Dow Jones Plunge Fueled by Overwhelmed Computers 215
cloudscout writes "The Dow Jones Industrial Average dropped over 400 points today. While there were various valid financial reasons for such a decline, some of the blame is being placed on computer systems that couldn't keep up with the abnormally high volume at the New York Stock Exchange and the resulting tremor as they switched over to a backup system."
Blaming? (Score:4, Insightful)
Humans do, at least in designing, manufacturing and sizing computer systems.
This one seems to me like blaming at a knife once you cut your fingers.
I have to wonder if this is spam related? (Score:3, Insightful)
Re:Blaming? (Score:5, Insightful)
Chaos theory, anyone? (Score:5, Insightful)
2. Market starts to waiver
3. Other parts of the market see this tremor so market waivers a lot
4. Panic ensues
5. Indices drop 10%
6. a pension company goes bust
7. my grandpa doesn't get to eat.
The last few steps are somewhat hypothetical, but still. The stock market must be one of the most immediately visible examples of chaos theory kicking humans in the nuts.
Peter
I'm actually suprised (Score:5, Insightful)
I'd say that someone, likely the one in charge of the IT budget approval, keeps tight purse strings. Of course, he's not the one getting reamed, it's the CIO and his crew who are taking the blame even though they have repeatedly requested the funds to improve the system. Just speculation, but likely spot on.
Just another piece of ammo when I start a new job and demand a reasonable budget.
Real Cause? (Score:3, Insightful)
Dropping prices versus dropping data (Score:5, Insightful)
The Dow did NOT drop 200 points in minutes, the data simply caught up with the drop that had already occurred.
Don't see how they could. (Score:3, Insightful)
I would guess, virtually none, since they're by definition low-volume?
This blaming it on computers seems mostly a red herring. The markets in Asia (particularly Shanghai) tanked, and as a result, the markets in the US tanked, because companies in the US are heavily invested in China.
I think the only lesson here, in case there was anyone left who didn't get it, is that we all float or sink together. For better or worse, the US has tied itself pretty tightly to the Asian markets, and if they collapse, we're going to be seriously hurting.
"Load"? That's exactly what I was thinking (Score:4, Insightful)
Re:Chaos theory, anyone? (Score:4, Insightful)
At least, that has been my observation. I can't WAIT for leveraged index ETFs... come on, ProFunds!!
Oh, and your Grandpa's pension would not go bankrupt over a panic event. That's absurd.
Of course, anyone who relies on pension companies for retirement has bigger problems...
Re:Chaos theory, anyone? (Score:4, Insightful)
1. Computer switch-over is a bit slow
2. Market starts to waiver
3. Other parts of the market see this tremor so market waivers a lot
4. Panic ensues
5. Indices drop 10%
5a. If your investments are diversified, you will survive when the Indexes drop 10%. This is especially true for long-term investments.
6. Buy low.
7. Wait for a while.
8. Sell high.
9. Profit!
10. Enjoy your retirement.
It's voodoo (Score:5, Insightful)
Imagine a series of database transactions, with each step getting queued up and waiting for the system to finish processing it. The actual DOW number reflects fully completed transactions, but not pending transactions that might impact the outcome. This is probably a good thing, as a transaction might end up being rejected, so you only want to show the outcome of completed transactions. Once the backup system came online, the transactions quickly finished being completed, resulting in the dramatic drop.
The amazing thing to me is that the system is robust enough that transactions can survive the loss of their main computer system and bringing up a secondary one. That's database, networking, and coding voodoo, all wrapped into something pretty awe-inspiring.
Re:Blaming? (Score:1, Insightful)
Re:Blaming? (Score:3, Insightful)
Sure they do. Bad ram, overheated components. If computers didnt make errors, you wouldn't need CRC checking - to name but one common error identifier.
Lets try and think more, go for frosty pist less. Ok?
Re:Sooner than think. (Score:3, Insightful)
2. What makes you think that's going to happen during the current administration? We both know that any negative actions will be held off on until the current "what-me-worry?" administration is gone. They'll let someone else take the heat.
3. And raising prime that far will have the beneficial effect of causing inflation, which will devalue our debt. The downside will when ere high prime will cause inflation, but the returns on business investment lag behind government securities causing a shrinking economy (stagflation). We've been through it before, it's not pretty -- and it's what gave us Reagan in the White House, for better or worse.
Re:Don't see how they could. (Score:3, Insightful)
Re:I'm actually suprised (Score:3, Insightful)
Put out an RFP for someone to design a cluster based system that will perform the same functions the system currently does, but using OTS hardware in a massive single or distributed cluster configuration. Perhaps they use virtualization and have one VM for every symbol... then purchase enough hardware that only the least active symbols share machines while those with the most activity are alone on a machine. They could even be dynamically moved about as loads fluctuate.
Sure it'd be expensive... but a massive cluster of low end machines, even at $2000 a pop can still bring a lot of power and stability to the mix... and best of all, adding more power is as simple as plugging a new one in.
Anyway, it's besides the point... I just believe that someone somewhere really screwed up to let things get so bad. Perhaps it's the PM who selected the software vendor, perhaps its the CIO who hasn't done what needed to be done, or perhaps it's those with the money who didn't listen to their IT people. I personally think it's the latter case, as I have seen that attitude at all levels of business... even a 1 man company can fail to allot the proper funds to IT and let essential services go ignored (like backups).
I have begged and pleaded with bosses that it's necessary to increase capacity prematurely... but often they counter with, come back when something is broken. Then when I do, it's "What do you mean it will take 3 months to implement a fix? Didn't you see this coming?" I still believe this is what happened. Sure someone saw the problem, and knew how to fix it.. but they couldn't convince the man with the cash to cough some up and get the ball rolling. I bet the vault is open now though!