But in 2000 the dot.com crash took down NASDAQ, the US fell into a recession, Sept 11 happened, Bush started a "war of choice", Katrina demonstrated that Bush's government was incompetent, the housing bubble burst, and now we have a debt crisis in Europe and a mini-meltdown in the US stock market. This is not the world I would have expected in January 2000.
Here is a bit from a post by Robert X. Cringely on the Adam Smith's Money World web site:
Yesterday something happened to drop the Dow 900 points in six minutes. We don’t yet know exactly what was the igniter for that market implosion, but it likely was a computer glitch -- a $1 trillion computer glitch.I added the bold to the last paragraph. It is the take home message. The US government is now almost two years from the meltdown of Sept 2008 and nothing has been fixed. In fact, the crash on Thursday May 6th proves that there are even more problems that are lurking out there. Instead of government rushing to fix the problem bequeathed by the Bush years, the US Congress has engaged in interminable debate. The Republicans stymie things by calling for all proposed bills to be tabled and to "start over" on the legislative process. That's it. No real progress. Pitiful.
Whatever the glitch was, it happened and trading programs, trying to sell out from under what they perceived to be a market crash, dutifully began to liquidate. Before any human even knew it the market was crashing, though for no good reason.
From a technical standpoint this event reminds me of when the Strategic Air Command first fired-up the DEW Line radar network in 1958 to find a huge wave of Russian bombers apparently flying over the horizon. Those bombers turned out to be the rising Moon -- something SAC programmers had failed to tell their command and control computers even existed. Then, too, calmer heads -- human heads -- prevailed, calling back a U.S. response that was already in the air, headed for Moscow.
Yesterday’s market event comes down to a differentiation between being clever and being smart. The program trades are clever -- they respond almost instantly -- but they aren’t very smart. A trader on his or her first day of work would be smart enough to know something was wrong when Accenture appeared to be selling for a penny. But computers are dumb.
Yesterday stands as a metaphor for the market as a whole in the last decade, when clever substitutes for smart and size trumps sense. When too big to fail means too big to even care, something has to give.