Casino Capitalism

Alan Abelson reporting on the stock market in Barron’s:

Knight must fall. And, by gosh, the stock of this high-frequency-trading firm did just that, plunging by over 40% in reaction to what was graciously dubbed by the professional Street apologists as a “technical glitch” in some spiffy new software. The first meaning of “glitch” in our dictionary is “minor malfunction,” but, man, don’t even utter the word minor to Knight Capital shareholders who saw an estimated $440 million vanish in about the same time it takes to scream “sell!”

The whole ugly business only underscores the sorry truth that what passes for investing these days has become more and more removed from allocation of capital and the feedstock of economic growth, and increasingly is the province of big-buck gamesters turning over massive chunks of stock in fractions of a second.


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