Here’s what we and all of Wall Street can say thanks for:

The economy did not melt down. Two years ago today, incoming president Barack Obama was weighing a $700 billion economic stimulus plan, on top of the $700 billion that went to bail out Wall Street investment and insurance firms. Here’s a timeline of the meltdown, in case any reminder is needed of just how full of fret Thanksgiving Day was two years ago.

George Bush was still president. You can argue to this day whether to be thankful he was chief executive at the time or be thankful that he was the outgoing chief executive at the time. But here are some Bushisms that might brighten your Turkey Day, whatever you think. Here’s one: “I've abandoned free market principles to save the free market system."

Markets did not melt down. For much of this year, it looked like the machinery of Wall Street was tied together with a couple strings and tin cans. The “Findings Regarding the Market Events of May 6, 2010" from the Securities and Exchange Commission and the Commodity Futures Trading Commission reinforced the notion. Their joint report portrayed “a market so fragmented and fragile that a single large trade could send stocks into a sudden spiral."

Restraint is in. Traders, hedge fund managers and high-profile executives are not going to rush back to their wanton ways of hedonistic spending fueled by stout bonuses that pits Wall Street against Main Street and would let a “know-it-all” such as Sarah Palin remain a major political figure of the future (or, present). Oops. Wrong, perhaps, on all counts.

Microsecond measurements also are in. In April, Algo Technologies introduced a matching engine for execution venues with a mean roundtrip latency of 16 millionths of a second. In July, Spread Networks said it could take instructions from New York to Chicago and back in 13.3 thousandths of a second. In November, NYSE Euronext promised that quote and trade data would be sent out in consolidated fashion from all venues in one millionth of a second, by the middle of next year.

Why be thankful for this? Pretty soon, the huzzuh over high-speed trading will be gone, because that’s the way all trades should operate. Instant execution should the expectation. So should instant clearing and settlement.

In any case, once all systems are instant all the time, everyday investors go back to doing what they do best, investing for the long-term. Which does not rely on microsecond perturbations of price.

Regulators’ new-found religion: technology. Spending on technology in capital markets will pick up again in 2011, according to research firms such as Ovum and Gartner. A big impetus? Spending on systems that help them comply with a worldwide onslaught of new regulations, aimed at preventing another global financial crisis. And on such things as a consolidated audit trail, so they can watch what goes on in markets, when stuff happens. So who said there wasn’t a silver lining in the credit crisis?

Give thanks.

And be appreciative that we have something to be thankful for, after all, given the wringer the world has been put through.


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