Even if you don't care about the index fund "front-running" "scandal", the section starting at "The value of market-making is hard to see and easy to criticize" is critically important to understanding why the markets work the way they do.
You know what's easier to criticize? Manipulating LIBOR and nobody going to jail. The downstream effects of instruments pegged to LIBOR is staggering, well, would be if the industry / reglatory agencies actually did anything of merit.
Remember, the main rationalization for Bernie Madoff's unbelievably consistent returns was that he was front-running, and fund after fund after fund after fund lined up to give him money. Besides, front-running isn't really where the big money is anyway. Insider trading is way, way more profitable from an individual standpoint.
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Even if you don't care about the index fund "front-running" "scandal", the section starting at "The value of market-making is hard to see and easy to criticize" is critically important to understanding why the markets work the way they do.
As always, Levine is fucking fantastic.
You know what's easier to criticize? Manipulating LIBOR and nobody going to jail. The downstream effects of instruments pegged to LIBOR is staggering, well, would be if the industry / reglatory agencies actually did anything of merit.
Remember, the main rationalization for Bernie Madoff's unbelievably consistent returns was that he was front-running, and fund after fund after fund after fund lined up to give him money. Besides, front-running isn't really where the big money is anyway. Insider trading is way, way more profitable from an individual standpoint.