Facebook Whining that the Fix Was Not In

Ideas and Issues

New Orleans   Yes, I use Facebook, and as a tool for work and communication, I have found Facebook to have value.  Ease of use and access, make it a useful means for people to slip a note over the electronic transom, find you, and move forward.  Facebook doesn’t make revolutions, change the world, or anything like that, but it is value added.

Nonetheless, I’m loving reading all of the hype in the financial press about the Facebook IPO the other day as they went public on Wall Street.  The story in brief is that the big whoops priced the stock at a huge multiple of its revenue and profits to inflate a book value, if successful, that would have set records and valued the company at its infancy at close to $100 billion dollars.  Endless stories, many of them true, about huge cash outs and sudden gazillionaires have a huge fan base, so they were regularly stoked.

But, now they are crying like stuck pigs.  Seems there was no rush from the little guys to buy the stock and it only held the value on the first trading day with a lifeline from is bankers, Morgan Stanely, who moved in to fix the price by buying shares.  The second day of trading the stock fell off 11%, and the roars began.

The real issue is that Wall Street thought the fix was in.  They thought they had stacked the deck with the early purchases so that the “biscuit cookers” would buy in to what they had been conned to believe was a “sure thing,” and some of the little folks might make a dollar or two, but the big boys would make millions on the increase thanks to the suckers spending on the street.  Didn’t happen, captain!  So, now the Wall Streeters are screaming like stuck pigs.

My unsophisticated argument has always been that the stock market at these odds where Wall Street is the “house,” and we are the small better, is the same as going to a casino in Vegas or any other state:  a matter of luck for the small fry and odds for the big dawg.   For now Facebook seems suddenly to be case in point once again that the fix was in, but the quick killing of the little investors didn’t happen.  There’s a recession driven by Wall Street that some of the big dogs forgot to realize reduced any belief they were running a fair game.

They are not, so they need to learn to lose on these bait-and-switch things.