Our Financial System is Broken

How much more evidence do we need, to say that our financial system is broken.  Case in point – the recent Facebook IPO.  Here’s another example of how Wall Street and the major financial institutions took advantage of the average citizen with a ridiculously over-valued offering price for Facebook.  It started out at $38 per share and over the first week lost 20% of it’s value.  So while the average investor bought shares at the offering price, the people who already owned shares (from the second market transactions) made their profits at the expense of the average investor.

This is another example of where our lawmakers have failed to regulate the financial markets.  Facebook shares have been trading for months on the so called “second market.”  Why does the system allow that to happen?  Where were the regulators?

Behind the scenes, investment banks and wealthy “insiders” are allowed to gain the inside track and profit from the IPO that was perpetrated on the average investor.  We are left to believe that this was all a poorly executed IPO and that Facebook management and the investment banks are to blame.  I think this played out exactly the way they intended it to.  The insiders made their money at the expense of the average “Joe.”

The old marketing adage is, “sell the sizzle, not the steak.”  And that’s exactly what they did.

I think our government leaders are incapable of reining in the financial industry.  There are so many ex-financial industry insiders in government that we have the “foxes” guarding the hen house.