Money talks: Flash Crash Bang Wallop
Money Talks from The Economist
The Economist
4.4 • 1.2K Ratings
🗓️ 12 October 2016
⏱️ 11 minutes
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| 0:00.0 | Attention at all passengers. You can now book your train tickets on Uber and get 10% back in Uber credits to spend on your next train journey. |
| 0:11.0 | So no excuses not to visit your in-laws this Christmas. |
| 0:16.5 | Trains now on Uber. T's and sees apply check the Uber app. Hello I'm Simon Long the finance editor and this is Money Talks. Coming up this week, |
| 0:32.1 | what caused the latest flash crash? |
| 0:34.4 | There was an underlying theme for this, which explains why the pound ended up lower on the day |
| 0:40.0 | and indeed lower still since. And what's the best formula to win a Nobel Prize in economics? |
| 0:45.0 | Prizes that both look at a tangible microeconomic questions |
| 0:50.0 | and which also point out places in economics where markets don't work exactly as we might want them to. |
| 0:57.0 | So first in the early hours of Asian trading last Friday, |
| 1:00.0 | the pound saw a sudden unexpected plunge in value, a flash crash. |
| 1:05.0 | It had recovered most but not all of the loss by the following morning. |
| 1:09.0 | Computing systems, human error, and of course Brexit have all been blamed. |
| 1:13.0 | But what did cause the crash? |
| 1:15.0 | And if it was just a glitch, why did the pound not climb back to its pre-crash value? |
| 1:19.0 | I'm joined now by our Buttonwood columnist Philip Coggin. |
| 1:23.0 | Hello. |
| 1:24.0 | Philip, first of all, can we rule out human error? |
| 1:26.7 | What about computing systems? |
| 1:28.2 | Well, I don't think it was human error. |
| 1:30.1 | The pound was 2% lower in the course of the day which is a significant move on its own so if |
| 1:35.3 | it had been a fat finger trade it would have resumed its old level. |
| 1:39.8 | Computer systems almost certainly are involved because a lot of trading is done with |
... |
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