Book review: Flash Crash, by Liam Vaughan (Amazon / Book Depository)
Over 36 minutes on the afternoon of May 6, 2010, a trillion-dollar crash, “the most dramatic market collapse in recent history,” occurred on the US stock market. It (mostly) rebounded when the unusual trading activity that caused it ceased, but the exact impetus behind it was unclear.
It exposed something far more sinister than a temporary trillion dollar loss and the instability of plummeting or skyrocketing prices of certain stocks: the market was poorly, thinly regulated, regulators didn’t always understand traders’ methods and thus how to counter and prevent illegal activity, and the workings of trades and market maneuvers in detail are difficult to understand even for insiders. The panic that this caused, both in the immediate aftermath and longer term, especially as weaknesses in the US financial infrastructure were still raw and exposed in the…
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