The floor of the NYSE circa 1980 |
This is a comprehensive multimedia book review of the New York Times Bestselling book, Flash Boys A Wall Street Revolt, by Michael Lewis. Navigate the various tabs on this blog to explore Lewis' supporting evidence to his thesis that in the United States, "the stock market is rigged."
Digitalization of the Market
In “The Damning Mark of False Prosperities’: The
Deindustrialization of Detroit,” Thomas J. Sugrue describes the post-industrial
service economy. He notes that, between the 1950’s and 1970’s, the
advent of automated machinery began replacing manual workers in an effort to produce
high volumes of products on an assembly line at the lowest
possible price (Sugrue, 136). Lewis portrays the automation of the stock market in
the 2000’s in a similar manner.
When
most people think of the stock market, they imagine Wall Street and the floor
of the New York Stock Exchange as it was in the 1990's: hundreds of people wearing
colored blazers, frantically hollering and waving their hands to signal the buying
and selling stocks. However, according to Lewis, this view of the market is
long outdated. Today, the "floor" of the NYSE is quite different. In
fact, it is not even a floor, but instead a massive computer
located in Northern New Jersey. Further, no longer is the price of a stock determined by
a group sweaty traders on Wall Street. Everything is now done in privacy because
it is automated within the information society. This automation saw HFT firms born and lies at the core of Lewis’ thesis, that these firms leveraged increased
computer speeds to rig the market. (Suggestion: In his thesis, Lewis credits the rise of HFT firms to automation because it allowed them to rig the market by leveraging increased computer speeds.)
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