(By Karl Denninger) Probably.
The "Knight of the living dead" yesterday in the dislocation at the open is just the latest saga n a broken market. We now know that (at least if nobody's lying) Knight had a computer problem that led it to lose about $400 million.
Basically, instead of being a liquidity provider (that is, if you bid for a stock it's on the other side provided it can make money) it basically reversed that role and started taking the other side at a loss.
The loss was large and immediate.
Then you have the Facebook IPO. And the flash crash. And the HFTs.
The problem is that there's utterly no indication that anyone on the regulatory side will put a stop to it, and yet the entire perspective on this is not analytical accuracy but simply speed.
Being first isn't anything but an arms race. It's not a matter of knowledge, it's not a matter of anything special -- it's just a matter of firepower.
There is no market folks and there is no reason to be in it, especially if you're trying to "invest for the long haul."
Yeah, I know, Bernanke and everyone else are trying to force you into the stock market by destroying any other ability to earn a return.
But you're still volunteering to "try to earn a return" and if you know you're walking into a shark tank -- and by now you do -- who's fault is it when you get bit in half?