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Nothing but the Truth!

By Will Power


May 25, 2010 (San Diego’s East County) – Earlier this month, the U.S. Stock Market burped big-time, sending blue-chips down to pennies a share for several minutes, while computers throughout the world strained to keep up. Within hours, millions of paper losses and gains were recorded, and then the market stabilized. Nobody knows what caused the sudden shock. But the profits and losses were substantial, and in fact many of the trades are now being nullified by the SEC. The trades are being voided because they were outside parameters set up by the SEC. You can hear the howls of pain from brokers in Tierra Del Fuego.

Computers can be programmed to do practically anything. And big banks and brokers have the most sophisticated programming in the world. It's hard not to believe that these computers can sense market liquidity and soak it up automatically using pre-programmed buy and sell orders.

What's worse, these computers can be programmed to do this automatically from anywhere on earth, making it easy for a broker in Singapore to game the market in New York. Furthermore, the entire program that caused the market to surge and stall can erase itself and disappear, making prosecution impossible.

As hedge funds and equity accounts grow in size, the leverage they have over stock and commodity prices increase. Big banks and brokers can now destabilize entire governments, as Greece, Spain and Portugal have learned recently.


The situation in Greece is so bad that Paul Krugman has suggested Greece may have to drop the Euro and completely revalue its currency.


Likewise, China has deliberately undervalued its currency which has increased Western dependence on Chinese suppliers.


The ability of governments to monitor and control banks and brokers has been hampered by the fact there is no international banking structure with the ability to keep up with the trader's computers.


Since the U.S. bailout, things have gotten worse, not better.


It's hard not to see how the whole house of cards could fail completely if somebody doesn't rein in the sharks. If international money markets fail there could be a clustermuck of Titanic proportions. And as history has proven, nothing is too big to fail- not even the World Bank.


Somebody needs to police the bankers and brokers and restrain them form their own greed. Add to that the possibility of cyber warfare that could disrupt markets and even erase entire computer networks and you see an even better reason to put some cash in your mattress.



Will Power is a retired teacher who holds a master's degree in creative writing.


The opinions expressed in this column reflect the views of its author and do not necessarily reflect the views of East County Magazine. If you wish to submit an editorial for consideration, email

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