Most of us have been seized at one time or another by what I call the explanatory drive, by which I mean a biological urge to explain things at some length, if not to others then at least to oneself; when you are confronted by a puzzle, riddle, or enigma and cannot rest through your long, haunted nights until you have wrestled that sucker to the ground, figured it out, and shouted, "Eureka!" or words to that effect.
We're all familiar with the explanatory drive, but I never realized I could incorporate it into my narrative of how traditional Tory morality makes [jump]
Via Kevin Drum, here is an animated graph from Nanex of high-speed trading volume in the US stock markets (all 14 of them! no, I didn't know either), from January 2007 to January 2012. (You'll have to click it to make it work.)
You can watch the configurations develop from an apparently quiet hum at the beginning (and yet the crash of 1987 was caused by program trading, wasn't it, and that was 20 years earlier) to a roar around last September when it starts looking like Götterdämmerung.
Drum remarks,
The basic idea behind HFT is that humans are taken out of the trading
equation entirely. Instead, computer algorithms trade stocks directly,
executing millions of trades per second and occasionally going crazy, as
they did during the Flash Crash of 2010 and then again a few days ago, when an HFT bug cost Knight Capital $440 million in 30 minutes. ...The problem with HFT isn't that we know it's dangerous, it's
that we don't know anything at all. It's become flatly too complex for
even its creators to understand what their creations are doing.
But what I was thinking, in the perspective of last Friday's post about the possibility of a Singularity among the corporate entities, is that these graphs could be perfectly intelligible if they were the representations of a language, to those who knew the language. Tagalog sounds like a series of random bird chirps to those of us that don't know it, but to the Tagalog speaker there's nothing random about it at all; what seems to the non-speaker like randomness is precisely what carries information.
Think about it: trading isn't you and Chuck any more, or the rich guy next door who stays home to work in his pajamas, it's mostly these machines (on behalf of our pension funds, should we have any): 84% of trading is HFT. As far as we know, they're autonomous, and as far as the market goes the Singularity in the ordinary sense has already taken place, but a very simple one, in which the newly conscious machine is only conscious in a single dimension, driven by the need to squeeze the profits out of the spreads.
But to generate each graph takes more than one machine, a host of them, and independent of one another. It's in the array of them that a higher consciousness might arise, using those one-dimensional consciousnesses as its neural networks, and communicating among themselves that way...
There's something about that odd little cataclysm that struck the stock exchanges yesterday:
An automated stock trading program suddenly flooded the market with
millions of trades Wednesday morning, spreading turmoil across Wall
Street and drawing renewed attention to the fragility and instability of
the nation’s stock markets.
While the broad stock indexes quickly recovered and ended the day
slightly down, it was the latest black eye for the financial markets.
The runaway trading suggests that regulators have not been able to keep
up with electronic programs that increasingly dominate the supercharged
market and have helped undermine investor confidence in stocks.
It brought me back to that idea of the socioeconomic Singularity, where it's the corporations, aggregates of employees and shareholders and equipment and value, that begin to acquire an independent consciousness—not that corporations are people, my friend, but that they might, under certain yet to be determined conditions, become monsters, if you will, superorganic Creatures with appetites and abilities of their own.
When we last visited it, we got slightly hung up on the question of how the Creatures would communicate, if they attained that second-order consciousness, the ability to see themselves as the center of a narrative, and ultimately to see the Other seeing them the same way. Corporate speech is money, right? Would they speak by cutting checks?
Today's story suggested a totally different approach, one that works better from a strictly scientific point of view: that the voice of the corporation could be the movement you see on the charts: the throb of sales, the crooning of prices, going up and down, up and down, with the kind of linear structure that is necessary for the classic (or Saussurean) sign.
When we look at a graph, we're looking at a very limited kind of pattern—trends and associations—in the aim of predicting: will it go up or will it go down? Sharp jerks and outlier numbers are ignored, because they aren't part of the pattern. When you're parsing a sign, it's exactly the opposite: it's the sudden swoops and spikes that have information value, the predictable part of the sequence is just white noise.
In this way events like Wednesday's flood of trades or the flash crash of 2010 might be not so much communications as the first cries of infants just beginning to recognize their separateness from their surroundings...
Now that the Dow has closed above 13,000 for the first time since May 2008, I wonder if the Times is going to redo their famous chart showing the stock market difference between Democratic and Republican presidents from October 2008:
Given that it's already up 56% since Barack Obama took office three months after that, it might even lead a person to suspect that the Times has a liberal bias and is waiting till October 2012 to do it. If things carry on as they have been doing, that's going to be pretty graphic, as they say.
But speaking of liberal biases, I now have a new idea on the foundational difference between Democrats and Republicans that is directly related to this news. Like so many others who have grown to feel that the liberal-conservative classification doesn't apply any more, I have been talking for quite a while now in terms of a conservative party that we have to vote for and a crazy party that explains why we have to vote for the conservative party, but I'm not really satisfied with that either.
Partly because it's still fun to vote for Democrats, because they're still so truly forward-looking in so many little ways, whether we're talking about same-sex marriage or [jump]
