Was the Flash Crash Caused by Regulation?

For three generations now, the rights of businessmen have been trimmed back--by regulation and prosecution--in order to make markets conform to the false ideal of "perfect competition." The great Galleon insider-trading case is but the latest example. Today, in the WSJ, Dennis Berman suggests that the 1000-point Flash Crash of last May 6 may have been a result of this process.

He writes : "The May 6 'flash crash' was the culmination of 35 years of relentless stock-market reform."

The invaluable Larry Ribstein of "Truth on the Market" has a comment : "Insiders have a function – there’s usually a reason why markets are willing to tolerate their existence and profits."

Update: Instapundit has picked up on Ribstein's comment, so hopefully it will get wide attention.

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