The computer did it!
Innovation in the financial sector is once again turning Wall Street into the biggest roller coaster in America. It was a "glitch," apparently, that sent the markets down a very steep trajectory yesterday. According to the NY Times article on the crash, at least half of all trading is done via these "high frequency" trades. A computer is programed to do the buying and selling that once were the sole domain of the trader. "'We have a market that responds in milliseconds, but the humans monitoring respond in minutes, and unfortunately billions of dollars of damage can occur in the meantime,' said James Angel, a professor of finance at the McDonough School of Business at Georgetown University"(as quoted in the NY Times .) I love computers as much as anyone. But innovation coming out of the financial sector is a little scary these days. From the Times story: "The near-instantaneous swings left brokers dumbfounded." Traders weren...