panic on wall street

It was a very scary day at the dog track, as Atrios calls the New York Stock Exchange. About 90 minutes before the end of today's session the Dow Jones average fell almost a thousand points in roughly half an hour. A rumor began circulating on the floor that what traders were seeing was a panic stampede set off by growing anxieties over the Greek debt situation.

If the pendulum had stayed there, it would have been the biggest one-day stock market loss in history. But the panic was followed by an upswing, and the average ended the day down 347 points.

The explanation we're now hearing is that the hysteria was set off when a trader made a data entry error on a sell order for a very large block of stock and typed "billion" instead of "million."

As the average began falling like a sack of coal, automatic computerized features built into the market's transactional system were activated, magnifying the panic. The AP article covering this clusterschnazzle explains that "Computer trading intensified the losses as programs designed to sell stocks at a specified level kicked in. Traders use those programs to try to limit their losses when the market is falling. And the selling only led to more selling as prices fell," then adds almost anti-climactically, "The selling was furious."

It's frightening to think that our economic well being, yours, mine, and everybody else's, is at least partially dependent on the vagaries of such an irrational, out-of-control, partially automated and totally abstract seven-horned beast as the New York Stock Exchange.