OK I just want to get these thoughts down real fast
1. What about all that talk of computer trading in previous stock market crises? Haven't heard a word.
2. What is this, 1950? I mean there's no talk of computer anything, of new tech, of nothing. Everywhere it's all these old dudes and politicians and economists saying what they're going to do.
3. Its like all of a sudden the grownups are in charge again, and we're not gonna talk about anything virtual, we need stuff we can touch and kick the tires of. So shall we bring the gold standard back?
4. There's wildly varied explanations (see list at bottom) for why everything went to hell. But more than anything I am reminded of hard-to-find software bugs. The financial system is like this big old many-layered software system, and no one knows how it works, nor why it stopped working and is exhibiting chaotic behavior.
5. OK here's my main point. A long time ago, I heard someone, maybe the head of Red Hat, or Linus Torvalds, say something like: "My goal is to turn a 30-billion-dollar industry into a 3-billion-dollar one." That blew my mind. Now I wonder whether growth as we know it is not ending. Don't get me wrong, I'm all for gratuitous, conspicuous consumption and waste. My argument isn't a moral one (hell no!). I'm just thinking maybe people won't really want to be buying that much stuff (and I realize that may be a clueless bobo thing to say). I'm wondering whether the information glut created by the Internet isn't making everything so productive and interesting that people aren't that interested in a lot of expensive stuff that people used to be into.
Here's an analogy: suppose cheap matter generators became available and plentiful. You could just press a button and out would come any raw material you wanted, and heck, any finished product as well. Such an invention would be a huge improvement in productivity. But wouldn't Wall Street tank, since entire industries would immediately become obsolete? Isn't it at least possible something like that is at play now?
OK, I realize everyone explains the crash according to what axe they have to grind. This is why I'll tell you my real explanation for the crash: the Singularity is here!
Posted by Kai Carver at October 12, 2008 04:27 PMI hadn't seen this NYT article on computers and Wall St., not terribly good, though it points to George Dyson's "Economic Dis-equilibrium -
Can You Have Your House And Spend It Too?", a little more interesting. Apparently John von Neumann predicted the crisis back in 1932...
Two other explanations of the crisis:
1. What would Google do? (WWGD) - a lot of (book-shilling) blabla, but at least he mentions Google and the economy in somewhat interesting ways (via robotwisdom).
2. Blame the Chinese! Actually, that's just points 1. and 2. of Oliver Kamm's pithy 10-point "How it happened" (via isteve).
Still, I think "WWGD?" and "Blame the Chinese!" will be handy exclamations in the uncertain years to come. Plus they're fun!
Note: Some may say point 2. is off-topic since the Chinese are not, in fact, computers. However:
a. I mainly mentioned this to annoy/amuse Hongyu.
b. We've all seen the human pixels at the Olympic opening ceremony, so the point might possibly be debatable in extremely bad faith.
Posted by: Kai Carver at October 19, 2008 04:53 AM