[quote]The current financial crisis is often described in terms evocative of Poseidon's wrath: a wave of foreclosures, a perfect storm of market conditions, a tsunami of debt. It turns out those descriptions may be more accurate, and more useful, than other metaphors. If financial markets behave less like the stochastic, Brownian systems they are often compared to and more like nonlinear wave systems, then rogue waves can account for spikes and plunges in financial markets.
In fact, if markets do mimic nonlinear wave-like systems, then rogue waves periodically upending free markets are inevitable.
Rogue waves are large swells that occur spontaneously far out to sea, threatening even large ocean liners. While rogue waves had been observed anecdotally and even predicted mathematically for years beforehand, they weren't recorded and proved until 1995. Since then, they've been discovered in several other systems like fiber optics and microwaves. Now, Chinese researchers are positing that rogue waves can occur in financial systems, and could account for events like the 1997 Asia crisis or the current credit crisis sweeping the globe.
A nonlinear wave-like representation of markets could solve a major flaw in the primary means of modeling financial systems. The Black-Scholes model, which assigns a random, stochastic nature to equity prices, is useful on several levels, but researchers acknowledge that it doesn't account for volatility in real markets. A nonlinear wave-like model for markets proposed earlier this month allows for a variety of variables that more closely mirror real market behavior. Rogue waves, which we know to be real in other wave-like systems, could solve for the black swan events -- like the subprime mortgage debacle or savings and loan crisis -- that periodically appear as if from nowhere and shake markets to their cores.
What does it mean? By definition, understanding that rogue waves occur in financial markets won't necessarily help econophysicists predict an impending financial crisis. But it does mean that rogue waves are an inevitable part of free markets. Rather than playing the blame game, perhaps market regulators should be working out how best to keep the ship from capsizing when a rogue wave rises up before us. After all, we can't change the inevitable, but we can at least brace for impact.[/quote]
So I guess it really does takes a physicist to explain where the economy went wrong.
[url]http://www.popsci.com/science/article/2009-11/econophysicists-rogue-waves-could-account-volatility-financial-markets[/url]
What the hell does 8th grade math have to do with the economy.
nevermind misread
The scary thing about this is that if we can prevent a recession, that will screw up the economy even more by effectively halting the stock market and causing panicked consumers.
so... if you want the economic crisis to stop you have to... [i]believe[/i]?
[QUOTE=Jessesmith1;18676361]so... if you want the economic crisis to stop you have to... [i]believe[/i]?[/QUOTE]
[i]Don't stop believin'[/i]
This will probably make big [B][U]waves[/U][/B] with investors and the like.
[QUOTE=Killy_Mcgee;18686776]This will probably make big [B][U]waves[/U][/B] with investors and the like.[/QUOTE]
that wasn't even a pun you used the same word
[QUOTE=Killy_Mcgee;18686776]This will probably make big [B][U]waves[/U][/B] with investors and the like.[/QUOTE]
I underline and bold my attempts at [U][B]puns[/B][/U] so that they are [U][B]blatant[/B][/U] and [B][U]unsubtle[/U][/B].
[QUOTE=innerfire34;18686798]that wasn't even a pun you used the same word[/QUOTE]
It strangely works better than any other wave synonyms
[QUOTE=Jessesmith1;18676361]so... if you want the economic crisis to stop you have to... [i]believe[/i]?[/QUOTE]
I'm trying to think of the guy who said these exact same words in 1929...
Also there was another guy who said that there is a fall of the U.S. economy every 20 - 30 years because that's when another wave of idiots who don't know how the stock market work join and fuck everything up by panicking and selling way way too much stock. This time it's a bit different though because we've really done a lot to fuck things up, including making all of the exact same mistakes we did in the 20's, just on a much more grandiose scale.
And [b][u]puns like this make me read them weird[/u][/b]
Awesome. Way to think outside of the box, Chinese researchers!
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