… Occasionally crashes are so large that they are outliers even from the power law distribution, says Didier Sornette of ETH Zurich. Their specialness makes them predictable, says Sornette, who calls the standout events “dragon-kings.”
Sornette and his colleagues argue that understanding dragon-kings [very large crashes] may help economists spot markets teetering toward crashes. Out-of-control [...]
This is Jerry McManus’ follow-up to his very insightful article, Modeling Collective Behavior, and it delves into the scientific meaning of a commonly-used, but sometimes misunderstood term of complex systems theory – “tipping point”. I have briefly added to his discussion of tipping points in forest ecosystems and financial systems by referencing a recent [...]
The economist Edward N Wolff, of New York University, has pointed out that, as of 2007, the top 1% of households in America owned 34.6% of all privately held wealth, and the next 19% had 50.5% of the wealth. This means that just 20% of the people owned 85% of the [...]
As Nassim Taleb of “black swan” fame has explained, it is misleading to say the last few grains of sand on the debt pile, for example, subprime mortgages in the housing bubble, are responsible for the entire sand pile collapsing: the masking of risk was systemic, and thus the sand pile was doomed to collapse [...]
Risks of more and repeated Black Swans, previously perceived to be small by corporations, investors, politicians and regulators, should now be reassessed, owing to (among other issues) globalization, tighter correlations, advancements in technology, the growing/excessive complexities of interlocking supply chains and derivatives, the acceptance of greater/extreme risk-taking (Minsky’s moment: “the longer people make money by [...]
The topic once again is the Financial Crisis, and specifically how, why and whether it will lead to America’s decline. Of particular note is Ferguson’s spot on characterization of the primary deficiency in the so-called brains of economists, namely that they see patterns, equilibria and stable systems where there are absolutely none: i.e., in [...]
The regularity of conflict in general poses a question Can we explain wars as self-organizing criticality?
Lars-Erik Cederman Modeling the Size of Wars: From Billiard Balls to Sandpiles
Cederman graphed the casualty rates of interstate war using the COW dataset from 1820 to 1997 and Jack Levy’s dataset of Great Powers conflicts from [...]
The Centre for Independent Studies 2010 John Bonython Lecture with Niall Ferguson.
Is the rise and fall of empires cyclical or arrhythmic? How does economic profligacy – whether the result of arrogance or naivety – contribute to the downfall of civilisations?
Today Professor Ferguson will argue that great powers or empires are in the strict [...]