Today, CNN reported the disturbing news that the stock exchange suffers a dozen mini flash crashes daily:
At least a dozen mini flash crashes are roiling stocks every day, traders say.
In flash crashes, a stock price plummets swiftly, and then rebounds just as quickly, all in a matter of minutes or even seconds. Automated trading programs using advanced algorithms are blamed. The mini crashes underscore the stock market's vulnerability to automated trading programs.
Dennis Dick, a proprietary trader at Bright Trading in Detroit, told CNNMoney he stopped counting flash crashes because they have become so frequent.
This is amazing and under-reported. The truth is that our markets are vulnerable to all sorts of mischief including hacking and computer glitches. Despite this reality, no one is addressing the very real threat of economic terrorism. We have pointed out how very real these risks are:
Put into context, this is all very scary. Consider this from a BARRON's report in 2010 (preserved on Senator Kaufman's website):
By JIM MCTAGUE
SATURDAY, SEPTEMBER 11, 2010
"An informal meeting of members of the House Committee on Homeland Security heard some scary testimony related to the May 6 flash crash.
MALEVOLENT FOREIGN TRADERS PROBABLY did not trigger the stock market's May 6 flash crash, which saw the Dow Jones Industrial Average within five minutes break all records for intraday nose dives. But witnesses before an informal convocation of the House Committee on Homeland Security on July 20 were united in their conviction that the nation's 10 or so stock exchanges and 50-plus related trading venues are vulnerable to attacks from traders overseas.
This is a frightening revelation…Industry witness…are critical of many strategies employed by so-called high-frequency traders, who use algorithmic programs to simultaneously discover short-term pricing inefficiencies and other arbitrage opportunities in virtually every market.
Foreigners theoretically could gain "naked access" to an exchange through the sponsorship of a brokerage firm…The sub-custodian chain can bury the identity of high-frequency traders in Eastern Europe and elsewhere who raise serious regulatory concerns."
It is almost amazing that this hasn't been addressed yet. And now, we see the problems are getting worse, not better at least in terms of frequency. In context of the Chinese approach to Unrestricted Warfare, the current situation is overwhelmingly serious:
Financial Warfare is part of Unrestricted Warfare according to Chinese military doctrine:
"Financial warfare [in which a country is subjugated without a drop of blood being spilled] means entering and subverting banking and stock markets and manipulating the value of a targeted currency."
According to the doctrine, new concept weapons should be used against enemies without them even aware that you are using them. Quoting Unrestricted Warfare (CIA/DIA translation):
"… the Americans have not been able to get their act together in this area. This is because proposing a new concept of weapons does not rely on the springboard of new (military) technology, it just demands lucid and decisive thinking. However, this is not a strong point of the Americans who are slaves to technology in their thinking… As we see it, a single man-made stock market crash, a single computer virus invasion, or a single rumor or scandal that results in a fluctuation in the enemy country's exchange rates…can all be included in the ranks of new-concept weapons."
When will we begin to address the fact that we are in a Global Economic War? We are witnessing potential "mini financial Pearl Harbors" every day. Will we have to wait for another 2008-09 collapse before we consider taking action?