On my way to class Tuesday afternoon I was listening to to the business news radio program Market Place. One segment of the show was devoted to news that United Airlines stock had dropped by 75% in value, in a matter of 5 minutes, the previous day. The declined occured after a "financial news aggregate service" fed a story to The Bloomberg Report, with the headline "United Files for Bankruptcy to Slash Costs." As a result, millions of shares were sold in a matter of minutes.
Shortly thereafter, it was discovered that the electronic search of bankruptcy filings for 2008, by the news service, had pulled an undated story from 6 years ago and posted it with the current search date. The stock had recovered "most" of its value by the end of the day, but analysts were still in the process of sorting out the fallout.
Commentators on the radio briefly posted the question of how to prevent the malicious planting of stories to manupulate financial markets. Perhaps it was beyond the scope of the program to consider this serious issue, but the commentators' only response was to point out that the Bloomberg Report deflected all responsibility by stating it was not their policy to fact check news feeds, only stories by their own reporters. The question raises the issue of who takes responsibility for identifying, correcting and preventing mistakes in an interconnected world, when the reprecussions of an honest or intentional "mistake" could seriously effect the lives of millions.
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3 comments:
That's a fascinating story! I'm especially surprised at how easy it was to manipulate thousands of people in the stock market.
It reminds me of the Y2K fiasco where many families believed that all the technology around the globe would fail, the stock market would crash, and stores would be looted. My parents were convinced that it was the end of the world and thus we stored about 6 months worth of food in the garage!! It took us two years to finish that food! The Y2K myth was perpetuated by news sources to scare the population and cause families to buy a surplus of food.
If you remember, the concern was that software wasn't programmed for the year 2000 and everything would revert to 1/1/1900. In many ways, technology was used to intimidate and manipulate the middle class. It makes me sad that people would use technology to make a profit, but that is the nature of capitalist greed.
I think your point goes to the information drought that I referred to in my blog - there is so much information that relevant information does not get any attention, while irrelevant and sometimes hazardous information gets promoted in status! This can cause a lot of confusion, and there is an idea out there for an invention that can help "correctly sort out" the good information from the bad in all situations.
There is also the problem of mistaken information in credit bureaus that haunt honest citizens. There was a case of identity theft reported where a man's identity was used for stealing cars by criminals. The victim did everything to get the credit bureau to recognize that he was not the person involved, but he still hasn't got his credit history cleared.
I remember this event from a couple of days ago and was also thinking of posting about it to my blog. I wonder how things would have turned out if a similar event had happened 20 years earlier?
With the communication technology today, we are able to send updates immediately by means of phone, email, cell phones, PDAs, and more. Two decades earlier, most people would probably not hear of updates unless they were listening to the radio or had to wait until the evening news. Some might even go a day or two before knowing the outcome! Thankfully the situation was quickly corrected and word spread like wildfire and fixed itself.
That said, I’m glad United Airlines was able to recoup their loss since they are a very respectable company.
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