The Crash of 2:52

We have long feared the day Computers Became self Aware and took over the world.

Something like that is afoot.

Let me explain,

The market, and by extension the economy of the US and the world has been punctuated by bubbles and bursts over the ages. We come to know them as the Crash of the 19th century, The boom of the turn of the century, the crash of 1904, The crash of 32, the crash of October 07.. etc.
The trend is to mark these "corrections" in terms of a time.
The time getting shorter and shorter. Beginning with Centuries and reducing to Minutes. The Thursday crash was referred to by more than one financial pundit as the Crash of 2:52.

The reason, of course, is automation. All the trading firms have highly sophisticated algorithms that automatically buy and sell stock without human intervention. The programs are all different but they are evolving into a consensus about what the spread should be and what the "Delta T" of a stock is. The math professor within my gentle reader will recognize the term.

The crash of 2:52 occurred because 60% of all stock trades are done automatically, by machine, in something called "High Frequency Trading". With this going on individuals who trade online should glue a lever to the side of their monitor. It is like being in a gunfight with a robot Yul Brynner. (Sorry for the dated reference.. if you need to - look it up) People react in minutes or days, computers react in nanoseconds.

There is a condition, known as population inversion, in which most of the individual elements of a society become excited. This can happen with mobs of people in train stations, atoms in a ruby, or even nuclei of Hydrogen. The result is an explosion in the form of riots, or lasers, or atom bombs.. It even happens in your brain in the car lot when a sexy sales person is showing that that sporty little red number.

Unfortunately it can happen to computers too. If there happen to be a million computers trading and more than half trip at the same sell point the stock market will drop like the discharge from a 707 toilet. That happened at 2.52 on Thursday causing a number of cyborg traders to jump out their Microsoft window.

Some in the EU say it was caused when Hungry fried Turkey in Greece..

I think maybe it is Just Greed.

Greedy Little Computers.