Guest post by John Katovich on Stanford Social Innovation Review
Dysfunctional public and private capital markets benefit traders, speculators, and financiers more than companies and communities; direct public offerings provide a capital funding solution that benefits everyone.
Once upon a time, capital markets had meaning—before their soul was lost to an über-financialized economy that spiraled away from its purpose as classically defined: the efficient transfer of wealth from an individual’s savings to companies for development of research, products, and services.
It’s become hard to find much that fairly fulfills that function of fueling the entrepreneurial spirit. Except for a brief window when an IPO price may have connection to the value of a company and before other xmodgames begin (for example, running up its value for the “pop” in price on the first day of trading, “dark pools” that avoid transparent markets, or anonymous high-frequency front-running), exchanges look more like legitimized gambling with excess volume disguised as liquidity. For whom does the opening bell toll today?
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