Steve Jobs, United panics: too much stock in bad info
Just as every corner of the connected world benefits from the Web’s power to eliminate time and distance as obstacles to the spread of information, no place is safe from its equal and opposite power to promote misinformation. Wall Street, perhaps more than any other industrial nerve center, sits astride this fault line. The financial sector has an endless thirst for hypercurrent news, but it also gulps down plenty of impurities.
There was the case last month of the 6-year-old Chicago Tribune news article announcing United Airlines’ bankruptcy on the South Florida Sun Sentinel’s website (the two papers, like the Los Angeles Times, are owned by Tribune Co). By way of various computer gaffes at Tribune and Google News, plus a dollop of human error, the archived story was mistaken for a breaking development and was picked up by Bloomberg’s financial news service, where it immediately triggered a panicked sell-off that hacked 70% off United’s stock price in a matter of 10 minutes. The Nasdaq had to halt trading on the stock for more than an hour while investors figured out what had gone wrong.
Then last week, an anonymous user of CNN’s ireport.com — a loosely moderated site where users can submit homegrown news — posted a report that Apple Inc.’s chief executive, Steve Jobs, had suffered a massive heart attack. The report was picked up by the popular technology blog Silicon Alley Insider, which contacted Apple for confirmation but not before posting the rumor, describing it as “a story of major consequence” that “no one else has reported.”
When Apple got back to Silicon Alley Insider, the company denied the rumor, and CNN removed it, calling it “fraudulent.” Still, in the story’s half-hour life span, Apple shares fell more than 5% before partially rebounding. Securities and Exchange Commission investigators are reportedly looking into whether the rumor was started by someone trying to manipulate the stock.
Both stories underwent a now familiar alchemy, whereby junky Web rumors gain credibility the moment they’re touched by a source that someone’s heard of.
Sometimes the story passes through so many hands that assigning blame becomes academic. Was it Tribune’s fault for letting an old story appear to be new or Google’s fault for not knowing the difference, or was it the fault of the guy who believed Google when it offered a new-looking story or Bloomberg’s fault for not vetting its contributors well enough? And what about the traders? Can’t these highly paid professionals get someone to spend 10 minutes verifying these catastrophes?
Not so fast. Or rather, not so slow. “These things happen very, very quickly,” said economist Robert Aliber of the University of Chicago. “The people who are closely involved probably don’t have the time to do the checking. It’s more important for them to be on the right side of the trade than to be library-type researchers.”
You wouldn’t get much further pinning the Jobs rumor on CNN, or Silicon Alley Insider, or even the hoaxer who posted the false report.
And, as Silicon Alley Insider Editor Henry Blodget pointed out, the crisis came and went in a flash. “The Web can certainly spread misinformation fast, but it’s equally capable of spreading correct information fast. With the Steve Jobs heart attack story last week, the market had the rumor and the answer within half an hour — and both were accessible to everyone.”
But rumors by their nature are destabilizing. Robert Bruner, dean of the University of Virginia Darden School of Business and author of “The Panic of 1907,” said that at the center of every market scare, micro or macro, is a kind of disorientation that comes when some people know what’s going on and others don’t.
“Somebody asked me, ‘So how is today’s crisis different from the great crash of 1929?’ And the answer is the speed, complexity and sheer scale” of the market system.
It’s no coincidence that the same phrase describes the Web’s central information problem as well. There are so many parties both producing and consuming information that it’s impossible for everyone to be on the same page.
Just go to any trading floor, Bruner said. Besides the banks of TV screens and news feeds on the walls, “the traders have their own news sources, scanning the Internet, reading the blogs and chatter, looking to exploit the arrival of news advantageously.”
Wall Street, in other words, has the Internet pumped directly into its brain. Just so, the two share the same exhilarating, maddening personality.
— David Sarno
David Kernell, 20, indicted for Palin email hack
David C. Kernell, 20, the student at the University of Tennessee who net detectives fingered in the hacking of Gov. Sarah Palin's email account last month, has been indicted by a grand jury in Knoxville. A release from the Department of Justice says the following:
The single count indictment, returned on Oct. 7, 2008, and unsealed today, alleges that on approximately Sept. 16, 2008, Kernell, a resident of Knoxville, obtained unauthorized access to Gov. Palin’s personal e-mail account by allegedly resetting the account password. According to the indictment, after answering a series of security questions that allowed him to reset the password and gain access to the e-mail account, Kernell allegedly read the contents of the account and made screenshots of the e-mail directory, e-mail content and other personal information. According to the indictment, Kernell posted screenshots of the e-mails and other personal information to a public Web site. Kernell also allegedly posted the new e-mail account password that he had created, thus providing access to the account by others.
If convicted, Kernell could face a maximum of five years in prison and a $250,000 fine. This is a much stiffer penalty than some people around the Web had been guessing, and shows that the federal authorities are not treating Kernell like a kid, or the hacking crime as a prank.
No date has been set for the trial.
Kernell is the son of a Tennessee Democratic legislator. Because of a similarity to an e-mail address Kernell was linked to through various online accounts, those chasing the story believed Kernell was the pseudonymous "Rubico" who apparently posted a lengthy account of his exploits to the bulletin board 4chan.org, detailing the way he gained access to Palin's Yahoo email account. Essentially, Rubico looked up the publicly available answers to her security questions (What's your zip code? Where did you meet your spouse?).
Screenshots posted by Rubico appeared to contain information about the address of the hacker's computer, which may have allowed authorities to narrow the search.
Federal agents reportedly served a search warrant on Kernell's apartment in late September, but no indictment was immediately handed down.
-- David Sarno
Photo of David Kernell by Emily Spence of the Associated Press
Hurricane Gustav hits Haiti, takes aim at U.S. Gulf Coast
hurricane gustav tracking, projected path of hurricane gustav, gustav computer models,
hurricane gustav, tropical storm gustav, gustav, hurricane gustav path, hurricane gustav projected path, hurricane gustave (Top 100 Google Hot Trends search terms)
Update: Hurricane Gustav hit southern Haiti today, threatening to become an "extremely dangerous" storm as it heads toward Cuba and takes aim at states along the U.S. Gulf Coast. See Hurricane Gustav computer models at Weather Underground.
Hurricane Gustav topped Google Hot Trends today with related results (Hurricane Gustav Tracking, Projected Path of Hurricane Gustav) found throughout the Top 100 most searched terms.
With current maximum sustained winds of 85 mph, Gustav could develop into a Category 2 hurricane later today and a “major” Category 3 or 4 storm by the end of the week, according to AccuWeather forecasters. (View the projected path of Hurricane Gustav from the National Weather Service.)
Forecasters warned Gustav's eye could pass near the Haitian capital of Port-au-Prince, home to nearly 3 million people.
To avoid the storm, Carnival Cruise Lines diverted one of its ships today to a Mexican port instead of Montego Bay, Jamaica.
Crude oil prices rose today as Hurricane Gustav threatened major oil operations in the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Image: National Weather Service
— Brady MacDonald, Los Angeles Times Staff Writer
Arrington vs. Cashmore: Tech titans clash in Hollywood
(Photo by Robert Scoble)
Last night at the Vanguard night club in Hollywood, there was yet another sign that the Silicon Valley tech scene is taking on Tinsel Town attributes (read: ego, expensive 2,000-person parties DJ'd by Perry Farrell, internecine territory squabbles and--crucially--more and more celebs caught on video).
Blog czar Michael Arrington (above) of the popular technology blog TechCrunch was accused by detractors of ejecting unwanted company from his exclusive Hollywood Boulevard shindig (co-thrown by PopSugar). The outcasts were, specifically, Mashable.com's Pete Cashmore, a young pretender to the tech blogging throne, and the crew from Valleywag, the tech scene's online tabloid.
