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Epic failures: 11 infamous software bugs

By Matt Lake
September 9, 2010 06:00 AM ET

End-of-the-world bugs

Remember how the world descended into nuclear oblivion on Sept. 23, 1983? No? Well, thank your lucky stars -- this is a tale of bugs so major they could have brought the entire world to a standstill.

It was all averted by the common sense of one individual, who ignored the Soviet early-warning system's faulty reports of incoming missiles and didn't launch a counterattack on the United States.

The warning system set off klaxons at half past midnight on that September morning. Apparently, the U.S. had launched five nuclear missiles toward what the U.S. president had taken to calling "the Evil Empire."

At the time, Lt. Col. Stanislaus Petrov reasoned his way to a decision not to respond: The USSR was in a shouting match with the U.S. about a Soviet attack on Korean Air Lines Flight 007 three weeks earlier, but it was only a rhetorical battle at that stage. Besides, if the U.S. wanted to attack the Soviet Union, would it really launch only five missiles?

Petrov ordered his men to stand down, and 15 minutes later, radar outposts confirmed that there were no incoming missiles. The decision took less than five minutes, it was confirmed within half an hour, and the world remained at peace.

When the early-warning system was later analyzed, it was found to have more bugs than a suburban compost heap -- which meant that although Stanislaus Petrov had saved the world, he'd made a serious error of judgment: He had shown up the incompetence of Soviet programmers.

This was not good for morale, or for the lieutenant colonel. He was cold-shouldered into an early retirement and was largely unsung until May 21, 2004, when a San Francisco-based organization called the Association of World Citizens bestowed its highest honor -- world citizenship -- and a financial reward on him.

The bug that never was: Black Monday's dark secret

It is a truth universally acknowledged (by people who don't know bugs) that the end of the 1980s stock boom, Black Monday of 1987, was precipitated by buggy software. It was Wall Street's greatest ever loss in a single day: The Dow Jones Industrial Average plummeted 508 points, 22.6% of its total value, and the S&P 500 dropped 20.4%. And it was all the fault of bugs in the computer models.

Except that it wasn't.

Program trading was relatively new and harder to understand back then, and people with diminished pension funds were anxious to find a scapegoat they could really lay the blame on. It was easier to point to a faulty program than to understand overvaluation, lack of liquidity, international disputes about exchange rates, and the market's notoriously bipolar psychology. So the computers became the bad guys.

Of course, program trading did contribute to the precipitous fall of American markets. The software contained strategy models for handling portfolio insurance, and it was there that the problems of Monday, Oct. 19, 1987, really lay. Portfolio insurance derivatives are tied to the condition of the market. After things nose-dived in Hong Kong and Europe, the sun rose on a Wall Street ready to react: The writers of derivatives sold on every down-tick, and plummeting values triggered a cascade of selling.

But the trading programs just did as they were instructed. The fact that they sold as the financial markets collapsed around them wasn't a bug, it was a feature -- just not a well-thought-out one.

Now it's your turn -- tell us your bug tales in the reader comments.

Matt Lake is familiar with quality control systems and auditing, but he is also writing a science book that includes a subchapter on entomology, making him a bug connoisseur in more ways than one.

Infamous software bugs

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