If congress stifles the derivatives market, what is to stop Americans from trading them in other

[RB TexLa]

markets? We just want to exclude American markets from the trading?

[BlooInBloo]

1. Stop watching fox.

[RB TexLa]

2. I haven't watched any televison in probably a month. Haven't even opened the doors it's behind.

[paulsby]

3. i've traded derivatives in hong kong

*i* wasn't in hong kong, but the market was...

hangseng index futures (HSI).

so... presumably ... nothing...

[sharesunited]

4. It shouldn't be stifling to have credit default swaps standardized as to form

and written only by issuers who have the financial resources to fulfill the contractual obligation the CDS represents.

The AIG bailout was prompted by writing CDS instruments as though they would never need to be performed. A premium collection scam. Like printing money, so they thought!

[anigbrowl]

8. I strongly agree

Investor confidence is ultimately founded on consistent regulation. Countries with developed markets will have to make commitments to working with each other for mutual security, rather than engaging in a regulatory race to the bottom ash has been the case in recent years.

[Toucano]

11. +1 This is the response that merits kudos.

Good response. n-t

[anigbrowl]

14. Thanks. My own country has been a bad neighbor in this respect

Ireland has some naturally good things going for it: part of the EU, highly educated workforce, moderately low labor costs (or it had when the cost of living was lower - Dublin in particular has gotten hyper expensive over the last decade or two).

But in seeking to attract more businesses to set up in Ireland they lowered the corporate tax rate to 10% - not necessarily a fundamentally bad thing, but they did so in a way designed to undercut neighboring countries - and took a hands-off approach to bank regulation on the principle of 'if it ain't broke, don't fix it'. Which was fine until the market changed direction, which has put the country in the economic freezer.

On the (very slight) upside the government kept their own accounts fairly straight (unlike, say, Greece) and made rapid adjustments to spending and taxation. Although quite painful in the short term, the benefit of this is a shorter time to get the deficit under control and the country's balance sheet back into the black, rather than a long period of stagnation due to heavy interest payments...which is something we experienced back in the 1970s and early 80s. IIRC, we had to turn to the IMF in the 1970s.

[Warpy]

5. Well, it's not an all or nothing proposition

but what it will do is introduce regulation of such markets so that we don't get the wide open casino that we've seen since the mid 70s, the casino that nearly brought down the financial markets worldwide just a year and a half ago.

What it will do is cause the thieves to shut down within our borders, meaning hedge funds will have to move offshore if they want to continue bad business practices as usual and let's just say caveat emptor, folks.

Likely most other countries will copy whatever regulation arises here, meaning that very few markets will have unrestricted derivatives trading, probably the Caymans and a few other extremely unregulated markets.

Business as usual is just not an option.

[Zynx]

6. You could theoretically prohibit them from having them on their books at all.

Then it doesn't really matter where they are traded.

[anigbrowl]

7. Nothing, in theory, although Congress could impose a tax on repatriated profits

I don't think they'll shut down the market or anything, but I do think there's a decent prospect of narrower regulation; given that the UK and Germany have both expressed a strong desire for reforming financial markets, and that the IMF has commended the idea of stricter regulation by members of the G20, it may prove easier for the financial industry to accept some restrictions and extra taxes in exchange for regulatory clarity.

[Skink]

9. Round trip derivative flows.

[snot]

10. Hopefully other countries are working on similar prohibitions.

[Aramchek]

12. Moneychangers suck ass

[JDPriestly]

13. The traders who trade derivatives in foreign markets can be bailed out

by the taxpayers in the countries in which the markets are located. They can't be bailed out by the American taxpayers if they are not allowed to trade derivatives in closed markets in this country.