Transparency and mendacity
The Richard Thinks blog has an item about transparency today. It implies that The Economist has fallen for the self-serving nonsense of some anonymous traders: 'not having full-transparency allowed them to fully exploit the potential of secret trading strategies and that with full disclosure they would have little incentive to correct market inefficiencies through arbitrage.' And: 'when investors start thinking that other people are privileged to lots more relevant information and that they have an unfair disadvantage they are likely to resist activity in the market. So "[s]ymmetry, not the amount of information, matters"' How convenient for the financial institutions! The first argument is clearly fallacious. Arbitrageable market inefficiencies only arise from lack of transparency. If the markets were transparent, the market inefficiencies would be visible and there would be an immediate and high profile incentive to correct them. And a much stronger one - ...