The New Speed of Money, Reshaping Markets

[FreeStateDemocrat]

Source: New York Times

By GRAHAM BOWLEY
Published: January 1, 2011
A SUBSTANTIAL part of all stock trading in the United States takes place in a warehouse in a nondescript business park just off the New Jersey Turnpike.

Few humans are present in this vast technological sanctum, known as New York Four. Instead, the building, nearly the size of three football fields, is filled with long avenues of computer servers illuminated by energy-efficient blue phosphorescent light.

Countless metal cages contain racks of computers that perform all kinds of trades for Wall Street banks, hedge funds, brokerage firms and other institutions. And within just one of these cages — a tight space measuring 40 feet by 45 feet and festooned with blue and white wires — is an array of servers that together form the mechanized heart of one of the top four stock exchanges in the United Sta

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But some analysts question whether everyone benefits from this technological upending.

“It is a technological arms race in financial markets and the regulators are a bit caught unaware of how quickly the technology has evolved,” says Andrew Lo, director of the Laboratory for Financial Engineering at M.I.T. “Sometimes, too much technology without the ability to manage it effectively can yield some unintended consequences. We need to ask the hard questions about how much of this do we really need. It is the Wild, Wild West in trading.”

Mr. Lo suggests a need for a civilizing influence. “Finally,” he says, “it gets to the point where we have a massive traffic jam and we need to install traffic lights.”



Read more: http://www.nytimes.com/2011/01/02/business/02speed.html?pagewanted=1&_r=1&hpw

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Be afraid, very afraid!

[Demeter]

1. Rather Like Einstein's Observation of the Atomic Bomb:

"The release of atom power has changed everything except our way of thinking...the solution to this problem lies in the heart of mankind. If only I had known, I should have become a watchmaker."


And for added irony:


"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction."

"We can't solve problems by using the same kind of thinking we used when we created them."

"Two things are infinite: the universe and human stupidity; and I'm not sure about the the universe."

[bemildred]

2. None of this would be allowed in Las Vegas, or in any honest casino. nt