Weekly Wrap: The Flash Crash, TARP

A Wall Street sign in New York City's financial district.

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So as far as anyone can tell the flash crash was initiated by a couple of large legitimate trades? If this is true, then why is there a huge jump into more regulating of trades? Did people lose money? Sure. If the market rewards the creators of intelligent trading algorithmsl, it has to allow for punishing (ie, losing money) of bad algorithms.

Mr. Ryssdal did not ask the most important question about the thinking behind allowing the banks and car companies to fail. Why. What is the likely benefit from allowing the system or a giant employer to fail? The purpose of the economy is to provide benefits to as many people as possible without making any person or group worse off. How would that be achieved by allowing GM or Citibank fail?

I can see three reasons the TARP is so reviled. First, as you demonstrated earlier this week, distinguishing between the TARP, the bailouts, and the so-called stimulus is difficult, made worse by the media's attempt to attribute the good points of each to all and the bad points of all to none. Second, just like the rest of the whole complex, it's different rules for the politically connected than for ordinary people. This is supposed to be "government of the people, by the people, for the people," not "of the political elites, over the people, for the political elites." And third, since Obama's election, political opinion has swung far back toward a distrust of any government but a limited one with few and defined powers. If the government has the power to do the good it claims the TARP was, it must also have the power to do immense harm to the interests of ordinary Americans, and we cannot trust the government to be benign.

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