In the past investors were limited in choices between paper assets like stocks , bonds and trust deeds, and physical assets. Physical assets were all forms of commodities (DBC, quote) , real estate, precious metals, agricultural, energies etc , along of course their labor. 

Over the last few decades physical assets were also turned into paper through the derivatives markets(although to some extent these derivatives have been around for centuries, forward contracts) For a couple of decades this was beneficial and open to many investors and it increased liquidity for most assets , allowing better risk management and strategies,  with deep and varied participants price discovery was more transparent and helped guide governments, producers and consumers in decision making. It wasn't perfect , but it was very successful as long as the rules were followed and concentration was avoided.

However, as computers became cheaper and faster larger firms began employing software engineers to increase the speed and gain an edge both in terms of cost and trading. This digitization of physical and paper assets created all kinds of hybrid opportunities and large firms, exchanges  and the government embraced the new world of finance. A deaf ear was turned to older and perhaps a wiser generation who thought automation,concentration and control  was a dangerous derivative .

Glass Steagall was a great piece of legislation that put firewalls between major market participants (brokerages, insurance ,commercial banks and accounting/ratings agencies) to try and avoid destructive concentration of power. Indeed, the USA and other countries did well with limited central bankers or none at all. The great recession was inevitable as regulation lagged substantially the changes created by the repeal of common sense.

New regulations meant to prevent the problems that occurred a decade before , is like trying to put a fence up when the horse has left the farm and is sipping cocktails on the beach in the Seychelles. Regulations must be wiser , simple and less burdensome but carry a much bigger stick and real firewalls. Too big to fail should have been addressed yesterday as the dangers are well apparent, today's credit markets and flow of credit the early warning sign

It might be time for market investors to get a little more physical and active. I have some ideas.  The calm eye of the storm is shrinking.

John is a  Senior Broker at Sierra Mesa Trading and has been working with clients in the field of financial products for over 25 years. John can be reached at linkedin