Tim Fernholz on the struggle of the financial world and its would-be regulators to understand the flash crash:
On May 6, the Senate was locked in a heated debate over whether the government should impose size limits on the largest banks in the country, in effect breaking up the reviled giants of American finance. But the journalists in the press gallery above the chamber weren’t paying attention: They were riveted to CNBC, which was reporting an enormous, unexpected, and simultaneous plunge in several different global markets. On TV, the Money Honeys were losing it.
The Dow slid 1,000 points in less than an hour. “What the heck is going on?” one reporter wondered aloud. The Senate could break up the banks, and the markets are crashing? It’s the end of capitalism!