Suspiciously like an information technology shock

[Most analysts agree that] the culmination of a thirty-year pulse of financial innovation simply swamped regulators’ abilities to cope with – or even at certain key points to understand – the nature of the unfolding crisis. This vast new infrastructure, known collectively as the “shadow banking system,” consists principally of the proliferation of investment instruments known as “securitization,” on the one hand; and, on the other, the advent of myriad other institutional investors including money market mutual funds. There is probably no reason to want to dismantle this system, or even to think any longer that it could be done. But new methods of regulation are definitely needed to prevent the industry from seizing up in panic again a few years hence.

Says David Warsh

Clearly, in this case, the sudden appearance of web based information.  The sudden implies asymmetric information.  When that happens, the finance community bids in a way that ignores exploding transportation costs.

I keep saying we saw  something similar in the web based mortgage market.  The sudden appearance of web based money lending causes money to move faster to housing than people can pick economical housing.