The problem is that the currency union is only as strong as its weakest link. Lopping off the weakest part of the Eurozone is not akin to removing a cancerous lesion from an otherwise healthy body, but more like the puncturing of an important blood vessel, which could well destroy the patient.
The potential cost is huge; the short-term benefits are minuscule. Let’s give HFT the funeral it deserves.
Mr. El-Erian counters that Pimco’s culture rewards people who challenge conventional wisdom.
Deep dive into the world of algo-trading :
In a mere 20 milliseconds, the world’s ‘traders’ had managed to read Bernanke’s 4549-word script, interpret it (as bearish in this case – which apparently is wrong now?) and start to sell down the major equity indices.
His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.