EDITORS NOTE

Pointing tlie (fat) finger

I
t's hard to keep up wirh so
many dramas on che busi-
ness front. I'm surprised
Congress has time to do any-
thing other rhan grill captains
ofindustry and regulators about
what happened, how did it go so
v\ rong and whac can be done to fix it.
Let's start wich BP Petroleum. The firm has been associ-
ated with multiple disasters, including che Texas Cicy refineiy
explosion (due to poor maintenance), che Alaskan pipeline leak
(due to, well, more poor maintenance) and the currenc debacle
happening in che Gulf of Mexico. BP especially stands out for
me as it has requested to pollute Lake Michigan more than ic
already does. Perhaps I should admire the full disclosure, buc
tliis is a firm with a questionable record. So what happened
in the Gulf of Mexico wasn't a surprise, buc the response was.
Now BP is pointing che fmger at its rig operator, Transocean
Deepwater Horizon drilling company, who is pointing the fin-
ger at Halliburton (a favorite villain), who allegedly supplied
bad materials. HalliburCon says it followed BP's directions.
Meanwhile, more chan 5000 barrels (a low estimate) of oil
has gushed into che Gulf of Mexico daily since che explosion
(which killed several workers), potentially ruining livelihoods
and killing wildlife across the Gulf region and threatening to
penecrace the Aclantic Ocean. The Three Scooges' solucions
for trying to stop the gush has only accomplished shutting
down the effort to expand offshore drilling in the United
States. How, after drilling for decades, does the industry not
have a solution to fix a breached oil rig pipe?
Then we have the Greek tragedy in Europe, which actually
stepped up to bail out its southern neighbor as well as prom-
ise help CO other troubled European nations, with close to a
Si trillion life line. When Greece's troubles first surfaced, who
did it poinc ics fmger at? Goldman Sachs {another favorite vil-
lain). Apparencly due to Goldman's fast talking bankers, the
country that brought us Socraces, Aristotle, Homer and even
Euclid, fell for ics own Trojan Horse.
In the United Scaces, we have finger pointing wich che so
called "flash crash." On May 6, wich oil gushing in the Gulf
and che Greco wrestling macch happening in Europe, the
stock market fell dramatically close to 1,000 points on the
Dow Jones Industrial Index before coming back almost as
fast as it fell. Ic ended che day down "only" 350 points (see
Trendlines, page 10). Why did this happen? Ac first che "fac fm-
ger" reason was opined some large trader hit a 'b' instead
of an 'm' when inputting a large trade. This was discarded a.s
soon as it came around.
Fingers also were pointed at the futures markets, echoes
of the 1987 crash and a desperate move by some in the secu-
rities industry. The most recent explanation, provided by
Mary Schapiro, Securities and Exchange Commission chair-
man, at a congressional hearing, was a "confluence of events,
which, taken together, exacerbated wliat already had been
a down day." That makes sense, and seems to happen regu-
larly. However, both she and Commodity Futures Trading
Commission Chairman Gary Gensler noted that two factors
might have been special exacerbaters: the fact the K\'SE hit its
mini-circuit breakers, which slowed trading on the Big Board,
but not on other stock exchanges; and second, trading by high
frequency traders (yet another favorice villian). which seems to
have a large hold on the scock market (it's estimated che vol-
ume done by HFTs is above 60% of all stock exchange volume;
on the futures side, the CME Group estimates it's close to
40% of exchange volume). Suffice it to say that no one knows
why the market did what c did yet but we certainly have a
long list of villains of who did ic.
E-mail me at gszala@futuresmag.com

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