"Working
at my desk today was somewhat surreal. Global risk markets were closing
out a dreadful week. Newswires were full of disconcerting articles - J.P.
Morgan, Greece, Spain, Italy, China, etc. Meanwhile, CNBC was in the midst of
blanket coverage of Facebook's initial public offering. Mark Zuckerberg rang
the bell to open Nasdaq trading, while helicopters provided live video of the
employee gathering at Facebook's Menlo Park headquarters. Insiders are now
worth billions, the "average" employee millions. Even U2's Bono
pocketed $1.2bn (with a "B"). I noted above how I see J.P.
Morgan's current predicament as a microcosm of global financial woes.
Well, it is difficult for me today not to see Facebook as emblematic of the
incredible transfer of wealth associated with Credit Bubbles. It's almost
as if this historic Bubble has been waiting to end with just such an
exclamation point."
-Doug
Noland, Credit Bubble Bulletin, May 18, 2012
A label used by promoters of the Internet bubble was
"The Age of Information." Information itself is worthless unless the
recipient knows how to employ it.
The Zero Hedge website displayed a chart of Facebook's opening trades on May
18. Trading opened at 9:30. At 9:30.32, the price shot straight up to £50,000 a
share. Zero Hedge calculated that Facebook, for a few milliseconds, was a $100
trillion (with a "T") stock.
Was this glaring, electronic trading blunder mentioned on Bubble TV?
Probably not. TV stars who hyperventilate over Facebook's IPO do not possess
the "knowledge" - a refinement of "information" - to
explain the flaws of electronic trading and the corruption of high frequency
trading (HFT). Also, it is not in Bubble's interest to scare its remaining
viewers from the markets. These non-SEC-investigated distortions happen with
great frequency. The individual shareholder seems to have somehow inferred
this, since individual shareholders account for only 10% to 20% of daily
trading. This, too, is probably not publicized on Bubble.
Nonsense that surrounded Facebook's IPO was an expression of the media's giddy
and abiding adulation of technology as well as its faith in an evolutionary
determinism towards the perfection of mass electronic communication.
"Power to the People" or "Facebook will free us all." Some
gooey and meaningless phrase of that sort. (Bill King The
King Report wrote that when Facebook shares fell from $45
to $40, "we were worried about mass financial media suicides.")
All this, despite the astounding amount of money spent on the electronic
trading structure for Facebook shares or Greek government credit default swaps,
is a calamity of error.
The financial media's idolatry for the common stock of
a company that is in the business of people-to-people electronic communication
is sacrosanct even as the electronic communications systems on which those
shares trade are flawed, corrupt, unstable, and cryptic to a degree that was
never true when all shares were bought and sold on the floor of the (then)
non-publicly-traded New York Stock Exchange.
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