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Had it been April and more particularly April 1st it might well have made some sense. It might have been an April Fool’s prank – albeit in bad taste. But it wasn’t. It was May 6th and the New York Stock Exchange’s (NYSE) 1000 point drop was, in fact, no laughing matter. It was a computerized sell off that was caused by what is being labeled a mistake.
If you had glanced at the stock market at about 1250am our time (here in Cambodia in the early morning of May 7th – which was about 1.50 pm CET May 6th in the United States) you would have been forgiven for thinking that the financial world as we know it was coming to an end.
The Dow Jones Industrial Average (DJIA) was down by nearly 1,000 points. It then started to recover …bit by bit. At the end of the day the DJIA stood at -342 points – a welcome sight compared to the -998.5 it had been earlier!
So what was the problem? It was an error that sparked off a computerized sell-off, we are told.
This in itself is worrying. Not so much the fact that there was an error – because as we all know mistakes do happen. The worrying part is the fact that even the slightest of mistakes can and will trigger off such a negative reaction that could have the severest consequences.
What’s even scarier is the fact that the trigger was caused by a computer and by the time the mistake was discovered it was simply too late. The sell-off had already occurred and billions and billions of dollars had been wiped off the book value of companies listed on the stock markets. Admittedly the markets and companies rebounded – but still, it makes you wonder, doesn’t it?
While there are those in the United States who might be thinking that there is simply too much technology (and too much of a reliance on it!) there are probably those in Europe who are thinking that there isn’t enough – especially in the wake of the Icelandic volcano.
If nothing else the volcanic ash cloud which plagued – and continues to sporadically plague – Europe shows just how infallible our man-made technology, systems and infrastructure really are in the face of nature.
In April a cloud of ash from the Eyjafjallajokull volcano in Iceland effectively brought Europe to a standstill by shutting down a large swathe of the continent’s airspace. The disruption adversely affected an estimated 1 million passengers per day and is reported to have cost the airline industry over USD $1.5 billion. The crisis had a knock-on effect to flights from Asia and the rest of the world.
Now the debate is going on in earnest over whether Europe’s monitoring equipment is good enough. There are currently discussions going on in Europe as to whether satellite instrumentation should be upgraded to allow for better monitoring of occurrences such as the recent ash cloud.
So, while the United States may be bemoaning its national reliance on technology, Europe appears to be bemoaning the fact that its technology is not sufficient. And what about Greece? This has been yet another huge story that has had a negative impact on the world – financially speaking. Has technology played any part in compounding the problem?
Not specifically, perhaps, but in a roundabout way – probably. After all with modern media driven by the latest technology what happens one minute in one country is known the next minute (or even faster) in another. This is the price we pay for globalization as well as the rapid advances in technology.
With news traveling quite literally at the speed of light bad news now travels fast – so fast that it can contribute to contagion. It was this contagion that caused wide spread panic on all the markets – from New York to Tokyo. It was this contagion that shone the spotlight on Portugal and Spain and their potential problems.
If nothing else it is the lightning fast dissemination of news that puts us all under pressure. Governments are under pressure because they have to react much faster than they ever used to in order to curb contagion while the public has to react to prevent being caught up in the fall-out. Gone are the days when one could actually digest what is happening.
The 64 million dollar question really is whether without super-fast technology that brings us instantaneous news – would Greece be the huge issue that it is today. It’s a question that we’ll probably never be able to answer unless we cast our mind back to the days before the internet. But having said that we probably wouldn’t have had a Euro back then either.
Three cheers for progress!
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