Electronic Gltich Shakes Market Confidence

If you are standing in the New York Stock Exchange and are responsible for buying and selling $millions of dollars worth of stock for your clients....your confidence and the confidence of your clients may have been even further shaken yesterday.

It's that dang electricity again!

Everyone knew that yesterday would be a busy, even frenetic, day for financial markets around the world. The Federal Reserve was scheduled to issue its latest verdict on interest rate policies, with economists holding their collective breath in hopes of a third round of quantitative easing. There was a cluster of fresh economic data due out. And today is the much-anticipated meeting of the European Central Bank.
Still, while lots of traders were anticipating volatility, nobody expected anything like the kind of gyrations seen in as many as 148 different stocks, with blue-chip names like Verizon (VZ) and Dole Food (DOLE) among those hit with massive trading volumes. Dramatic gaps emerged between “bid” and “ask” prices, while some stocks briefly plunged 10 percent or more.

Knight did say that none of its clients had been affected by the software problems, but the glitches again shook investor confidence in the market
Just imagine, for a second, that the algo in question had gone temporarily insane not in the U.S. stock market, but in the European sovereign debt market. Assume, just for a nanosecond, that yields on Spanish or Italian debt had soared to 10 percent, 12 percent or 15 percent. Imagine how global investors would have reacted to that; how they would have responded by assuming that something fundamental had changed and that the entire European economy was about to collapse.

The potential for trouble is almost unimaginable – “almost” because some traders already fear what might happen in just such an eventuality. Simply because a hiccup in trading appears technical and short-lived, doesn’t mean it’s something that couldn’t have serious consequences for our financial markets – and it’s certainly not something regulators and policymakers can confine to the back burner for much longer.

Read more at http://www.thefiscaltimes.com/Columns/2012/08/02/Algos-Gone-Wild-Stock-Trading-Glitches-Strike-Again.aspx#O64o6ByYaxo36SjE.99

Yes....let's just imagine....all of these $trillions of 0's which represent stock accounts, gold accounts, commodity accounts, debt accounts of Spain, Italy and others, all starts to go haywire.  Wrong information, hiccups, stalls and sputters start plaguing the trading desks all over the world.  Might be a computer virus, human error or lack of reliable electricity....no matter the cause, those mythical zeroes can't handle too much more loss of confidence....because the whole system is built on confidence and if that collapses, what will all those $0's stand on??

Have we really reached that point where the whole thing could unravel because of a 'glitch'?

What about all those mythical zeroes sitting in all our 401(k) plans, pensions, IRA's and Bank accounts?  That's where all of our work is stored...that's where all of our hope for the future is stored?

2 Corinthians 4:18
So we fix our eyes not on what is seen, but on what is unseen, since what is seen is temporary, but what is unseen is eternal.