contributed to the large, in some cases extreme absolute level of compensation in the industry. The Principles are intended to reduce incentives towards excessive risk taking that may arise from the structure of compensation schemes.”

This competition is unfair, because the financial resources and with that the man-power between private banks and official supervision are unevenly distributed. In the face of the high costs of banking supervision now and the rather low return, the society must question whether it wants to further participate in this competition over banking regulation.

Mark-to-Market valuation – pro cyclic accounting

As the EU-Commission has decided, European credit institutions have accounted for according to International Financial Reporting Standards (IFRS) since 2005. One groundbreaking change is the valuation of financial assets, documented in the trading book, by their market price, so called “mark to market” assessment or “fair value accounting”. Before, in the “Current Accounting Framework”, the acquisition value of an asset has been taken for valuation.

This constraint to evaluate tradable assets with actual market prices involves high risks that were pointed out by Enria et al. (2004). As the development of US real estate prices demonstrates, market prices certainly do not always represent the fair value, but rather underlie speculative exaggerations and are volatile. With the mark-to-market valuation of tradable assets speculation and volatility are taken into the bank’s balance sheet. Shareholders’ equity, profits and losses, tax payments, dividends and lastly the credit institutions’ solvency therefore reflect the market’s volatility. Wherefore, the balance sheet, the income statement, and the annual report of financial institutions only have little reliability and limited significance.

• These 18 Keynesian Banksters Looted The U.S. Public Treasury!

Additionally, the market-oriented assessment of assets strengthens the speculative exaggeration of the finance market in both directions, meaning that it has a procyclic effect. This is proven in an empirical study about past financial crises by Adrian and Shin (2010).

The functional chain can easily be comprehended.

In the case of a mark-to-market valuation rising market prices automatically increase the value of financial assets, causing the shareholders’ equity and profit to simultaneously increase on the liability side. Banks with higher equity capital can take up more loans and newly invest this capital at the finance market. The increased demand then again causes market prices to rise and so leads to steadily increase in banks’ profits and equity capital.

Gratifications for bank management (bonus payments), the dividend disbursements to shareholders and the number of bank analysts’ recommendations to buy bank shares increase as well.

The boom nourishes the boom.

How else would it be possible for US-banks that were rescued by the government during the financial crisis, to pay back the high government grants within a short period of time after the crisis?

With comparably modest revenues from financing real investments, such a turn of events from threatening insolvency to high profits is unexplainable. Naturally, banks that are especially active in investment banking have an advantage here.

Rating – no independent and neutral assessment

With the increasing sales-orientation of banks, as well as with growing complexity of financial products, there is a higher demand by investors for a “manufacturer-neutral” or bank-independent assessment by a third party.

The three big rating-agencies Standard & Poor’s, Moddy’s, and Fitch, who are responsible for 95% of all ratings, perform this task, but rather insufficiently.

All three agencies are private, profit maximizing corporations, whose business is the assessment of credit risk of various kinds. To this extent, they are first and foremost liable to account to their shareholders. These are not investor or consumer protection organizations, which examine and attest the intrinsic value of stocks by government order, independently of economic interests as “Stiftung Warentest” (the German product testing foundation) does.

• Remember The United State’s Banker’s Death Cross: It Is Now Upon Us ~ Keynesian Economics Of Deception ~ Unreported Blowback Of $12.8 Trillion Bank Bailout.

In terms of the ratings problem, it is also important, to observe the environment. The market participants align their actions with the ratings, so that a change of rating directly influences market development.

In the case of a downgrade of a debtor’s credit quality, his refinancing costs rise immediately, through which a crisis situation of an entrepreneur or a country can intensify further. The down-rating therefore becomes a self-fulfilling prophecy, acts procyclic to that extent and supports the prevailing herd behavior of investors.

Through the daily trading with securitized loans long-term forecasts about the probability of a default become a shortterm play ball for the market. {Orchestrated Inside Trading Mechanism}

•         One Evil Human Being: Convicted Felon ~ Inside Trader Orchestrator ~ George Soros!              Tim Geithner Oversaw Obama’s $2 Trillion Back Door Bailouts Of Fraud Pumped Stock Markets & Banks For Inside Traders To Bet Against!      

The meaning of ratings and so the influence of the agencies are additionally supported by the fact, that national legislation concerning bank supervision and regulation in many states, so far for example in the German banking act, KWG, are based explicitly on the risk assessment of private rating agencies.

This is hardly surprising, because the G20 agreement about banks’ capital adequacy (Basel II and Basel III directives) is also applicable to the assessment by external rating agencies.

The European Central Bank too explicitly uses ratings as a standard for the minimum requirements of collateral deposited by commercial banks for refinancing. This is how laws, provisions, and procedural regulations in the finance sector are implicitly based on the subjective assessment of three American corporations.

Credit derivatives and other derivatives – perverse world

The example of credit derivatives demonstrates how the expanding market negatively affects the real economy. With the help of credit derivatives, the actual stream of payments (interest and redemption) of a loan can be separated from its default risk.

Since this is an exchange of credit default risks, this most widely used credit derivate is called “credit default swap (CDS)”.

Example:

• Bank A grants corporation B a loan and simultaneously gets insured for credit default by insurance C.
• As in any insurance, A, being the secured party, now pays C regular premiums and so is guaranteed to be compensated for his loss (nominal value of the loan) in case of B’s default.
• As opposed to traditional credit insurance, the credit derivate is tradable at the market due to an extensive standardization of contracts.
• Furthermore, the buyer of such a credit derivate can insure the risk of credit default of B without even possessing a loan handed out to B.
• When taking up insurance, however, the insured party must possess the object to be insured.

Many economists view the development of credit derivatives as positive, because in theory they enable an allocation of risks to economically strong corporations.

But this opinion overlooks substantial disadvantages.

The incentive structure in the credit business of banks changes fundamentally. In the traditional credit business, the bank has a considerable economic interest in the debtor’s solvency.

When granting loans, the bank intensively examines the debtor’s creditability and credit worthiness and requests a regular report about his economic development. When the bank sells the credit risk to a third party through a credit derivative, it has no more an economic interest in carefully choosing debtors.

Furthermore, the bank is not required to inform the borrower about the altered state of interest.

• The End Is Coming: Unemployment Checks To End On January 1, 2013 ~ No Banker Bailout Austerity Just People Tax & No Work Austerity!

To recognize future risks early for the stability of the financial sector, an Economic Systemic Risk Council (ESRC) is installed.

It is its task, to investigate potential risks for the stability of the finance system on the macro level and send out warnings and recommendations to national and European supervision institutions as early as possible.

With the creation of a central authority in Europe for macroeconomic analyses, the research power of national institutions and supervising authorities, which are fragmented into resources until now, are supposed to be bundled.

In general, the analysis of macroeconomic aspects becomes a much more important factor, than it was before the crisis.

• England’s Financial Black Hole Of Debt: End The Banks ~ Wages MUST go Done Another 30% To Balance The Bank Bailouts!
  

Reforms of the banking system

Despite the short period of time, numerous reforms were introduced in the banking sector. An overview of them will be given below:

Stress tests

The newly created European Banking Authority (EBA) has been conducting annual stress tests since 2009 for European banks. With this, the Europeans are following the US role model to test the risk bearing ability of individual banks under the assumption of negative developments of the entire market environment.

In case of a simulated decrease of economic growth, as well as rising interest rates in the money market and in the capital market, the bank’s equity capital (hard core capital, common equity tier 1) must not fall under the 5% mark. With the publication of the results of stress tests, transparency is supposed to be improved and to strengthen the market participants’ trust in the European banking sector.

•         Iceland Dismantles The Corrupt, Arrests 10 Rothschild Bankers, Then Issues Interpol Arrest Warrant For Rothschild Banker Sigurdur Einarsson!      

•         Jailing Of The Rothschild Banking Mafia Has Begun: Iceland Leads The Way!      

•         Iceland President on Crisis: “We Allowed the Banks to Fail, and in the End, We Were Blessed with Our Own Currency.”      

In relocating the system risk on to central counterparties, it must be guaranteed, that the central contracting party itself is always solvent and complies with its payment obligations. A default by the CCP must absolutely be prevented. Consequently the Bank for International Settlements (BIS) has, in cooperation with the International Organization of Securities Commissions (IOSCO), formulated fundamental requirements for the equity base, liquidity, business model and corporate risks of CCPs (Committee on Payment and Settlement Systems, 2011).

Regulation of rating agencies

With an EU regulation concerning rating agencies, a unanimous regulation framework is created for the supervision and control of rating agencies active within the EU. Since 2011, rating agencies must register business activities within the EU at the ESMA and with that comply with the European requirements. Rating agencies based outside of the EU are supposed to be obligated to form subsidiaries within the EU. With this new directive, national supervising authorities now have the right to examine rating agencies, even without a concrete occasion, at any time. {Hello NWO}

The EU regulations roughly correspond with the IOSCO code of conduct for rating agencies (International Organization of Securities Commissions, 2004). According to this code of conduct, rating agencies must in the future reveal the fundamental assessment models and assumptions for their ratings. Additionally, the manner of the change of assessment due to changes in certain parameters of the model must be documented by a sensitivity analysis.

Each rating is to be examined annually. The rating agencies’ Independence?? among others is supposed to be??? strengthened by a rotation system for an agency’s analysts and employees.

In addition, the rating agency’s board of directors and administrative board must, to one third at least, consist of independent members. The directors and administrative boards’ independent members’ compensation is not supposed to depend on the rating agency’s economic success.

To avoid conflicts of interest, the agencies are not permitted advisory tasks, especially with respect to the establishment of structured financial instruments (European Union, 2009). Ratings for structured financial products are to be labeled as such by suitable symbols in the future. {Big Red Herring}

The EU additionally carried out a consultation procedure late 2010 about the further proceedings with rating agencies. Possible alternatives to the “issuer pay model” and the establishment of a public rating agency by the European community were discussed there. Here another legislative bill by the EU in 2011 is still possible.

•         Iceland Says Goodbye To Rothschild: How to Handle The Financial Crisis Like Iceland ~ Let The Banks (NWO) Go Into Bankruptcy!      

• Pope Benedict XVI Condemns Banking Cabal’s World Government, New World Order, & World Central Bank!
• Pope Benedict XVI Calls On Rothschild, Strong, Soros, & Rockefeller To Show Solidarity For The Poor!
• Every Pope Every Jesuit Has Condemned Rothschild’s New World Order Since Its Inception: Counterfeit Catholics!

Regulation of the shadow banking system

With the Alternative Investment Fund Managers Directive (AIFM) from June 2011, the EU constitutes unanimous requirements for the approval of and the supervision over alternative investment fund managers.

The term “alternative investment fund, AIF” covers organizations for joint investments, which get capital from professional investors to invest it according to a specific strategy for the investors. In fact, all forms of collective capital investments can be subsumed under this term, so long as they are not retail mutual investment funds.

This guideline is especially applicable to hedge, private equity and real estate funds. It focuses on alternative fund managers, legal entities that run the fund business and the individual fund itself. The AIFM directive has to be implemented in national law by EU member states within 2 years (Weitnauer, 2011, p. 144f.).

•   Prospectively, an approval obligation exists for AIFs. Connected to this are minimum re- quirements for equity capital and the experience and knowledge of fund managers. With the approval, the AIF receives an EU-pass, which permits EU-wide activities.
•   Within the fund management, it is to be strictly distinguished between risk and portfolio management in the future. The compensation system should be transparent and adequately fitting to the size of the fund and the complexity of the management. Also, the compensation practice should be in line with solid risk management and should not neg- atively affect the risk behavior of individuals.
•   In the future, a regular assessment of asset values and fund values should occur. Additionally, the deposit bank principle known from retail mutual funds is introduced. Meaning there is an independent holding authority for the assets of the fund, which will simultaneously be a control institution for payment streams and valuation. {This Is Gobbledygook Lip Service}
•   With respect to the demanded transparency, the obligation to publish a detailed annual report with a balance of all liquefiable assets, list of revenues and expenditures, and the disclosure of compensation structures is introduced. Hedge fund managers also have to verify the adequacy and compliance of debt boundaries of the administrated AIFs. For private equity funds, there is prospectively an obligation to inform the supervising authority when equity quotes of not publicly traded corporations over 10% are bought or sold. To impede the destruction of corporations or the sale of corporation parts by the private equity corporation (so called “asset stripping”), the AIFM directive envisages a prohibition period of 24 months for the sale after gaining control of the corporation through the AIF.4. Technocracy versus regulatory policy Politics reacted to the financial crisis with a number of new laws, directives, regulations and institutions for regulating the finance market.

The deregulation and liberalization of the finance market, a process, which began with Margaret Thatcher in Europe and Ronald Reagan in the USA in the 1980’s, belongs in the past.

This is PURE POPPYCOCK!  During Reagan/Thatcher The Banks were under Glass Steagall and were well regulated and blocked from high risk banking investments that would put citizens at high risk of loosing everything.

In 1999, Billy Clinton Repealed The Glass Steagall Act which UNREGULATED the Banks and caused the world wide financial chaos we now see!

•         How Free Americans Became Slaves To The Rothschild Bankers: Glass Steagall Act Will Stop Them ~ You Know, The One 
•         New York Times Allowed Thugs Bill Clinton & General Wesley Clark To Commit War Crimes!      

With the legal bills discussed above, each segment and every institution of the finance market are to be regulated. This turn from an extensive deregulation to a complete regulation of the finance system takes only three years.

• Pope Benedict XVI Rebukes Obama: Bishop Letters Read To Every Diocese In The United States!

{Yes they are unregulated now because of the bankers and now they are paying lip service because they are getting caught in the act} These are not REAL reformations but a loose set of bullshit that can be easily manipulated by {attrition of supposed to be’s} 

• Additionally it must be emphasized, that these are not national solo runs, but that instead the majority of regulations are based on international agreements by the G20 community of states. {The E.U. is nothing more than a banker’s corrupt ‘fox guarding the hen house’ ploy}
• The origin, here, is an international consensus about the necessity of the finance market’s regulation. This poses the question, how is it possible to initiate such a multitude of laws and international directives to regulate the finance market within such a short period of time, while the international community of states has not come to a consensus, for just as socially relevant topics like global warming or the General Agreement on Tariffs and Trade (GATT), even after many years of negotiating. {Because there exists “We The People” and we see the bullshit}

Lets Do What Iceland Did ~ Arrest The Bankers Who Violated The Existing Laws ~ Instead Of Making Up Bullshit Gobbledygook!

•         Breaking => Obama Issues Executive Order Allowing Seizure of Americans’ Bank Accounts: Told Bankers Today Its OK To Foreclose On American Citizens Who Bailed You Out!      

The previously discussed regulations of the finance system are aimed at increasing the system’s stability as such and to prevent another collapse. But in the previous 30 years of deregulation, {BULLSHIT READ HERE It WAS Officially Deregulated By Democrat Clinton In 1999 – thats only 13years} structures have evolved at the finance market, which prove to be counter productive for the real economy and present a risk as well as a stress factor on a community’s welfare.

Talk About Blowing Smoke!!!!

The regulation attempts indeed improve the system’s safety; do not, however, change its fundamental structures. The reforms are altogether system conform “repair measures” and cement the portrayed without getting to the core of the problem. This explains, why it was possible to come to an agreement on the international level in such a short period of time. When the finance system, despite all structural and institutional deficits, is not doubted in its foundations, and only details in the interaction of institutional players are altered, it is easy to find a broad consensus.

•         Spain Surrounds Police In Anti- Austerity Protest!      

What would be the obvious solution to the phenomenon “too big to fail”?

The size reduction of financial institutions. Banks could be split into small to medium sized business units, either by business type or by region. The rescue of banks with public resources {TAXPAYER BURDEN AGAIN}  here offers the state or the federal regulatory policy various design options. Additional capital requirements for system relevant banks or the development of plans for resolution or liquidation of defaulting banks do not solve this problem, but merely treat the symptoms. In this sense, the German way of creating restructuring funds with bank charges, so that future defaulting measures can be financed out of the fund, does not appear very sensible. These regulating measures cannot eliminate the system risk, but merely secure it.

Let The Banks Fail Its NOT The People’s Business In The First Place _ They Have Their Own Businesses And/Or Jobs To Deal With!

•         Iceland Continues To Grow Using ‘Startups’ By Replacing ‘Banks’: Iceland Refused To Bailout Rothschild’s Corrupt Banking Cabal.              Mexico’s Unemployment Rate Average Is 3.67%: Immigrants Heading Back To Mexico!      

What would be the obvious solution for the risk of a collapse of the economy’s credit supply in case of a bank crisis?

One changes the business model of banks and separates the lending and deposit business, which is important for the real economy, from the risky investment banking business. With this institutional separation, comparable with the American Glass-Steagall Act from 1933, the real economy’s financing is secured. {Agree}

Only those commercial banks involved in financing the real economy earn the privilege of cheap central bank financing. Basel III, on the other hand, tries to reduce that risk from investment banking activities, instead of solving the problem. Indirectly, Basel III substantiates the current business model bank. A business model, which presents a risk for the financial stability as well as for society.  {Agree}

Knowing, that derivative-trade has negative effects on the real economy and the finance system, the trade of derivatives, as a result of pure speculative nature, should be prohibited.  {Agree}

Credit derivatives are counterproductive for the credit business and therefore to be generally prohibited.

The regulations for the derivative market, meanwhile, strive for the development of an extensive system of central clearing parties for the derivative trade. With that, a state supervised infrastructure is created for speculative derivative trading and facilitates it. {Glass Steagall Prohibits ALL Derivatives – Which Are ALL Fundamentally Fraudulent}

The risk for the finance system is reduced, {It was Blocked During Reagan/Thatcher IOWs REGULATED} but the serious disadvantages of speculative trading for the real economy remain. With standardizing futures contracts concerning central clearinghouses, even an increase of trade volume of derivatives is probable. {Derivatives Should BE Strictly Prohibited via Glass Steagall}

The above listing could be continued for the reform efforts in terms of rating agencies, hedge funds and private equity funds.

Lastly, the reforms are lacking the regulatory policy’s creative drive to remove the structural deficits and fundamentally change the system of the finance market. When thinking merely system inherently, all the reforms presented can objectively be justified and demonstrate a complete logic in themselves.

Noticeable is the high degree of detail, which requires expert knowledge for legislation, supervision and control, as well as on the bank side. In the sense of a “technocracy”, a sort of objective necessities legislature and organizational determination dominate over the political assessment of social benefits and disadvantages of finance institutions and instruments, for present reforms in the finance sector (Lübbe, 1998).

• Rothschild Libor Scandal Unmasked
  
• OhOh ~ JPMorgan Chase Libor Scheme: Subpoenas Coming From All Over The World.
  
• Its Over For The Rothschild Banking Cabal: Banking Cabal Must Be Disgorged ~ Libor Scandal & New Fomentation Of Wars To Distract & Coverup.

This may not be surprising, because the legislative proposals all come from experts from the FSB, the BIS, the International Monetary Fund (IMF) and national central banks; institutions that are suspended from society’s or national parliaments’ democratic control, because of their supranational status (Roberts, 2010, p. 557). {Because They Are Rothschild MAFIA}

To complete the assessment of the status quo in the regulation of the finance market, one more aspect must be pointed out: the majority of new regulations, the complexity and their great level of detail {BULLSHIT} will increase the costs of finance market supervision immensely. {Then Lets Glass Steagall}

This is especially the case in Europe. Because, despite the new founded centralized {socialized, communized, marxized, fascized} European institutions for security markets, banks, and insurances, the national sovereignty {hack, cough, sic} of EU member states in bank legislation and finance market supervision still remains. {BULLSHIT} Opposite to these high public costs of finance market regulation only stands a small social benefit. {NONE ~ THEY ARE STILL AT HIGH RISK OF BAILOUT WHICH IS ANOTHER HIGH BURDEN TO THE TAXPAYER}

On the bank side, too, the reform’s realization will create considerable costs. In a widely oligopolistic banking sector, a rolling over of costs for charges and higher interest margins from finance institutions on to customers is to be feared. {Agree} Therefore, from an economic perspective, each citizen pays twice for the finance market reform, as a taxpayer and as bank customer. {Then Lets Glass Steagall}

Modern finance architecture without banks

The institutional separation between investment banking and commercial banking and the prohibition of derivative trading out of purely speculative motives are reforms of the finance sector for a transition phase to new structures. {Its A “We The People” Sector that want Glass Steagall}

The finance sector’s reform efforts must not come to a halt at the divestiture of what presently persists and a prohibition of activities and finance products, but instead, new and more efficient forms of economic intermediation of capital as the conventional banking business must be created. {Nope ~ Just A Simple RETURN TO – The Division Between Legitimate Commercial Banking From Speculative ‘Investment’ Functions}

•         Obama Enforces United Nations Agenda 21 by Shutting Down 259 Fed Agriculture Offices ~ Ending Initially 7,000 American Jobs (which is still increasing) While Importing 80,000 Islamic Immigrants.