I understand that it would clearly be illegal for Charlie to spread rumours that Bob had gone Hare Krishna. But considering that in the real world, Bob is not a real person but a publically traded company, the only people who were losing out until the arrival of Helicopter Ben in the parable would be Alice (who lost out in both scenarios) and Bob's shareholders.
I am not sure that I understand why we are having any sympathy for Bob's shareholders. They gambled on the exchange. They lost. So what? If they lost because of illegal market manipulation then presumably they could get fines and compensation by way of a civil suit. They're big boys - I think they can take care of that part for themselves.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
I don't think this ultimately can be stopped, but Bernanke has managed to stall it enough for the "people who matter" (i.e. rich buggers with "vacation homes" in Paraguay and private, sovereign islands) to bail out at public expense and for the creation of a diversion of skyrocketing commodities that will cover the tracks of the financiers who created this mess and the "regulators" who let them.
