The flash crash of the 6th of may in the US is something worth worrying about.
As the picture becomes clear now it is the perfect example of automatic programs
taking command in a business sector where the human intervention and genius was
said to be responsable for the creation of wealth and trade. It is also an example
how we are increasing the systemic risk by integrating at an ever increasing level
systems and networks that aren't necessarily bound to work together. The us stock market
is not as most think one market or one network that gives you one number. It is a network
of networks and tradingplaces to much are also connected the supercomputers of traders -
even small localized ones. The fall of cost of the supercomputer has made it available to
many more investors than ever before which means that they can observe, intervene and try
to manipulate the stockprice on one trading place or the differences between the different
trading places. It is result of a business where oversight and control is more the exception
than the rule and every millisecond could be the difference between the best and the worst deal
for a trader that day. The result is that even when the whole system was crashing at an ever
increasing speed there were still traders placing bets that it would even go lower.
Two automatic processes seem to have been important in this self imploding market.
The first is the stop loss market orders. THis is when computers automatically start selling
when a certain value is selling less than determined x. It is an automatic process to protect
the gains. In a declining market this cold lead to choas as an army of computers may be selling
millions of values to computers who are only selling.
The second is the self help remedy in which one of the connected trading places stops taking instructions
from another connected trading place or forwarding information to it when it takes more than one second to
receive a response. THis may have lead to another worrying trend in those minutes of market hell :
liquidity was disappearing. The global trading place was becoming smaller and it seems there were
every minute less buyers than sellers. Which was logical because a few trading places were not connected
THe decision was made to interrupt the trading and to resume later. Afteplr that time and the
annulation of the trades the situation returned to more or less normal.
Some automatized daystocktraders with super computers just pulled the plug themselves because they
saw it was total madness and that they could only lose that day. A human can make this decision.
A computerprogram will continue.
That day the US stock market in a matter of minutes lost 6 procent and some - even
famous - stocks were worth next to nothing losing all their value in those few minutes.
Those stocktrades were cancelled afterwards.
The sec has also decided to set up new rules and oversight of the big electronic traders. It seems
that they account for the moment for more than half of all the trades during one day in the US. They
aren't big banks or investment houses as we see sometimes on tv, but small offices around the country which
are connected to the trading network and let computers trade all day. As stated in some newspaper articles
most trades aren't kept longer than a few minutes as their computers and programming is based upon the
presumption that one has to profit from each discrepancy in price between trading places or trading information.
But as they are small in numbers and actual turnover compared to the big broker houses they aren't supervised
like them, even if they do more trades a day than any one of those.
The idea of the longterm human investors being replaced by a computer that sells and buys stocks as was it
a casino makes everything different.
One thought when reading these reports is that 'the whole is more than the combination of
the many'. It means that if one wants to create one global American or international stocktrade
one has also to set the same kind of controls, procedures and limits on everyone of them and that
trading from one exchange to another shouldn't implicate a whole different set of procedures.
The flash crash of the 6th of may in the US is something worth worrying about.
As the prices for blank media are now increasing in Belgium due to ever increasing taxes to protect authors they say
so when you think that you can buy those media cheaper online in countries where they didn't install that tax yet, you are wrong again
There is a free traffic of goods and people in Europe, but not online :)
* We mogen helaas geen lege cd-r,dvd en cassettes naar Belgie en Oostenrijk(+nog andere produkten) stuuren de rest van onze produkten (inkpatronen enz...) kunt u natuurlijk bestellen of u kunt ook direkt in onze winkel in Luxemburg inkopen.
Ons adres en de openingstijden vind u op onze Home pagina bij "Bezoek ons".
so someone will have to travel to luxembourg, Holland or UK and get the DVDR's delivered at his hotel
the price differences are enormous so will any consumer defense organisation get into action or is the Free trade zone only for the rich and famous ?
Sun has to sell because it has lost its biggest clients in the banking industry. So how many other ITfirms were too dependent on the financial sector and are sinking ?
Sun has to sell because a private investor group has decided it was time to take the money and run. So how big is the influence of such kind of investors in other ITfirms ? It doesn't matter if you are big or small.
If the case it really happens than there will be a lot of questions for the clients and for the regulators.
The only one that will be celebrating if it happens will be Microsoft as that integration of IBM and SUN will be so time-consuming that it will get a timeframe it could very well use. Also, it won't be the bad guy in town anymore because regulators will find enough reasons to go through a very long study period before the deal could be finalized.
"Given that Sun has reportedly been shopping itself around (nice severance packages for the top brass, no doubt), it's more likely that Sun has been too successful at selling itself -- just to the wrong party at too low of a price. This may even be in the form of a chop shop takeover. The only thing holding up a hostile takeover of Sun to sell it for spare parts over the past six months was the credit crunch, and the fact that private equity firms have had some distractions."
so what does that mean to owners of Sun installations or software ?
uncertainity and fear and backups and lifecycle management
There are 5 good reasons why you shouldn't wait on no one else and on nothing else and start getting a real internal - or with other firms next to you (windmills) or in the same branch (collective negotiating) - energy policy together.
These reasons are the same why you have set up without waiting on anything from outside your own ITsecurity policy plan
1. The situation is worse than everybody is telling
2. Nobody is doing anything essential and everybody is just saying how bad the situation is
3. it will take years before they have decided on anything in law and with real budgets and years to organize it effectively to have enough effect
4. Nobody is going to help you if the situation has gotten you into problems
5. It makes good business sense because your business will be better prepared and will maybe even have the possibility to make money out of it. In fact it secures the business future of the enterprise you are going to protect.
For the IT manager this means
* replacing everything that is too old with new material that has all the green essentials a new machine should have nowadays
* shutting everything down or setting it in standby from the moment it isn't used
* monitoring your energy use all the time and trying to get it under control
* have different suppliers you can switch over to if needed
* try to become energy-independent by producing your own electricity if possible (sun, hot air, wind,....)