Download
HTML Embed
HTML EMBED
Click to Copy

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
This Is Uncomfortable
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Codebreaker

Banks bet on bigger, faster super computers

Steve Henn Jul 25, 2011
Share Now on:

During the last financial crisis, JP Morgan realized it didn’t have the computing power to keep up with the collapse. Bankers didn’t know what their portfolios of bonds and complex derivatives were worth at any given moment or how they would change in value as all hell was breaking loose. The computers that were supposed to offer up those answers were choking on the complexity of the financial instruments JP Morgan and other masters of the universe had created.

In the fall of 2008 it took up to 8 hours for JP Morgan’s fastest machines to do the math. So traders would know what their positions were worth the day before – but could not anticipate what was coming- or even know what they were worth at the time. And if anyone made a programming mistake there was no time to re-run the calculations before the next trading started for the day, which meant the bank was flying blind. One exec compared it to driving down a highway at 90 miles an hour by looking in the rear-view mirror.

Since then, JP Morgan has invested in a newer, faster machine. Bonds are just as complex, but now running the same calculations on its book of business takes less than 4 minutes and some calculations that used to take more than an hour finish in 12 seconds.

So, is it possible supercomputing might help us avoid a financial meltdown this time around? Sounds like wishful thinking, but maybe this time the bankers will see the cliff coming before we all careen off it into the abyss.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.