Posted 1 year ago on Jan. 10, 2012, 6:41 p.m. EST by Nanook
This content is user submitted and not an official statement
There are some institutions that have been with society so long that their purpose and value are often taken for granted. One example is prostitution. It is often jokingly referred to as the "oldest profession". Nonetheless, while not addressed in the U.S. Constitution, U.S. society has deemed it bad, and has banned it by law through state laws.. The current U.S. exception is Nevada. Another closely related issue is gambling. Both state and local laws, outside the constitution, deal with that. I selected these two examples because I believe Wall Street and the stock market belong in the same category.
The entire stock market has been corrupted away from the fundamental reason for its creation. It was originally created to help BUSINESSES raise money to start and grow. What we have now is mostly just GAMBLING. The whole market is very much like a Ponzi scheme. Like gambling, it is also a "negative sum" game. Except for the initial investors, people can gain in the market only as long as prices go up. BUT, like a Ponzi scheme, the last one holding a stock when the price falls loses big. And, like a casino, for every trade, the HOUSE takes a cut! We need to recognize the GAMBLING element of the market and STOP IT!
What should be done is to separate the stock market into a PRIMARY and SECONDARY market.
The primary market would be the original intent of stock ownership. These are the IPO investments. The goal is to raise money to start or grow a business. The rules for this need to be tightened up a lot. ALL citizens should be able to invest in these as simply as they buy stocks now, and no special deals should be available to company employees or other investors.
The secondary market, where stocks are just traded as gambling, if not shut down completely, should be controlled by a version of the RICO commission. A very important provision for this market is that NO bank deposits or pension funds should be allowed to participate in the secondary market.
As for the commodities market, a similar division should be made. Protecting businesses from things like climate variations should be handled with insurance. Speculation should be moved to the RICO commission and limits placed on who can invest and which commodities can participate.
This point does raise another issue: responsibility in business. When someone sets them self up in business as a "professional" with "claims" like: they are "experts", have years of experience etc. why shouldn't society hold them responsible for those claims? Somehow, we have let all the financial advisors get away with setting up laws that let them approach investments like GAMBLING, yet still use claims like they are experts. So, in changes proposed for the stock market, I suggest we create two distinct categories of investment financial professionals, similar to what the country did after the Enron scandal.
One category is for people who provide services to accomplish MANUAL TASKS using strict rules. These are people like stock brokers. They would be paid for their labor in executing trades.
The second category is for "professional" advisors. These are people to apply specialized knowledge to advise OTHER people how to do something. These are the investment advisors who recommend stocks and set up portfolios. However, because they CLAIM special knowledge, they should bear RESPONSIBILITY for what they recommend. These advisors should be compensated PRIMARILY on OUTCOME. If their suggestion produces a profit, they should be rewarded a portion of the profit. HOWEVER, if the investment results in a loss, they should also pay a penalty for that loss.
How might this look in practice? Here's one example. Let investment advisors charge a "retainer" for their services, subject to the limitation that the sum of ALL retainers for services not exceed the government measured annual average individual income. The remainder of their income would be an adjustment, plus OR minus, based, not on principle, but on aggregate annual investor gains or losses at whatever load fee they apply, which must be stated prior to making an investment.
A longer discussion of this issue is available at http://A3society.org/StockMarket
So, please jump in here with comments.
(This post is part of a collection of posts aimed at launching a new process called the National Opinion Collection System (NOCS). For more information on the process, see http://occupywallst.org/forum/occupytheconstitution-introduction/ )