Aug 27 2012

Facebook Friends and Trust

I know I keep banging on about trust at the moment, but Facebook has shown us recently why people are losing faith in the idea of a free market.

When Facebook shares were floated, they were bought by small investors and fans of Facebook at $38 a share. It wasn’t only small investors, George Soros bought some too. However last week saw the end of the ‘local-in’ period for the early investors, such as Goldman Sachs. As they rushed to cash in their gains, Facebook’s share price fell to less than half of what we were originally told it was worth. Told by people like Goldman Sachs.

It doesn’t matter if this was rigged or not. It’s a high profile float where those who were on the inside make lots of money, and those who take their advice and listen to the hype, don’t. At least in the short term. I personally have an issue with free marketeers who say that capitalism is the only answer. It may be, I don’t know, but the market isn’t free and we shouldn’t pretend otherwise.

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