$200 billion gone in two minutes
On Tuesday, $200 billion temporarily vanished from the stock market because of a bogus tweet. It was back seven minutes later, which is reassuring. But how it happened at all is not reassuring.
A website called the Syrian Electronic army, which claims the Western media is making up news about the rebellion over there, decided to punish the western media by hacking into the AP feed, and tweeting that the President was injured in an attack on the White House.
An AP reporter quickly reassured Press Secretary Jay Carney his boss had NOT been injured.
“I appreciate that. And I can say that the President is just fine – I was just with him,” said Carney.
In the meantime, the Dow Jones had bungeed about 145 points. And analysts were wagging their fingers, reminding us – don’t believe every tweet.
“It might be a good idea to make sure it’s not some sort of bogus report before you act on it,” said CBS tech consultant Larry Magid.
Which would be good advice if it was actually humans reading these tweets. But, according to the Wall Street Journal, trading firms have now programmed computers to read news tweets, and to start dumping stocks when they see phrases like “blowing up.”
Yes – irrational trading practices have now been computerized.
What could go wrong!
Happily, those same algorithms also detected that the AP had been hacked, which is why stocks recovered. Of course maybe next time, the event will be real, and the retraction will be bogus. Who knows?
On the bright side, now that it’s possible for the bad guys to terrorize us with fake bombs, maybe they won’t need to use the real ones.