A Complex System View on the Financial and Economic Crisis

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THE GREAT MODERATION This figure shows the rolling 10-year average real GDP growth rate along with one-standard deviation bands. These standard deviation bands provide a sense of how much variation or volatility there has been around the 10-year average real GDP growth rate. The figure shows a marked decline in the real GDP volatility beginning around 1983. 46
Stress drop (coupling strength) 10 1 0.1 0.01 PERIODIC + SYNCHRONIZED + (Sornette et al., LARGE RISKS * 1994) + + + + * + (Ben-Zion, Dahmen * * et al., 1998) SELF-ORGANIZED CRITICALITY * * * 0.001 0.001 0.01 0.1 1 10 Coexistence of SOC and Synchronized behavior Heterogeneity Rupture thresholds “Phase diagram” for the model in the space (heterogeneity, stress drop). Crosses (+) correspond to systems which exhibit a periodic time evolution. Stars * corresponds to systems that are self-organized critical, with a Gutenberg-Richter earthquake size distribution and fault localization whose geometry is well-described by the geometry of random directed polymers.
Page 1 and 2: A Complex
Page 3: Canada Currency: Canadian dollars 3
Page 6 and 7: Standard claim: The current financi
Page 8 and 9: The illusionary “PERPETUAL MONEY
Page 10 and 11: A 15y History of the 2008 crisis
Page 12 and 13: •1995-2000: growing divergence be
Page 14 and 15: Foreign capital inflow 14
Page 18 and 19: Causal slaving of the US Treasury B
Page 20 and 21: Causal Slaving of the U.S. Treasury
Page 22 and 23: Real-estate bubbles 22
Page 24 and 25: Real-estate in the UK 24
Page 26 and 27: (2005) And this with the median hou
Page 28 and 29: B-F Over the past decade and a half
Page 33 and 34: Key Players and Frictions in Subpri
Page 35 and 36: Estimated assets and market positio
Page 39 and 40: 2006-2008 Oil bubble Speculation vs
Page 41 and 42: 41 Source: R. Woodard (FCO, ETH Zur
Page 43 and 44: Recession-Plagued Nation Demands Ne
Page 45: Separation of financial and credit
Page 49 and 50: • Fundamental error: “perpetual
Page 51: Main Messages • Do excesses exist

A Complex System View on the Financial and Economic Crisis

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