The 2008 crisis analysis overlooked transaction-speed acceleration as a destabilizing factor

Evidence

In the wake of the worldwide financial crisis of 2008 and the global economic recession that followed it, obscure, complicated financial instruments like credit default swaps, collateralized debt obligations, and the now notorious species of derivative, the mortgage-backed security, became household words. Much was made of the anonymity and lack of transparency in the derivatives markets that lay at the heart of the crisis. But little was made of a related and equally troubling aspect of contemporary stock exchanges: the destabilizing and unpredictable effects of the acceleration of transaction speeds. — Hartmut Rosa, Social Acceleration, 14

Categorization

• QUESTION: Is high frequency trading genuinely a causal contributor to instability, and is that claim empirically supported decades later?
• XREF: Connects to Constructing a Market, Performing Theory on derivatives growth to $108 trillion. — connects to: Compressed decision time makes financial markets prone to cascading collapse — David Harvey, The Condition of Postmodernity: An…, 1938; Immediacy is the subjective corollary of accelerated capital circulation — Anna Kornbluh, Immediacy, or The Style of Too Late…, 82; Accelerated algorithmic trading causes recurrent flash crashes beyond any regulator’s mastery — Hartmut Rosa, Social Acceleration: A New Theory of…, 15 (+1 more)

Broader Connections

• Compressed decision time makes financial markets prone to cascading collapse #corroborates (0.95) — David Harvey, The Condition of Postmodernity, 1938
• Accelerated algorithmic trading causes recurrent flash crashes beyond any regulator’s mastery #exemplifies (0.90) — Hartmut Rosa, Social Acceleration, 15
• Immediacy is the subjective corollary of accelerated capital circulation #expands (0.80) — Anna Kornbluh, Immediacy, or The Style of Too Late…, 82
• An unaccountable liquidating desk accelerated losses that hit all consensus traders #complicates (0.75) — Donald MacKenzie, An Engine, Not a Camera, 1034