Why I am not worried about Goldman, Volcanoes and even Greece….but crazy computers?

April 19, 2010

(You may need to increase the font size of this essay to enhance your reading experience – to do so hold down the Ctrl key and press +)Am I really worried about the SEC going for the throat of Goldman Sach’s? Nope. What about the run away volcano in Norway? Nope. What about the financial crisis looming in Greece? Nope!

My immediate worry doesn’t even revolve around people – let me share with all of you why? Firstly, why did God create stock analysts and firms to predict market movements? Simple without these people there would be virtually no job security for fortune tellers, shamans and weather forecasting wouldn’t be taught as a degree discipline in school – so people are the least of my concern.

My real concern as to whether we will see a contagion effect pan out from the Goldman crisis may sound like something that is closer to sci-fi: but bear with me – consider this: what do you really see when you open up the hood of a big stock analyst firm? Want to know? – A giant, world-spanning electronic network where high-powered machines are making millions of mind boggling calculations every single minute – most of them run super duper secret algorithms that are really not so different from high-stakes battle games of you shoot me and I shoot you.

Except the stock market is not a game; it’s something that affects billions of people — and since the stock and commodities markets is inextricably fused to these psychotic computers these days; don’t be surprise just like modern day commercial jet liners; the real decision makers aren’t human as they remain very much the ghost in the machine.

The main problem with automated trading or what the industry refers to as high-frequency trading (HFT) is computers feature are so prevalent these days most of the buy and sell decisions actually pivots on the vagaries of a set of math equations written by someone who probably knows fuck all about how markets pitch and yaw – my point is you don’t need to be a member of Mensa to figure out what happens when everything under the sun is reduced into numbers, metrics, statistics and liner regression curves and is designed specifically to exclude the human condition – what we are doing is actually amplifying herd mentality on a mega scale – that’s really what I fear most.

As what I have just described is very real and spells big trouble in an already jittery market that’s set to either shrug this whole matter off or dive with it –and don’t be surprised if what we may actually be witnessing here is none other than the powder, ball and the flint that’s primed to explode – to paraphrase the sum of all our fears.

I could be wrong; I hope I am wrong.

Darkness 2010

 
“Do you notice Gentlemen that if you break a chair in the virtual; it breaks exactly the same every single time – do you want to know why? Because somewhere in that room where you have rows and rows of servers with blinking lights – there is one chip; roughly, the size of a parking ticket tab and written on it is a mathematical equation that calculates precisely the definition of how a chair is supposed to break….we can spend one hour breaking all the chairs here…just to prove my point, but I didn’t come all the way here to speak about furniture, silver hair brushes and side tables to the guilds…..now Gentlemen take that whole idea that I have just mentioned and blow it up a thousand times and put it beside the stock market – what do you end up with?
Gentlemen….a game called Armageddon. There is something very wrong with the Mordecai 51 program – I want you all to review my calculations and assumptions, as I believe we are headed directly into the eye of the perfect storm; the ASDF is wrong – the director of the ASDF should be taken out to shot! – if we do not recognize this, we will lose everything!”

 

Darkness 2008

This conversation was captured by an auto-bot crawler sponsored by the Interspacing Mercantile Guild – in a secret meeting between Darkness and some unidentified members of the Mercantile Guild at Primus Aldentes Prime just before the financial crisis in 2008 – The Brotherhood Press 2010

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