Get Ready for More Fraud

I don't know if you've heard about the state of California's issuance of numerous IOUs over the past several months as a desperate plea to stay afloat. I haven't discussed it because I felt it to be a trivial issue; that is until now.

According to a recent report from the AP, the SEC plans to recommend these IOUs be regulated as municipal debt by the municipals regulatory authority. 

Already, these IOUs have been trading in non-regulated securities markets such as Craig's list and eBay, causing many to wonder about their authenticity.  But if the SEC's recommendations are passed (almost guaranteed) Joe sheep will no longer be able to purchase the IOUs on these shady sites, which is a good thing. 

The bad news is that, in my opinion, this action would do nothing more than to discredit America's capital markets even further.