[Oh, that's Thailand, never will happen here]
Funny you should mention Thailand -- I was working there last summer when the SET (Stock Exchange of Thailand) crashed and actually saw it happen.
I was doing some engineering work at a large Thai company, in their computer/communications room, and they had a data connection to the SET that fed data into HP Unix computers for analysis. They actually had a computer screen that displayed every transaction being executed on the SET and the SET index. When the crash started to happen, the data started scrolling rapidly on the screen, almost faster than the eye could comprehend. What really stunned me was how relentless the market drop was -- people were selling shares at any price they could get for them.
To use a technical metaphor, wealth disappeared like liquid nitrogen evaporating on a flat surface -- lots of activity, then it was gone, without leaving a trace behind.
Sure people might say -- but that was Thailand, a much smaller market, and they didn't have "circuit breakers" like here in the U.S., so it couldn't happen here that way. I disagree with that view -- the high tech trading systems here, like Instinet which allows for trading after the market closes, Web stock brokerages and 800 phone numbers to brokers and mutual funds are even more technically advanced than the systems in Thailand. The technology we have now in the U.S. is just as capable of allowing a stock price to be devastated in a very short time -- it's already happened with various individual companies on the U.S. stock markets and when it happens to the markets themselves, billions of dollars will be lost in the blink of an eye. If a crash happens, it will be a much more accelerated event than in 1987, because of the technological advances that have happened since then.
This is probably an example of what my father (a retired nuclear engineer) warned me about, the unforeseen consequences of technology. (At one point in time, nuclear energy was supposed to produce electricity so cheaply it wouldn't even be metered. Of course, no one thought about the nuclear waste problem...)
Paul McGinnis |
