Insightful Guardian column by Dean Baker.

Of course, Facebook is unlikely to go out of business, but it is certainly possible that its business model is not sufficiently robust to justify a position among corporate America’s elite in market capitalization. A year or two down the road, it may well turn out that its share price ends up at half or less of its IPO price (at time of writing, it is already off 13%).

In this case, there will have been an enormous transfer of wealth from the purchasers of Facebook stock to those able to cash out following the IPO. This will make many of those on the inside of the company fantastically wealthy. However, much of their wealth would not result from making a good product that society valued; rather, it came from being part of a successfully hyped company.

These insiders benefited from the ability of Mark Zuckerberg and his colleagues to convince investors that Facebook had much more profit potential than, in fact, was true. This ability to hype a product (in this case, company stock) can be an incredibly valuable skill, but it provides nothing of value to society. In that way, it is similar to the skills of Fabrice Tourre (aka “Fabulous Fab”), who was apparently very skilled in putting together complex mortgage derivatives for Goldman Sachs that were designed to fail.

ALSO: Interesting WSJ video conversation about Facebook’s feeble showing on smartphones.

And now this story:

Financial regulators are to investigate whether the banks in charge of Facebook’s initial stock offering broke the rules by selectively releasing negative news about the company before shares went on sale.

The financial industry regulatory authority (Finra) is looking into allegations that Morgan Stanley and other banks released reduced revenue forecasts for Facebook to big investors – but not the general public – before Friday’s IPO. Such activity could constitute a violation of securities law.