Whenever you hear or see the term prescriptive, you better start checking not just your wallet but your freedom. And it holds true for the quasi-science called medicine as well as the financial world.
Side effects are common to both.
In this case, it's the Security Exchange Commission, a pseudo-government entity peopled with over paid bureaucrats. In the name of protecting us from ourselves these people pass stupid regulations that muddy the financial waters even more and, more often than not, help contribute to the next financial crises. The truth is we need protection from them, not ourselves.
Now these geniuses have liquidity on their narrow minds. Since the recent liquidity fallout in junk bonds at Third Avenue, they are concerned and that should mightily concern you. So their proposal as is their pathetic wont is to create more categories as in "six liquidity categories that would be convertible into cash," the WSJ reports in an editorial, "within a certain number of days: 2-3 business days; 4-7 calendar days; 8-15 calendar days; 16-30 calendar days; and more than 30 calendar days."
Imagine if you can how many government bureaucratic jobs that will create just to track it all. These nonsensical invasions even in semi-free markets, because that's really what we have now, are based on the false assumption these folks know how markets will react in the future. They don't and neither does anyone else. If you need proof just check the Fed's sterling record these last several years.
There's an old saying about the relationship between snoozing and losing. And that's what these people count on. Buried in this proposal are other asinine rules like limiting to 15% so-called "illiquid assets" funds can invest in. Last time we looked real estate can get pretty illiquid.
Life is a terminal illness an associate likes to say. Markets bode lots of risk. Volatility if you've been paying attention of late. Geo-political, interest rates, currency, earnings, weather, management, correlation are a few of the others. But one of the biggest risks also starts with the letter R--regulations.
No comments:
Post a Comment