The Flash Crash
I was having a late lunch and watching CNN yesterday around 2:30 p.m. The images of the Athens riots were concerning-police beating back protestors, small gas-fueled fires on the side of the road-and then I hear that the U.S. stock market is down 500 points. Yes, we're one, interconnected world... but seriously? I blogged about it.
What I missed (until the story began coming out last night) was that the 347.8 loss the Dow closed with was nothing compared to the wild bungee jump that the markets went on just before 3 p.m. The stock of Accenture went from being traded at $40 to a value of $.01 - a penny. At one point, the Dow was down nearly 1,000 points.
Says Floyd Norris in The New York Times:
Combine one part nervous traders, one part Greek crisis and one part trader error. Stir in one part central bank complacency. Bring to boil. Panic.
Andrew Leonard weighed in on Salon.com with a more dire view:
Forget about too-big-to-fail insolvent banks. Today's nightmare is a vision of insolvent countries knocking each other down like a line of dominos, with street riots and brutal recessions breaking out all over. The credit crunch of 2007-2008? Today's panic suggested that past troubles might be merely a prelude to a much more devastating crisis.
OK, I have to admit, I'm a little freaked out. The fluctuations of the market are like the ups and downs of a bad relationship (see this great bit of research on "phantasies" and the market circa 2008). So like I'd advise any dysfunctional couple in the heat of a frantic argument, let's call a temporary truce, get through today as calmly as we can and take a few deep breaths over the weekend before we do anything too rash, shall we?