Policy Punchline

Liam Vaughan’s newest book explores the “Flash Crash” that took place on May 6, 2010. In the span of five minutes, S&P fell 5% and a trillion dollars of valuation was wiped out. Within around 20 minutes, the markets picked back up and resumed to normalcy. The crash was later attributed to Navinder Sarao, or Nav, a London day trader who lives with his parents and trades from his bedroom. In this interview, Liam joins Tiger and Michael to talk about this fastest drop in market history, Nav’s journey and involvement in the crash, the moral-ethical implications of his arrest, and some fundamental issues of financial markets and emerging tech that allowed such havoc to unfold. Why should we care about an event that only lasted 20 minutes – shorter than 1/5 of the length of this podcast interview? Was the Flash Crash a Black Swan, perfect storm type of event, or an indicator of something larger such as an unstable trading ecosystem as we move towards automation? What are the definitions of these techniques like