Wind of change

This crisis is not the end of capitalism and the raise of communism, as some journalists write. Marx will not come back. There are just big changes that must be done. I will give few examples:

1. Global markets, local regulating bodies. Some decades ago, each German land was having its own police restricted to that land. If somebody steals a car in Bavaria and runs away in Hessen, bad luck for bavarian police. They were supposed to stop at the border and give the case to their hessischen coleagues. Goldman Sachs takes 10.000 millions usd from FED and go to speculate on romanian currency. If they would speculate against usd, of course, they would get no money from FED for that. We need global regulating bodies.

2. Rating agencies. They are payed by issuers, not by investors. If Lehman Brother issued some certificates, they also payed Moody's to assign a rating to those certificates. Of course, they cannot assign a bad one, because they are payed by Lehman. Even more, the rating considers more the solvability of the issuer and not what is in that sold package. The whole concept of rating agencies must be changed.

3. Equity market laws. They are so old and that even old respectable companies ignore them. Theoretically and legally, Porsche owns 30% of VW. Practically, they own 30% shares and 41% call options. But the current laws are too old and they do not oblige Porsche to make public the fact that they actually/potentially have 71%. According to current law, a shareholder is defined only by the number of shares he has. The laws are from the times when only shares were traded.

4. Derivates markets. Actual free float of VW was 5%, but the naked short sellers were short 10%. They could not even close their positions. They had no idea that Porsche, major shareholder, owns 41% of VW by owning calls! The regulating body had no idea that the short sell positions are bigger than the free float. Until Porsche made a volunteer public statement. The short sellers had no other option than go bankrupt or beg for mercy from Porsche. Why? Because the laws are too old and no more effective.

5. Market principles: I like the free market, the place where the price is decided by sellers and buyers. But there is no book about it, where it is written that third parties can join and influence the price. What about oil market? The producer want to sell it with 70-90 dollars per barrel. But the speculators push the price to 150. Why? Is it because producers want to sell fast and go back to drilling? No, it is just a free market big enough to attract big speculators. I think these markets should be regulated to allow only producers and rafineries as consumers to trade. It is not a restriction of the free market concept. Just the speculators should stay out when establishing the price for basic goods that everybody needs.