23 August 2013

SP 500 and NDX Futures Daily Charts - The Necessity of Regulation To Insure Market Efficiency

"There are so many questions as to why, but each comes back to this: The markets are not set up to be 'fair and orderly' for investors; they are set up for the benefit of very fast, sophisticated pickpockets."

Jon Najarian, Blame HFT For Yesterday's NASDAQ Mess

Personally speaking, there is merit in saying that quite a bit of the blame rests with the SEC, which after all is responsible for regulating the markets and setting the 'tone' for their behavior, by action and example.

And of course the myth, promoted out of self-interest, that any and all regulation is bad, because people are naturally rational, long term in their thinking, and virtuous.   And therefore they need no governance but their own wills. Markets always and everywhere are subject to distortion and corruption by the powerful without transparency and the equal justice of independent regulation and the law.
"In questions of power, then, let no more be said of confidence in man, but bind him down from mischief by the chains of the Constitution."

Thomas Jefferson
Yes there is a balance to be struck, but reform is not to be found in the mindless tearing down of past wisdom in the name of deregulation for its own sake, except if one would prefer to have no place to stand when the cold winds of the powerful and the unscrupulous blow without impediment across the land.