Jay Connor's Reviews > The Fear Index

The Fear Index by Robert   Harris
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's review
Mar 23, 2012

it was amazing
Read in March, 2012

Starting with this real world premise -- The May 6, 2010 Flash Crash[1] also known as The Crash of 2:45, the 2010 Flash Crash or just simply, the Flash Crash, was a United States stock market crash on May 6, 2010 in which the Dow Jones Industrial Average plunged about 1000 points—or about nine percent—only to recover those losses within minutes -- Harris delivers a powerful story about market manipulations and greed at a speed faster than intervention could arrest. During this seven minute "Flash Crash," 19.4 billion shared were traded on the NYSE. That is more than were traded in the whole decade of the 1960's! Events were denominated in milliseconds -- far beyond human comprehension.

I reviewed favorably recent non-fiction books on the late 2000's market crash. Most notably: "All the Devils are Here" and "Boomerang." But leave it to good fiction to bring the absurdity of our financial markets into sharp relief.

I've enjoyed Harris for awhile. His recent political intrigue "The Ghost" was great fun. But here, this "story" is less a romp than a cautionary indictment of our pervasive greed and its attendant huge costs to society. We expect greed in the markets -- Gordon Gekko: "greed is good" -- but what when this unbridled greed unravels the very fabric of society?

In Harris' hands, it is a story of great depth with range from the ridiculous to the sublime. In describing the NEXT processor in 1991 in Cern, Switzerland, that started the world wide web and goes on to, depending on your point of view, either best represent Pandora's Box or the the law of unintended consequence: "You start out trying to create the origins of the universe and you end up creating E-Bay."

A far more troubling example of the law of untended consequence is another real world story of a $10 billion decision to close down Desertron in 1993. Closing down this US super collider in Waxahachie, Texas wiped out the career plans of an entire generation of academic physicists. Many of these disposed scientists migrated to Wall Street to become Quants who helped build derivatives instead of particle accelerators. When they went wrong in 2008, the worldwide banking system imploded to the tune of $3.7 TRILLION. How much better would we, as a society, have been if we had keep them down on the farm in Waxahachie?

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