Tyler Cowen writes far better, and with more assurance, than I can about high frequency trading. I have only one point I would like to make: this style of Trading could well freeze the Market price for anything and everything until there is massive pressure to Sell or to Buy. The barrier shift would vary for each element, but the average Price variation might adjust to around $8 per item, as it becomes an issue of competing computers, Orders, and Cancellations. Why? Because no Order will clear until the battle of competing computers is over, and no one can get their purchases accomplished. I believe seriously that there is a point of Computer freeze, and another point of Computer burn, associated with every purchase. It could well kill the Market system.
Mish explains an email fight he got into over the ethics of Walking Away and the foreclosure system. As a realist in possession of remarked little knowledge of the area in discussion, I can still relate that due to the Conditions of past mortgage lending, an indeterminate number of Mortgages were taken out with prior Lender or Borrower knowledge of future invocation of bankruptcy, foreclosure, or necessary rewriting of Loan conditions. The financial crisis developed because of the frequency of this knowledge as much as it did because of adverse economic conditions. This was what the financial crisis was all about, no one playing according to the Rules of Lending. It was only a matter of time, waiting for the problems to develop into a full-blown crisis.
I included this article at first because I imagined that Paul was talking about my style of punditry, but decided his stuff was sufficiently decent that I could enter into a diatribe against the Fox News Network. I object to a Corporate propaganda network. I further object to Topic Choice being dictated by the estimated level of misinformation which the Public will swallow. I feel repelled by deliberate misrepresentation of policy advocations, simply because of opposition to those policy initiatives. I deplore the Sensationalism approaching the yellow journalism of Old, simply to incite Anger or Fear. I cannot find any generosity in my Soul for Those who attempt to incite Internet lynch mobs to drive responsible commentary from the Airways. I most am angered by the contempt expressed towards the Public, who are expected to swallow the distorted flow out of Stupidity. Jon Stewart and Stephen Colbert can at least claim a search for humor; Fox News has nothing to blame except a lust for creating division where no previous antagonism existed. lgl