Are Goldman Sachs and the Megabanks Able to Wipe out an Entire Economy with a Keystroke?

AlterNet / By Scott Thill

Are Goldman Sachs and the Megabanks Able to Wipe out an Entire Economy with a Keystroke?
How artificial intelligence and robotrading pose a growing threat to the global marketplace.

May 27, 2010 |


"We have found no evidence that these events were triggered by 'fat finger' errors, computer hacking, or terrorist activity, although we cannot completely rule out these possibilities," a recent Securities Exchange Commission (SEC) report on the so-called May 6 "Flash Crash" that wiped out a cool trillion in a mere half-hour weakly admitted. "Much work is needed to determine all of the causes of the market disruption."

That's another way of saying that it remains only the market makers that caused the largest single-day point decline in Dow Jones history who actually know where the bodies are buried. The rest of us, including the SEC, have a Sisyphean task of sifting through mountains of dense data. But regardless of who ends up on the end of possible criminal proceedings, the SEC is sure that the whole clusterstock was seriously exacerbated by the robotraders executing light-speed electronic transactions via supercomputers, while exposing our hyperreal economy as an Internetworked casino. If anything, the Flash Crash proved that market makers like Goldman Sachs and plenty more playing both sides of securities could be capable -- with the high-priced help of math and computer science Ph.Ds crafting up proprietary, recursive algorithms -- of wiping out any corporation's stock, perhaps any nation's economy, in a comparative instant with just the press of a button.

"It was actually amazing watching it all happen," Gina Sanchez, senior analyst for Roubini Global Economics, told AlterNet by phone. "We went from risk-aversion to risk-seeking in the matter of an hour. But it doesn't bother me so much that the algorithms went after the bids. They were doing what they're supposed to do, which is seek out arbitrage opportunities. What concerned me was how the bids got out there in the first place."

That is the primary concern of the SEC as well. But it's going to have a hell of a hard time figuring out the human brains behind the inhuman bids that remotely reduced the price of some once-reliable stocks to mere pennies. Thanks to the very technological innovations that has transformed last century's stock market into an inscrutable hyperreality programmed and deprogrammed daily by rapacious banksters, Wall Street's corruption cops are drowning in deeper paperwork, virtual and otherwise, than ever before. ..............(more)

The complete piece is at: http://www.alternet.org/economy/147006/are_goldman_sachs_and_the_megabanks_able_to_wipe_out_an_entire_economy_with_a_keystroke_/

Then they will find out what they need to know.

transactions?

They were thinking of foreign countries trying to mess with our economy, but the real economic terrorists are home grown and motivated solely by profit not ideology.