CommodityPanda

The Reverse-Convert Scam

I read your post and the referenced article and there is no face value evidence that this investment is a scan or a fraud. Bad, or better yet horrible investment with practically non-existing risk management, but again I don't see fraud.

To your point of "Reverse converts are a scam, and it’s high time US regulators put an end to them." Now if my assertions are correct and this isn't a scam then why should this investment be done away with? Again, I ardently support your position that this is a poor investment, but is this grounds enough for the omnipotent regulators to end their existence? Has our polity devolved to such a degenerative state that we require regulators, not to shield us from fraud and corruption, but from bad investments? People routinely and continually make bad decisions every day, even though well informed. So in a likewise manner should we cry out to the regulators on high to "put an end to them" i.e bad decisions?

In sum, reverse-converts are a bad investment, but not fraud, and being a bad investment should not be enough "to end them." Heck, I see bad investments and bad investment advice given everyday (not fraudulent just bad), and in a likewise manner to your suggestion should we replace individual responsibility with additional regulation? Regulation can protect us from fraud by making regular (i.e preventing outright fraud), but it should never replace individual responsibility.

Ten Non-Predictions for 2009, Part I

"Given that we're all Keynesians now"

Not all of us are fooled by Keynesian policies, some realize that government intervention is bad. In the words of Marc Faber, "Well, it may help a little bit, temporarily. But in the long run, it’s a disaster. Any government intervention into the economy is basically bad, in particular, an intervention that is designed to support prices. The Federal Reserve, and the Treasury, both actually want to support asset prices. Most cartels that have been designed to support prices eventually broke down and prices collapsed."