Monday, August 2, 2010

A Richter Scale for Markets

From the New York Times...

"It’s tempting to pull out the old earthquake metaphor when talking about the latest financial crises. How else to describe the economic devastation — the tremors in the subprime mortgage market, the seismic collapse of Lehman Brothers, and the aftershocks reverberating in Europe?

But some academics are now taking the metaphor seriously, pursuing a new approach to economics they call econophysics. The field represents a significant break from traditional economics, by studying financial earthquakes in much the same way geologists study those on terra firma. “New approaches are needed to address the fundamental and practical challenges of our financial, economic and social system,” a group of econophysicists wrote recently in an open letter to George Soros, the billionaire investor and philanthropist."

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