May 7, 2010 Are you sure?

   Yesterday May 6, 2010, the Dow Jones Industrial had a 1,000+ point swing in about 20 minutes. The market recovered but it still closed down 300 points. The United States trading market is one of the most real time, up to the second, technological dependent systems in the world. Checks and balances, verifications, behavior monitoring, fraud detection, yet there was a sell off or record proportions and no one know exactly why from a business perspective. There were no indications that a sell off was required or that one was about to happen, yet one did and that left the 'experts' baffled. 

   Today the 'experts' are coming out and saying that the dive was caused by an erroneous trade where the entry was in Billions and not Millions.  Now, with all the checks and systems that are in place to watch and verify trades and moves, you'd think this could have been prevented. Even in the high speed, stressful world of no error trading. Yet the error was processed and in the markets, where you are basically betting the future, perception is reality. They say someone selling Billions of shares and the rest followed. A cascade effect started and the rest of the market got sucked down the drain. 

    

   I don't want to get into more details and market jargon of why it happened, I don't understand enough about the markets to even attempt to. However, let's think about it in a more Doom and Gloom scenario.

What is really, really scary about what happened? Take a minute and think about it......



**** THINK ****

   OK, time's up.

   Here's what scares the hell out of me that our smart people of the world, the technology experts, the world of data and information has put together. There is a system in place, that we allowed to develop this way, that can potentially be brought to it's knees by one or a few 'fake' or 'error' transactions. Where they will be wiped out and cancelled later on, but still allowed to be processed. That act alone was enough to cause the market to shed 10% of it's value. Now, in this case it was an error and the market somewhat recovered. So what?

   What if it was coordinated? What if there were 2 or 3 really smart, anti-money guys who knows their enemy very well and executed a plan of several well times 'error' transactions enough to cause enough perception to have the system collapse in on itself. Just from the perception from the behavior of a few. That is what could have and can happen. That's scary.

   You don't need an SUV full of gas and fertilizer to destroy a country.

    You may just need a keyboard and an Internet connection.

End of line.

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The items in this post are purely the thoughts and opinions of the author. All facts and data are gathered across various sources and the author's conclusions are based that information. Techie Pro

Posted in: Technology