When news broke that a false Associated Press tweet reporting explosions at the White House sent the stock market into a tailspin, one of the first things that came to mind was the movie "War Games."
In that 1980s classic film the American military put its entire missile defense system into the hands of a computer because humans are too slow to react to an impending threat and some of us have a conscience that may prevent us from "pushing the button" to Armageddon. Low and behold, along comes a teenage computer genius who hacks into the system, innocently thinking it’s a computer gaming company, and unknowingly brings us to the brink of World War III.
That scenario is slightly different than the one that unfolded Tuesday afternoon, but the lessons that the movie from nearly 30 years ago drove home are pointedly the same: That we should not rely too heavily on computers without human oversight, and we should make sure that the computers we do use have adequate security.
Here’s what happened on Tuesday: At 1:08 p.m., a tweet appeared on the hacked AP Twitter account stating that two explosions at the White House had injured President Barack Obama. Stocks immediately started falling, dropping from 14,697 to 14,554, losing 143 points, or 1 percent. The AP quickly announced that its account had been hijacked and the report was false and the Dow began to climb again, recovering all its losses by 1:18 p.
Though markets quickly recovered after Tuesday’s plunge, the speed with which one fake tweet caused the world’s mightiest stock market to tremble is frightening. The incident rattled traders and highlighted the danger of handing control to the machines. It also raised questions about whether regulators should be doing more to monitor the relationship between social media and the markets.
For decades, computers have been sorting through data and news to help investment funds decide whether to buy or sell. But that’s old school. Now "algorithmic" trading programs sift through data, news, even tweets, and execute trades by themselves in fractions of a second, without slowpoke humans getting in the way. More than half of stock trading every day is done this way, according to the AP.
"The exchanges love speed," Bart Chilton, a member of the Commodity Futures Trading Commission, told the AP. "I’m not so sure that fast is always better."
As the Washington Post reports, the episode has drawn scrutiny from the FBI and a bevy of regulators while also highlighting the hair-trigger nature of today’s markets. This kind of computerized trading tends to exacerbate market fluctuation, especially during sudden drops in prices, critics say. This may not be as dire as nuclear Armageddon, but it does affect billions of dollars in assets and could annihilate our economy.
What’s even more frightening is that a group called the Syrian Electronic Army claimed responsibility for the hack. Unlike "War Games," this wasn’t some teenager looking to play a simple game; this was a group intent on doing harm to our nation’s economy and to our very livelihood.
The threat of cyber attacks has for the first time become a greater concern than terrorism, James Clapper, the top U.S. intelligence official, told the House Intelligence Committee during an April 11 hearing.
Congress is renewing a push to pass cybersecurity legislation following warnings by U.S. intelligence officials that electronics attacks could disrupt the nation’s banks, utilities, telecommunications networks and other essential services. U.S. Rep. Michael McCaul, a Texas Republican, likened cyberthreats to the April 15 bombing attack in Boston, according to a Bloomberg News report.
"In the case in Boston they were real bombs," he said. "In this case they’re digital bombs. And the digital bombs are on their way."
The U.S. House recently passed a bill that is backed by Boeing Co., AT&T and others that would encourage companies to share information, such as threats to computer networks and malicious source code, with each other and the U.S.government. The bill gives companies immunity from lawsuits when they voluntarily share information.
However, the Obama administration is threatening to veto the bill because it doesn’t require companies "to take reasonable steps" to remove personal information when sharing cybersecurity data, according to Bloomberg.
"Citizens have a right to know that corporations will be held accountable -- and not granted immunity -- for failing to safeguard personal information adequately," according to the administration statement.
Meanwhile, a different cybersecurity bill in the Senate was blocked by Republicans who said it would lead to regulation.
So here we go again, waiting for Congress to work on a solution to a problem that threatens the very fabric of our society. This could take a while. Maybe we should let a computer solve the problem.