That 1,000-point drop on Wall Street today? Guess how it happened?
In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses in what possibly could have been a trader error. According to multiple sources, a trader entered a “b” for billion instead of an “m” for million in a trade possibly involving Procter & Gamble [PG 60.75 -1.41 (-2.27%) ], a component in the Dow.
That set off a chain-reaction panic on trading floors. As Daniel Foster at National Review noted:
P&G's 37 percent nosedive was only responsible for 172 points of the 992.60 the Dow lost in the slump. The rest was market reaction — and part of that was computerized and automated.
You know, capitalism and free trade generally make a lot of sense. But our current method of allocating capital -- Wall Street being the big mover in that process -- keeps finding new ways to make itself look dangerously insane. Terminator was about how computers and robots set off an apocalyptic attack on humanity; turns out they don't need nuclear weapons to do that, just mindless programming instructions to start selling if somebody else is selling -- even if that sale is the result of a "fat finger" typographical error. Holy crap.