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Comment by jodrellblank | Hacker News Reader

How bad is that? From the graph it's back to levels of early February, but is this a curiosity, a drama, a panic or a catastrophe?

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To give some perspective, it is the biggest intra-day loss since 1987.

For those interested, "The (Mis)Behavior of Markets" by Benoit Mandelbrot and Richard Hudson examines, among many other things, the 1987 "Black Monday" event. Mandelbrot theorizes that sudden, disproportionate events such as these may be much more common than today's models and distributions predict. It's a great, accessible read even for those not mathematically inclined.

Sounds like a "Black Swan".

A black swan is an unanticipated event (typically grounded in some fundamentals) - not an error of judgement or algorithm.

But to the extent that judgement and algorithms inform and are informed by our anticipation, it is very much that.

This is a genuine panic -- probably the start of pretty dramatic decline. Sovereign debt is going to be the new contagion. If the contagion spreads, the gains to consumption over the past year could be demolished. These gains were bought at the price of government stimulus -- i.e. soverign debt. Businesses are not yet stable enough to weather another downturn soundly; governments are already grossly over-extended.

Oh, happy days.

"We should be down big today, but not 1,000 points. This is an equity market structure issue, there's no major problem going on."

http://news.bbc.co.uk/2/hi/business/10101581.stm

Doesn't sound like a panic to me.

Yea, it's appearing more and more like a glitch, human, structural, or otherwise.

However, the sellers were real -- and increasing. I think there is a danger that people will see it as only a glitch and not the beginnings of trouble. The glitch might mask the true sentiment.

Why would you want a panic? The market is built on confidence, we want the market to have confidence...

To some degree, I agree with you. The stimulus was a bluff that was meant to inflate confidence and bring back spending. The market is a strong signal that, if in panic mode, may arrest gains to consumer confidence. I don't want a panic because it may lead to recession/depression round 2. However, I also believe that, if round 2 is inevitable. I'd rather fall from a lower height.

But not necessarily false confidence.

According to CNN it "might" have bee a computer glitch causing a huge volume of trades and corresponding panic that followed pushed it further down.

Things seem rather stable at -4% now...

From the BBC: http://news.bbc.co.uk/2/hi/business/10101581.stm

"This is an electronic market where bids can be cancelled at the flick of a button, and everyone cancelled at the same time," said Joe Saluzzi, of Themis Trading in New Jersey.

Does this make sense? With the time horizons that today's programmed trading operates at, is this really a reasonable explanation?

Follow the action live on Google Finance (one of the few finance site still working): http://www.google.com/finance?q=INDEXDJX:.DJI

Early plunge: panic.

Current status: probably a fairly rational reflection of the badness of the situation (which is not new, and although serious, probably not catastrophic).

panic

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