Ghost Exchange: Complexity, Velocity, and Risk

Increased complexity leads to increased risk. Stock markets run by algorithms, creating virtual markets that even the experts have difficulty explaining. The “flash crash,” “dark pools,” and “high-frequency trading”—what do they all mean? Throughout 2018, and now into 2019, we have witnessed some extreme volatility on stock markets, sometimes with swings so huge that many of the usual market commentators were left audibly speechless, stammering through bewildered confusion as to what may be the cause of this fall or that rise. Otherwise announcements of an impending collapse have become mainstream. The divorce between finance and the economy never stood out more clearly; the circulation of values (including imaginary, speculative ones) and the production of goods seemed to occur on two different planets. One day, Reuters reports on negative stock market news, warning that the trade war was “finally hitting home”—yet on the very next day, Reuters reports a “robust” (then changing the word to “upbeat”) employment report that “underscores US economic strength,” given a massive increase in employment (not dependent on the recent holiday) and a surge in wages. A strong economy and a shaky stock market—apparently both things can sometimes be true at the same time. Can rising or falling stock market numbers be read as if they were ratings on an economy, like telemetry reporting on the life signs of the economy? Financial crises breed very severe “real world” effects, so it’s not like ignoring what is happening on the stock markets is a wise move. But what causes these strange and extreme swings on the stock market, and how much are they related to the real world? What is behind the rapid collapse of values or sudden surges? What are the solutions to the problems of increased complexity, velocity, volatility, and loss of confidence?

For more, please read:
https://zeroanthropology.net/2019/01/29/ghost-exchange-complexity-velocity-and-risk/