Wednesday, May 23, 2012

Which Beast Should We Fear Most?

Does it need to be said?  Yet again?

Greed may be the undoing of capitalism in the United States.  It's our country's financial beast.  Yes, I've explained the dangers of greed several times before, but it's difficult to watch the implosion of Facebook's celebrated IPO these past several days and miss the point:  something went nefariously wrong here, and it didn't have to.

Of course, we've just entered the early stages of unpacking the fallout from Facebook's spectacularly fumbled initial public offering.  Lawsuits were filed this morning in New York City.  The Financial Industry Regulatory Authority, the Securities and Exchange Commission, the state of Massachusetts, and the United States Senate have each opened inquiries into NASDAQ's handling of its electronic management of the stock offering and how banks managed information critical to the IPO's launch.  The stock itself has fallen 16% since it's debut.  All this, in just four business days.

Experts from across the financial media spectrum have already pounced on this historic debacle, analyzing what they think it means and extrapolating dire consequences and scenarios from what little is known at this early point in the incredibly short history of Facebook's stock.

Some analysts say this is all proof that the stock was wildly over-valued from the start.  Others accuse the big banks underwriting the IPO of staging last-minute briefings to protect some of their largest clients from potential disaster, while allowing smaller investors to wade out into the IPO frenzy and get gobbled up by devaluation sharks.  Still others want NASDAQ's corporate head on a silver platter for being unwilling to admit that they couldn't handle the unprecedented trading activity for which they should have been better prepared.

Could Facebook's tainted $100 billion IPO spark a new recession?  Were the big banks in collusion to stage a crisis that may have netted them $100 million in additional trading fees?  Were NASDAQ's electronic failures a smoke screen to obscure behind-the-scenes shenanigans with the stock?  These have all been questions that Wall Street gurus have asked, and are questions whose answers may not be as far-fetched as they seem.

Coming, as it does, on the heels of J.P. Morgan Chase's $2 billion loss earlier this very month, Facebook's IPO may be just the thing that convinces even conservative Republicans that Wall Street has lost its last shreds of incentive to police itself.  It's almost like instead of being the heart of New York's pinstriped financial district, it's become the Wild West down there at Wall and Broad streets, just a block away from Trinity Church, and miles from Main Street USA, where most of the debris from these financial bombshells usually falls.

It was reported today that Neelie Kroes, Digital Agenda Commissioner of the European Union, has proposed a draconian set of initiatives for establishing a glorified human bar code system to facilitate, among other things, the more efficient transfer of money electronically.  Kinda like a "mark of the beast" some end-times theorists have been warning us about.

Except that Kroes' efforts may be too little too late.  Thanks to Wall Street's unbridled greed, we may all be bartering with sea shells and pretty rocks like hunters-and-gatherers before her beast ever makes it across Europe.

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