Parliamentary inquiry

't is something to see members of Parliament address (former) Cabinet members concerning their views on the Credit Incompetency Crisis (CIC). Today/yesterday the former Finance Secretary Zalm (look at picture) was questioned by the committee. He told his peers (?) that Regulatory rules had been too lenient towards banks, which resulted in the debacle we know so well. With only 2-3% of equity the banks could do anything they liked (and did so fervently) while regulatory bodies stood still and watched but never interfered because rules did not fathom reality anymore. And so on.

I think the whole bunch (BIS, central banks and their affiliates, governments, secretaries of Finance around the globe were star struck (we know NOOO-thing, we're from Barcelona...), unintelligent (whatever they do, WE do not understand), purely bureaucratic (your law/ruling is my command) is incompetent.

Banks also are 327% incompetent, where they themselves did not understand what they were doing (Christ Zalm shouted it today: Father, they do NOT know what they are doing).

It becomes more and more clear that incomprehensive products, as well as fraud-like products that seemed to carry a AAA rating, where they obviously did not deserve that qualification, is at the base of the CIC (see above).

As I said before, numerous times, securitization on a AAA-rated scale should never have been endowed with the AAA-rating. The MOODY'S AND THE S&P'S ARE TO BLAME FOR THAT. The suckers of the capital market believed the S&P's etc. and traded/bought/sold on the basis of this AAA-rating. We now know that trillions were traded based on this fairy tale and billions have been lost as a result of it.

I propose a new set of rules (also defined earlier in this -your favorite- blog:

1. equity minima must be 10% or more of total capital employed
2. (new rule): securitization may be used once on its nominal amount (of assets)
3. every 'new' financial product has to get a regulatorially approved passport
4. every 'new' financial product has to fulfill strict risk management (VAR) rules
5. bonuses on 'new' financial products will conditionally be granted 5 years after introduction
6. savings and term deposits must be secured 100% at all times (preferred above equity)
7. risk must only be taken untill equity is depleted
8. equity can only earn dividends on 'new' financial products conditionally, 5 years after their introduction

(this list is not complete)

Now to the matter of system change.

We all heard of maximizing shareholders wealth

We know this paradigm has shown to be erroneous

So we know that efficiency in returns is erroneous

So we need another paradigm.

Which includes society as a whole.

And is not purely shareholders owned

But what?

Any ideas?

Share it with me and I share your thoughts to the world.