4 ms·

"Integrity, justice, fairness, work-ethic, excellence--all have fallen prey to greed." Greed is tempered by risk when the government can't save you.

viggity 17y ago
Greed would be tempered a lot more by risk if the government didn't save anyone.
- megamark16 17y ago
  I think that is what richcollins is saying. What I took away from that article, although I don't think it is quite what the author had in mind, is that Capitalism is flaw by the fact that our government does not allow/force us be purely capitalistic. The safety nets open the doors for greater risk, which require bigger safety nets.
  - chrischen 17y ago
    Humans aren't angels. Just as we need laws to protect us from killing each other or stealing we need laws to protect us from ourselves in the economy. Whatever system we have, however much it naturally encourages innovation, someone will try to manipulate it.
    - danek 17y ago
      Agreed. I think people spend too much time arguing about "capitalism the ideal" when what we should be talking about is "capitalism the implementation."
- richcollins 17y ago
  Yes I should have worded it "when you can't rely on the government to save you"
danteembermage 17y ago
Counterpoint: flash trading. If I can peek at the orders the little guys put in through scott trade and execute a trade before theirs clears, then I can benefit from the upward price pressure that their orders induce. Little risk, no government, hardly "fair". In an ideal world new stock markets would pop up without flash trading and the little guys would flock to those instead but there are huge network effects to get over. In this case regulation, or at least shaming the exchanges into doing something, seems appropriate. I'm totally with you on the bailout moral hazard, there are just definitely some zero-work-ethic, unfair, risk-less behaviors that are quite profitable even (especially?) under anarcho-capitalism.
- yummyfajitas 17y ago
  You are confusing front running with flash trading. What you describe is front running, and is illegal. Flash trading is simply trades based on receiving market data with lower than normal latency (usually by having colocated servers). http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Flash_trading http://en.wikipedia.org/wiki/Flash_trading
  - danteembermage 17y ago
    From the articles: "Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers." "Flash trading is [when] certain customers are allowed to see incoming orders [30 milliseconds earlier] than general market participants, ... in exchange for a fee. ... Traders ... can conduct rapid statistical analysis of the changing market state and trade ahead of the public market." So this is not front running, there are no brokers involved for one, and the trades in question already occurred. However if NYSE takes X milliseconds to execute a trade and BATS can fill my order in Y < X - statistical analysis lag time I can get my order filled before the NYSE guy. As far as I know doing the above is not front running or illegal but it is not necessarily full of fairness. So unless NYSE only gives flash traders a peek at completed orders rather than initiated orders the above could occur. It doesn't appear that this is the case: "Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay." http://www.nytimes.com/2009/07/24/business/24trading.html http://www.nytimes.com/2009/07/24/business/24trading.html
lutorm 17y ago
It seems the trouble with this idea is roughly the same reason that it makes economic sense for poor people to not have car insurance. You're playing with other people's money, and it's an asymmetric risk situation: when your bet doesn't pay off you do not have to pay the entire price, because you don't have it. So it makes economic sense to subject yourself to long-term risk for short-term profit because if/when the crash happens you're not able to pay for the damage you did even if you were liable for it. (As opposed to now when money made is safe, at worst you can be fired.)

viggity 17y ago

Greed would be tempered a lot more by risk if the government didn't save anyone.

megamark16 17y ago
I think that is what richcollins is saying. What I took away from that article, although I don't think it is quite what the author had in mind, is that Capitalism is flaw by the fact that our government does not allow/force us be purely capitalistic. The safety nets open the doors for greater risk, which require bigger safety nets.
- chrischen 17y ago
  Humans aren't angels. Just as we need laws to protect us from killing each other or stealing we need laws to protect us from ourselves in the economy. Whatever system we have, however much it naturally encourages innovation, someone will try to manipulate it.
  - danek 17y ago
    Agreed. I think people spend too much time arguing about "capitalism the ideal" when what we should be talking about is "capitalism the implementation."
richcollins 17y ago
Yes I should have worded it "when you can't rely on the government to save you"

danteembermage 17y ago

Counterpoint: flash trading. If I can peek at the orders the little guys put in through scott trade and execute a trade before theirs clears, then I can benefit from the upward price pressure that their orders induce. Little risk, no government, hardly "fair". In an ideal world new stock markets would pop up without flash trading and the little guys would flock to those instead but there are huge network effects to get over. In this case regulation, or at least shaming the exchanges into doing something, seems appropriate. I'm totally with you on the bailout moral hazard, there are just definitely some zero-work-ethic, unfair, risk-less behaviors that are quite profitable even (especially?) under anarcho-capitalism.

yummyfajitas 17y ago
You are confusing front running with flash trading. What you describe is front running, and is illegal. Flash trading is simply trades based on receiving market data with lower than normal latency (usually by having colocated servers). http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Flash_trading http://en.wikipedia.org/wiki/Flash_trading
- danteembermage 17y ago
  From the articles: "Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers." "Flash trading is [when] certain customers are allowed to see incoming orders [30 milliseconds earlier] than general market participants, ... in exchange for a fee. ... Traders ... can conduct rapid statistical analysis of the changing market state and trade ahead of the public market." So this is not front running, there are no brokers involved for one, and the trades in question already occurred. However if NYSE takes X milliseconds to execute a trade and BATS can fill my order in Y < X - statistical analysis lag time I can get my order filled before the NYSE guy. As far as I know doing the above is not front running or illegal but it is not necessarily full of fairness. So unless NYSE only gives flash traders a peek at completed orders rather than initiated orders the above could occur. It doesn't appear that this is the case: "Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay." http://www.nytimes.com/2009/07/24/business/24trading.html http://www.nytimes.com/2009/07/24/business/24trading.html

lutorm 17y ago

It seems the trouble with this idea is roughly the same reason that it makes economic sense for poor people to not have car insurance. You're playing with other people's money, and it's an asymmetric risk situation: when your bet doesn't pay off you do not have to pay the entire price, because you don't have it. So it makes economic sense to subject yourself to long-term risk for short-term profit because if/when the crash happens you're not able to pay for the damage you did even if you were liable for it. (As opposed to now when money made is safe, at worst you can be fired.)