Back in 1936, John Maynard Keynes compared the stock market to a casino. Keynes wrote: "Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done."
Now it looks like the financial services industry is campaigning to keep capital markets working like a casino. High frequency traders are lobbying Washington, trying to get the lawmakers to overturn rules that seek to control markets, protecting investors and the economy.
Bloomberg reports that these trading firms are now starting to act like banks, paying politicians, forming trade groups and hiring lobbyists and ex-regulators.
These firms use high powered computers to generate share trades in milliseconds, something that can create unforeseen crashes like the one on May 6 when the market plunged temporarily, wiping out $862 billion of share value in 20 minutes. The New York Times reports that more of these crashes are likely to happen again.
All the more reason to bring these people into line. Given the money they're throwing around, however, that's unlikely to happen.
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