GPS, the Russians are amateurs. The USA has the best politicians money can buy. It's silly to accuse Russia and Putin of fascism if we consider the trends in the "free" world over decades. With the various police shootings of people and SWAT home invasions of wrong addresses and excess in general, with Homeland Security treating people like herds of compliant sheep, we read little about the USA lecturing and hectoring China about human rights. Free speech, despite having specific constitutional protection, is increasingly limited.
Meanwhile, the Flash Crash remains a puzzle to some people. Fortunately, you got the right answer from the world's foremost prognosticator. Maybe they should consider gremlins. americasmarkets.usatoday.com <Even four years after the crash that wiped out $1 trillion in wealth in the blink of an eye, investors and academics still haven’t agreed on what caused one of the most vicious and inexplicable short circuiting of markets to occur.
On that day, the Dow Jones industrial average plunged roughly 1,000 points only to recover in minutes. High-frequency computerized trading, believed to at least be part of the cause of the breakdown, is still a major force in the markets. There have been tweaks made to “circuit breakers,” or thresholds of volatility that cause trading individual stocks or the market to be halted. But these measures are widely viewed as putting Band-Aids on an open wound — it might offer some comfort, but does little to fix the underlying problem.
“It can still happen now, and it does in certain (individual stocks),” says Joe Saluzzi, trader at Themis Trading.
Perhaps the reason why the problem isn’t being addressed is that we don’t really know — even four year later — what caused the 2010 Flash Crash. And as recently as 2013, there have been other widespread malfunctions in the market that remain largely mysteries. Regarding the Flash Crash of 2010, it took roughly five months before regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission released a report documenting the events that shook the markets. The report largely blames the “fragmented” stock market where there are multiple marketplaces exchanging prices with each other.
If any part of the networks connecting traders broke down, just a single trade could cause problems, the regulators found. The SEC and CFTC focused in on trading in so-called E-Mini S&P 500 contracts, which are complex financial instruments used to bet on the future direction of markets. Academics and other market observers have taken issue with parts of the regulators’ studies, meaning that even today, the cause of the event is in dispute.
And while there hasn’t been a major broad flash crash repeat to the magnitude of the one in 2010, that’s not likely due to any changes in the markets. Just last week, the NYSE was fined for not following rules with trading, or not even having rules in past.
Others insist the industry has made meaningful reforms that make the repeat of a flash crash unlikely. Stub quotes, artificially low bids for stock at a penny a share for instance, are eliminated and tighter curbs on short-term stock movements are in place, says Randy Williams, spokesman for BATS, an electronic stock exchange. “The industry has put mechanisms in place, such as limit up and limit down, which make another flash crash far less likely,” Williams says.
This is one time where traders hope history doesn’t repeat itself. “Thankfully we’ve not seen the ‘big one,’ but it could happen again,” Saluzzi says.>
See their faulty thinking? They write $1 trillion was wiped off "wealth". There was no change in wealth. There was a change in price. An ephemeral one. There was a transfer of wealth [the aim of flash crashes], not a loss of wealth overall.
See the silly "safety" things they have done. They "put mechanisms in place, such as limit up and limit down". All that does is hand even more advantage to the supersonic million mile a minute high frequency wheeler dealers. Their systems can easily incorporate such arbitrary mechanisms into their models. Humans can't. So the authorities have made things even better for the winning machines. That's not surprising because governments usually exacerbate problems with their "solutions". The "solutions" normally involve giving more power and money to themselves and their cronies.
Mqurice
PS: Yes, I noticed I made a Freudian slip and referred to you as GPSOne. |
