Complex Financial Instruments and Testosterone-Driven Trading: Algorithm of Market Chaos

The combination of increasingly complex high-risk financial instruments (unknown, under-acknowledged, under-estimated and/or misunderstood by public and private policy sector workers at all levels of governance) and a thriving culture of testosterone-driven traders

with their hands firmly on the throttle of oil-dependent muscle vehicles, flooring-it on shared virtual highways with silently condoned (albeit) unwritten permission and even enthusiastic encouragement to exceed safe speed limits, the exponential growth in wealth of the upper quintile of the upper quintile accompanied by the exponential increase in poverty of the lower quintile of the lower quintile, the global expansion and implementation of the belief-system based on unfettered, self-regulated market political economies (loosely called market liberalism although best-served by political conservatism) promulgated around the planet through mass media content packaged to sell imagery of the invisible hand of the market as the right hand of the new secular god surrounded by soldiers of the user-pay, private-is-better, blame-the-poor, monetize-everything, blame-the-ill, social-justice-vs-economic-efficiency, base-minumum-wage-on-pin-money-workers, minimum-government, trickle-down-affect, legal-but-not-ethical, group-think-culture led by the Triad of Mises-Friedman-Hayek has led to market chaos that is not theoretical but Really Real.

According to this article (2008-04-19) by Dan Mitchell in the New York Times, “Movements in financial markets are correlated to the levels of hormones in the bodies of male traders, according to a study by two researchers from the University of Cambridge.”

This is twisted curve in the winding road of ancient arguments that prohibited participation of hormone-driven women (emotional versus logical, intuitive versus deductive, feelings versus reason) in pivotal positions of decision-making.

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Does this mean the invisible hand of the market should be wearing a glove? Should the use of Viagra be monitored on the trading floor?

Webliography and Bibliography

Coates, J. M. and J. Herbert. 2008. “Endogenous steroids and financial risk taking on a London trading floor.” Proceedings of the National Academy of Sciences. http://snurl.com/250a7

Emarketer. 2008-03-18. “Online Advertisers To Spend Through Turbulence.” http://snurl.com/250e6

Flynn-Burhoe, Maureen. 2008-04-19. “Complex Financial Instruments and Testosterone-Driven Trading: Algorithm of Market Chaos.” http://snurl.com/250a6

Mitchell, Dan. 2008-04-19. “Trading on Testosterone.” New York Times. http://tinyurl.com/5tvolz permalink

Palmer, Jason. 2008-04-14. “Traders’ raging hormones cause stock market swings.” NewScientist.com. http://snurl.com/2508n

Rubel, Steve. 2008-04-17. “Study: A Billion Dollars in Internet Advertising is Wasted.” Micro Persuasion. http://snurl.com/250au

Rubel, Steve. 2008-04-19. Twitter.

Notes:

1. Algorithm: a “problem-solving procedure: a logical step-by-step procedure for solving a mathematical problem in a finite number of steps, often involving repetition of the same basic operation” or a “problem-solving computer program: a logical sequence of steps for solving a problem, often written out as a flow chart, that can be translated into a computer program,” a term used in the late 17th century. It is an alteration, “after Greek arithmos “number,” of algorism, via Old French and medieval Latin based on the Arabic al-Ḵwārizmī , the name of the 9th century mathematician who introduced algorithms to the West.” See MSC (1998-2005) Encarta.

The combination of increasingly complex high-risk financial instruments (unknown, under-acknowledged, under-estimated and/or misunderstood by public and private policy sector workers at all levels of governance) and a thriving culture of testosterone-driven traders with their hands firmly on the throttle of oil-dependent muscle vehicles, flooring-it on shared virtual highways with silently condoned (albeit) unwritten permission and even enthusiastic encouragement to exceed safe speed limits has led to market chaos that is not theoretical but Really Real.

Social Media Will Change Your Business

My use of social media is not based on a business-model but the most accessible research on the evolution of social media is probably written by nerds and geeks who are learning from each other and/or those mining social media for market potential. So I follow what they do with interest. Innovations they develop can sometimes be useful for social media producers and users regardless of motivation. Examining each of the new tools and trends through an ethical lens is a great exercise for the spirit.

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I learned of this story through Steve Rubel’s Twitter tweet “Steve Baker from BusinessWeek is looking for Tweets on how social media is changing. Please give him a hand. http://tinyurl.com/4nlwmq

“Thursday 8:56 a.m. It’s the latest wrinkle on Descartes. I blog therefore I… consult. An entire industry is rising up to guide companies into this frightening new realm. And the consultants establish their brands and reps with their blogs.

Steve Rubel Perhaps the biggest is Steve Rubel. A year ago, the exec at the PR firm CooperKatz & Co. started his blog, Micro Persuasion. He was already pushing such clients as WeatherBug and the Association of National Advertisers into the blog world. Then early one Sunday morning, as he recalls it, “my wife was sleeping, and I was sitting in the living room, laptop on my lap, and thinking if I am talking to clients and reading these blogs, I should jump in.” When launching his site, he had the smarts to contact big shots such as Dan Gillmor, who was a leading blogger and tech reporter with the San Jose Mercury News. Gillmor linked to Rubel’s site, and his traffic took off. It was great for his brand, and it also gave Rubel a blogger’s education. “I became a living guinea pig for what I preach,” he says.

Now Rubel is positioned as an all-knowing Thumper in a forest of clueless Bambis. The first job, he says, is to monitor the blogs to see what people are saying about your company. (An entire industry is growing to sell that service. Even IBM’s (IBM ) banging at the door.) Next step: Damage-control strategies. How to respond when blogs attack. He says companies have to learn to track what blogs are talking about, pinpoint influential bloggers, and figure out how to buttonhole them, privately and publicly.

He gives the example of Netflix (NFLX ). When a fan blog called Hacking Netflix asked the company for info and interviews last year, Netflix turned it down. How could they make time for all the bloggers? Predictably, the blogger, Mike Kaltschnee, aired the exchange, and Netflix faced a storm of public criticism. Now Netflix feeds info to Kaltschnee, and he passes along what he’s hearing from the fans. Sounds like he’s half journalist, half consultant — though he insists Netflix doesn’t pay him (2005-05-02. “Blogs Will Change Your Business.” Business Week).”

In Web World of 24/7 Stress, Writers Blog Till They Drop

NYT article on the at-risk lifestyles of high-speed, high-stress, high-adrenalin lifestyles of pro-bloggers chasing new improved on-line newstories 24/7.

Thanks to twitter and Steve Rubel’s lifestream for bringing this article to my attention.

“digg.com blurb: “Some professional bloggers complain of physical and emotional strain created by an Internet economy that demands a constant stream of news and comment.”

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This reminded me of an article by Kate Argyle (1996) in Rob Shields useful anthology entitled Cultures of the Internet. Argyle’s account of what happens when a member of a virtual community dies challenged notions of that Internet communities were blasé and that the Internet itself fostered  a culture of distance and indifference. See http://www.socresonline.org.uk/1/3/van_loon.html

Webliography and bibliography

Argyle, Kate. 1996. “Death on the Internet.” in Shields, Rob. 1996. Cultures of the Internet: Virtual Spaces, Real Histories, Living Bodies. Chapter 8. London: Sage. ISBN 0 8039 7519 8

High blogger Steve Rubel’s Web 2.0 Naughty Nice list mass media .rsscrouges

“Every single mainstream outlet syndicates headlines and summaries rather than publishing full-text RSS feeds — even for paid subscribers. They often don’t credit or link to bloggers who break stories first. And don’t get me started on the nuisance of interruptions such as interstitial ads and video pre-rolls.”

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Drawn deeper and deeper into that mesmerizing alternative virtual space called Web 2.0, caught in a cybernarcosis that hits me before I’ve even poured my second cup of morning coffee I now read all my news from my Customized Google New Reader fed by social-minded (not Socialist) .rss feeds producers. I’ve just placed three of the most recent .rss feeds by Steve Rubel at the top left where I begin, my daily news headlines, so to speak.

I learned about Micro Persuasion from Jonathan Yang’s (2006a) Rough Guide to Blogging which I found while browsing the stone and glass Cowichan Valley Regional Library’s print and paper stacks. Steve Rubel explores how social media is transforming marketing, media and public relations. See also Yang’s blog (2006b) which complements his recent Rough Guides publication.
While I’m still trying to figure out where I am since (this is obviosly not Kansas) I’m bumping into cyberspace inhabitants of this strange new world. Somehow I feel as though I am blurking unseen, like a voyeur, bordering on scopofilia. But there is so much information on them that I have this illusion that I can get very close to verstehen understanding. What is concealed and what is revealed here?

For now I am just grateful for the Rubies out there. I am going to start keeping track of them so I can remember months from now why I del.ico.used, Dugg, blogrolled, and finally .rssd them. (Blog lexicons really hurts the ears and conjures up some very ugly metaphors.) I think it is time for a poet laureat of the blog to whom innovators turn before creating new terms that will stick for all blog eternity.

One of the emerging concepts in cyberspace is the “deep internet” which came to mean that part of cyberspace that was exclusive, not social, pay-per-use or members-only and therefore in terms of acedemic capital, somehow more profound, valued, authentic, legitimate, timely and quotable. Academic journals are by far the worst offenders. Jstor (you-do-not-have-access) on my screen gives me a feeling similar to the blue screen of death. Main stream media seemed to be going in that direction but I am not so sure now. I can read full-text articles from the New York Times, the Boston Globe, Le Monde, Le Figaro, Toronto Star and Nunatsiak News (including their archives) with no cost to me. Some require registration which is free and painless. Which is good for I for one would not pay a dime to access information on the Internet. In a way it is like a purist’s experiment. If I can access it for free that so can those who have Internet access but have no capital at all for even a dime-per-factoid user-fee.

Thank you Jonathan Yang I will be harvesting detailed information from your timely publication over the next while. Thank you Steve Rubel for holding a virtual flash light for the net novices who are blindly groping through the dark.

Selected webliography and biblography

Yang, Jonathan. 2006a. The Rough Guide to Blogging. Rough Guides: London, UK & New York, New York. p. 188 www.roughguides.com

Yang, Jonathan. 2006b. Rough Guide to Blogging: The Blog Accessed December 4, 2006.