On February 27, 2007 the Dow Jones Industrial Average plummetted 416 points–at one point in the day it had fell 546 points, it’s worst drop in a single day in over 5 years. Part of the drastic decline was that the market was oversaturated after record increases in the previous weeks. This decline has mostly been attributed to the fact that the Fed released a series of statements indicating that interest rates were going to remain constant. But the most important reason that the market crashed was because the Chinese markets dropped over 9% before the market opened. That was the impetus that sent our financial markets into disarray.

This is an interesting example for our class because it shows a strong tie between the American and Chinese markets. Many analysts would have predicted that while there was certainly a tie, that it was not strong enough to send the Dow down 546 points. It also brings to question the importance of power in relationships. China is clearly incredibly important to the stability of our financial system.

That’s worth a little thought, but the best connection to our course is about how there was a failure in the electronic part of the market. This ties in well to the handout on the Hybrid Market. At about 3:00PM the Dow dropped 200 points instantly because of failures in the computer systems, which brings to question whether or not it’s really worth it to integrate computers into the NYSE.