Today's anniversary is remembered by anyone who sat through those frightening minutes. Here is an interview by Rick Santelli and the opening comments from a CNBC article marking the date:
CNBC.com | Monday, 6 May 2013 | 8:02 AM ET
Rather than being simply a one-off event that Wall Street could dismiss as an aberration, the first Flash Crash now looks like it was just the opening warning shot.
In 20 breathtaking minutes that happened three years ago Monday, the stock market saw the Dow Jones Industrial Average lose nearly 1,000 points, only to rebound just as quickly.
Academics and market experts have pondered the cause and effect of the event since, and market circuit breakers have been used to good effect at least to rein in similar events before they get out of control.
But indeed there have been numerous subsequent flash crashes—none as dramatic as the initial one but each a reminder that a certain dynamic has been changed in the stock market, likely on a permanent basis.
(Read More: Fake Terror Tweet Should Be ‘Wake-Up' Call: Pros)
What makes the first Flash Crash especially troubling is the lack of concrete findings about the cause.
Don't forget that the Chinese People's Liberation Army in their 1999 book "Unrestricted Warfare" first explained that a "single, man-made stock market crash" was among the most potent weapons of war available. We have written about "flash crashes" on this Blog before and here are a few of those posts:
How Foreigners Could Disrupt U.S. Markets
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."
Now, we don't know what caused the flash crash. We do know that financial terrorists could cause a flash crash. We also know that financial terrorists have tried to crash the market with at least limited success in the past couple of weeks. We also know that jihadists are partnering with hackers to take down our system. We have reported on this numerous times:
Now, there is a report today in Washington Times that documents the fact that Jihadists are actively looking for hackers to partner with in attacking our system. Here are excerpts:
Shaun Waterman The Washington Times, Monday, May 6, 2013
Middle East- and North Africa-based criminal hackers are preparing cyberattacks this week against the websites of high-profile U.S. government agencies, banks and other companies, according to the Department of Homeland Security. The attacks, dubbed #OpUSA, for Operation USA, will begin Tuesday, the department said in a warning bulletin circulated to the private sector last week. The bulletin was first obtained and posted online by blogger and cybercrime expert Brian Krebs.
The attacks are called for in the name of Anonymous, the leaderless coalition of hackers whose trademark Guy Fawkes mask has become a global symbol for their anarchistic spirit.
"OpUSA poses a limited threat of temporarily disrupting U.S. websites," the homeland security bulletin states, saying the attackers will likely use commercial hacking tools in a variety of "nuisance-level" strikes, defacing websites or temporarily knocking them offline.
"Some of the participants possess only rudimentary hacking skills," the authors add.
More dangerous, though, is the developing alliance the organization of the attacks seems to presage between criminal hackers and violent Islamic extremists.The bulletin notes that the attacks are being promoted by the moderators of websites and discussion forums that host al Qaeda and other Islamic extremist material, in addition to calls through more conventional hacker channels like the bulletin board Pastebin. This collaboration may "signal an emerging trend of Middle East- and North Africa-based criminally motivated hackers collaborating with others regardless of their motivation," like Islamic extremists, states the bulletin.
"Middle East- and North-Africa-based criminal hackers will continue issuing public statements to announce cyber attack plans against high-profile targets," the bulletin predicts. Homeland Security will monitor these statements for signs of an emerging alliance between Anonymous and jihadists, the bulletin goes on . . .
Since September 2012, U.S. banks have faced a wave of coordinated cyberattacks from Islamic hacktivist groups believed by many observers to be linked to the Iranian regime. To date, 46 U.S. financial institutions have been targeted in more than 200 separate attacks, according to an FBI bulletin last month.
This demonstrates what we warned against previously, that is the connection between Jihadists, Occupy, and Anonymous. It seems as if the process is formalizing in going after the American financial system. Now, add to this the fact that a Chinese PLA-backed company has actively solicited the sale of hacking capabilities in the Middle East and you get an idea of the global risks we are facing.
If you thought the Boston Marathon bombing was a tragedy (and it was), imagine what could happen when Jihadists, the Occupy disgruntled, and Anonymous team up with Chinese technology and capabilities. The 2010 "flash crash" is a stark reminder of the risks we face in an ongoing global economic war. Read the posts and decide for yourself if we, as a nation, are prepared to meet the threat.