Knee Jerk

Published 8 August 2011

We live in peculiar times where the proliferation of information in its various guises appears to have set the world on a path of perpetual knee jerking and where nothing can remain constant.

This week marked the 50th anniversary of the forming of the Berlin Wall – and while information was something tightly guarded and controlled in the Eastern part of that city for the next 28 years after 1961, the other extreme appears to be what we’re experiencing today…

…a seemingly endless orgy of information that bombards us every second, of every minute, of every waking hour.

On this topic, two major events of the past 10 days or so spring to mind – huge daily gyrations in markets and the London riots – in both cases information and misinformation (the Stasi – the Ministry for State Security in East Germany – would be proud) combined to create chaos, although in the case of the London riots it was organised chaos.

US markets bounced on every day last week first down by around 5% then back up by 3.5% then down again, then up again. Unbelievable.

One commentator on Twitter rhetorically quipped how a huge mining company, Glencore, could increase 10% in value because a few new non-farming jobs were added in the US.

Yes, there is huge uncertainty economically with debt, low growth and hegemonic shifts in the dynamics of global power at play – but behind all of this one feels the vast array of information driving views, consensus, opinion and decisions is actually hindering our choices.

No one has the ability or time to digest everything at the speed required to make an informed decision if markets are moving quickly – not even the biggest super computer.

This means decisions are essentially being outsourced leaving investors to follow movements, patterns and trends – but what information are those driving these trends basing their own decisions on?

This is a risk for markets and has the potential to drive herd mentality and cause more frequent large swings in sentiment.

France, Italy, Spain and Belgium implemented a short-selling ban for a basket of specific financial stocks temporarily in order to stave off the huge fluctuations in the markets after rumours circulated that France was to follow the US lead with a sovereign downgrade of its credit rating.

Meanwhile in Hong Kong on Monday, a ‘fat finger’ trade saw EVOC  Intelligent Technology jump almost five times in value after an incorrect ticker number was entered, instead of a company linked to Motorola that stood to benefit from the announced deal with Google.

All this aside; essentially, the velocity of change appears to be increasing, and while every generation would claim its era to be the most influential in shaping the planet, one can’t help but feel the present point in time is creating change at a pace that has never been seen before.

If we take stock of the distance travelled in little over a decade using the news as an example.

A few years ago, in the UK, people bought a newspaper in the morning to read about events from the previous day, some might listen to news bulletins on the radio at some point during the day, and then in the evening there was the 6pm news followed by the 10pm news for those who missed it.

Fast forward to 2011.

The internet and smartphones have proliferated the ready access people have to news. Every second of the day people can read, receive and hear about updates of events.

Twenty-four-hour news channels, ticker-like news feeds on websites and the explosion of social media means the adage of yesterday’s news is today’s fish and chip paper would be more apt today as the news an hour ago is now a web page cookie – less punchy, I concede.

On the issue of social media – credited as a key component of the Arab Spring – the knee-jerk reaction of the British Government to their own riots was to call for a review of social media and exploring how it might be constrained. ‘Hogwash’ was the answer.

Yes, the vast majority of Brits were up in arms about the rioters and looters with huge public support for a crackdown on those responsible, however the idea of ‘putting a lid’ on social media was heavily criticised despite the clear evidence that the concentrated gatherings of looters in certain areas was partly the result of social media… and partly the result of social structure.

A series of propaganda re-workings from the era of the Berlin Wall quickly sprang up (pardon the pun) following the UK coalition Government announcements – and reinforcing the notion that you have to get up pretty early these days if you want to be the first person to think or do something on this increasingly intertwined planet.

hairy girl частный займ в краснодареонлайн займ на карту без процентовзайм на яндекс кошелек мгновенно

Inigo Rudio