Two facts in the news that just have to be plain nonsense

[ThomWV]

First: We bailed out our banks to the tune of 700 Billion, or more, but we are told that 110 Billion of debt by the Greeks will bring down the world's economy.

Second: We are told that somewhere there is one guy with a Blackberry who, with a half dozen keystrokes, can control the entire US economy, that this one may can cause the Dow to drop 1,000 points in minutes.

[hobbit709]

1. Amazing! Isn't it?

[WinkyDink]

2. I think Americans, at least, have proven ourselves gullible.

[Turbineguy]

3. Of course that 110 billion

is in Euros.

Just imagine if it were in US Dollars.

Oh, wait. Never mind.

[Dr Morbius]

4. Well, you're right on your first point.

But the panic on Wall Street is perfectly understandable, even if it is ridiculous. A very small tax on transactions - like a penny per thousand shares traded - will discourage such folly, and meanwhile produce some much-needed revenue for government.

In fact, why not use that revenue to create this bank safety net the President wants?

[ThomWV]

5. Amen brother!

Hells yes put a sales tax on stock transactions. I have to pay tax on milk and bread, why can't Warren Buffett pay a tax when he buys his ego-candy?

[RKP5637]

6. Insane times, nations, people, media and facts. If half a dozen key strokes

can do this imagine what a dozen could do... Life today is a conundrum as are almost all explanations for events. And we are paranoid about hackers? The real cause will be diffused by the boisterous media with their bantering it about and nebulous conflicting explanations reported as absolute facts.

[girl gone mad]

7. On Greece..

this will be sovereign default with risk of contagion. Greece can't print their way out of debt, as we did (taking on all of the banks bad debt and printing our way out of crisis). The Eurozone is rightfully in jeopardy.

On the "fat-finger" trade, you are right, it is completely absurd to place the blame for the collapse on some dumb typo. Yesterday's action increasingly looks to have resulted from high frequency trading algorithms being triggered to sell as key valuations are breached. It's not a glitch, but a function of these programs and the idea that these trades will be reversed is completely insane to me. Those who gambled with these tools should be required to take their losses. We have certainly allowed them to keep their questionably obtained profits.

[Dr Morbius]

8. I wonder if Greece is for sale.

Seriously. The nation is kind of going into default.

Bad government has a price. I would hope conservatives are taking note, but I doubt it.

[ThomWV]

11. Your comment intrigues me.

When you called the trading algorithms "high frequency" what did you mean by that? I don't know much about them other than what their purpose is of course and I can conceive of how they work easily enough but the notion that maybe their speed or omnipresence might trigger this sort of thing is worth thinking about but also there is that other hint you tossed in when you suggested that here we have a tool designed to minimize risk for the few that turned out to maximize risk for everyone.

[alc]

12. high frequency trading

For selling, computers sell small amounts of stock many times a second and continue to up the asking price until nobody buys. A human would take a while to pull that off and things may change. A computer can do many "test" trades a second so things don't change much as they go. Then they know the max price someone will pay and sell as much as they can for the max price and don't have to negotiate.

And they can cancel a request instantly so if something changes after they make an offer but before it's accepted they can cancel that and make an offer that's better for them.

They also get results of other trades instantly (in milliseconds) and can change their strategy before normal investors are aware that anything is happening. There's no human involvement so you can have 1000s of sells with millions of shares and the feedback makes the computers think the downward trend is worse than it may be so try to sell more.

They can also try to split their trades into multiple requests so there aren't any obvious "big" sells that may tip off a normal trader. If I want a million shares I'd have to do 1 trade of a million shares or risk loosing the current price. But they can do 1000 trades of 1000 shares and it looks like there's a lot of activity but not 1 person doing something big.

[Delphinus]

9. Insightful.

Thanks.

[underpants]

10. Fat Finger