Buying and selling huge volumes of securities in a matter of seconds is just another high-tech form of speculation that is only remotely connected to the fundamental purpose of financial markets, which is to raise and allocate capital efficiently for businesses that need it. Liquidity is certainly good for markets, but we recently learned from painful experience that it is also possible to have too much of it. And though sophisticated computer systems can be powerful tools in plotting trading strategies and managing risk, we also know that these systems have blind spots and can backfire when too many people try to pursue the same strategy at the same time.
Wall Street Creates the Next Crisis – Steven Pearlstein, Washington Post
