Trading on the NYSE was just halted due to a “technical glitch” that sent Berkshire Hathaway to zero, and they claim it's because of issues with the up and down limit bands which are used for stop trading when a stock becomes too volatile. But as ZeroHedge reports, this could actually be due to an AI-generated analysis published on Bloomberg terminals, which claimed the stock fell 100%, which would have caused a real price reaction and materialize the false claims of the automated report:
What can go wrong when you have AI reporting on every market move? pic.twitter.com/NQGW5WieqU
– zero cover (@zerohedge) June 3, 2024
It's a small taste of the chaos that automation madness can cause when entire markets can be moved with just a few words. When AI-generated reports are transmitted to Bloomberg terminals around the world, markets automatically ingest and respond to them. This is a glimpse of what can happen when these systems disappear and publish hallucinations, with terrifying implications for markets run by global computerized systems that broadcast information – good and bad. true and false – instantly.
As AI continues to disrupt traditional markets, its growing difficulties highlight the challenges associated with automating information and data flows in these same markets. But these growing difficulties also reveal some of the existing absurdities of global finance by amplifying them 100-fold.
So, was this really a problem with the NYSE? stop mechanism? Was the AI report the cause of the accident, or was it in answer to that ? I think an even bigger question is why we allow such centralization of markets and a shutdown of trade in the first place. What is the real benefit of allowing a centralized institution like the NYSE to set rules and stop activity in a market? It is claimed that this helps protect investors, but it would be naive to think that it is never abused to protect insiders and companies that, in a free market, might go bankrupt.
Berkshire Hathaway 1 month: drop of 99.97%
Markets are like living communications networks, and to enable them to operate efficiently and based on the best possible information, there must be as much symmetry and openness as possible. But from the secretive Federal Reserve to the stock exchanges to insider trading in the halls of Congress, there are endless asymmetries and opportunities for an exclusive club to co-opt and dominate these information flows in order to benefit a select few.
Today, thanks to AI-powered reporting and analytics, there exists within this global network an automated broadcast machine that has infiltrated the megaphones of Bloomberg terminals and major newspapers, and has the power to reach an immeasurable upheaval. AI-induced crashes cause economic instability that can both financially destroy investors and shake the foundations of the broader economy with random shocks that it is not prepared to handle.
In an economy where money printing, short-term thinking, and academic subjectivity dominate, it also changes market dynamics when even established “reliable” sources of truth begin to be questioned. This includes analytics that appear on Bloomberg Terminalsaccess to which costs tens of thousands of dollars and gives the already rich a privileged and more in-depth view of the markets with data inaccessible to the global peasant class.
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