Problem: No fund exists in reserves for the collective bad debts of the bond, stock and commodity markets. When good debts go bad they are toxic to the economy.
Why this problem exists. NINJA mortgages = No Income No Job no Assets. The press calls this predatory lending. I call it wreckless and shared irresponsibility on the part of the lender and borrower. Also, investment banks are usually leveraged, borrowed money loaned to create double borrowed money until all collateral effectively vanishes.
Anyway – the markets themselves need to fund an emergency reserve fund. Tax each unit of transaction a one cent fee. The unit of transaction for stocks is shares. The unit of transactions for bonds is the bond unit. The unit of transaction for commodities is the specific, traditional and accepted commodity unit.
Then, this money goes into an EMERGENCY ONLY FUND. Borrowing from this fund requires a collateral downpayment and the load interest fee is twice the current rate of inflation. Yes, this is implementation of standard loan sharking philosophy.