When things don’t go your way it is really a learning experience – life is like that sometimes. We all have to accept that life isn’t fair and sometimes we lose despite what we think should happen – oh, unless we are Goldman Sachs.
I forgot the life is funny sometimes speech is for the lower classes when they lose their house, a job, or have some financial difficulty. If you are a bankster and something goes wrong the last thing you should do is take your lumps. You need to demand justice even if the rules are less than clearly on your side.
Yesterday the computer at Goldman Sachs responsible for trading options whose symbols start with the letters H through L traded a bunch of options at the wrong prices and put Goldman out by a hundred million dollars or so. Today various exchanges are sitting down and pondering whether to give Goldman that money back.
This strikes some people as unfair because, y’know, hahaha Goldman you screwed up, but also because someone was on the other side of those trades, made a profit, hedged it out, and will now be sad and possibly screwed when it is unwound.
Goldman relies on these computers to make trades which have reaped profits for the firm. The computer breaks down costing, instead of making, them money – and now they want the money they lost. The person who made the opposite bet of Goldman should give them the money back because Goldman was supposed to win. The market is never wrong, never.
The screw up also brings back the issue of having these complex machines ruling the markets, as highlighted by the infamous “flash crash” in 2010, as well as more recent mistakes by other firms that were nearly as deadly.
The mishap comes about a year after computers run by Knight Capital Group Inc. flooded U.S. equity markets with erroneous orders, a mistake that almost put the market-making firm out of business. Goldman’s error is fuel for critics of America’s electronic market structure, coming four months after the Chicago Board Options Exchange was shut down for 3 1/2 hours by a computer malfunction.
Even if Goldman gets its money back perhaps it should reconsider its support for having these complex hard-to-control supercomputers running the financial markets. Nah, just keep trying to destroy programmers for leaving the firm. And hey, if Goldman can get the money back what incentive does the firm really have to fix things? Heads I win, tails I crash the market and then get my money back.