Thursday, November 12, 2015

From Astrology to Astromy...From Fortune Tellers to Scientists

"ABOUT 500 YEARS ago a middle ranking church official working in an obscure part of what is now northern Poland imagined a new way to think about the workings of the universe. Before Copernicus, mankind knew that the earth sat motionless at the very centre of the universe with the sun and the stars turning around it. After Copernicus, we knew the earth was just a minor planet orbiting an unremarkable star.

What Copernicus thought about the universe was important - it turned astrology into the science of astronomy - but how Copernicus thought about the universe was immeasurably more important. Copernicus taught us how to do science. He taught us to look for simple answers to complex problems ( The essence of Modular-Finance) and he showed us the importance of using our imagination.

Copernicus was the first of the scientific revolutionaries, but he was not the last. He was followed by a long and glorious list of imitators. These copy cat revolutionaries borrowed his scientific methods and to a surprising degree also used very similar imaginative tricks to turn their own fields into sciences."

~ Hat tip ~ Geooge Cooper ~ MONEY, BLOOD AND REVOLUTION

From Modern to Modular....

"Finance is one of the few areas of economics in which theories and equations come straight out of academia and are almost immediately applied in the real world. The tools of Traditional finance are heavily used by investors, banks, corporate managers, and government policy makers. The decisions that ride on the back of these ideas range from billions of dollars in trading, to whether two companies will merge, to how central banks set interest rates. Thus, any claim that Traditional finance theory is wrong is an important claim indeed.
     Finance theory is also unique in that it is the most empirically tested area of economics. Financial economists have an embarrassment of riches, with minute-by-minute data on the trading of tens of thousands of assets. They are also fortunate because financial markets tend to be old and keep good records, allowing economists to look at data not only at the minute-by-minute level, but also over decades. Unfortunately, as of late, all this data has not been kind to Traditional theory."

~ Hat tip ~ Eric Beinhocker, The Origin of Wealth

Tuesday, November 10, 2015

The Nature of Value

Investing in the Adaptive economy

~ Nick Gogerty

THIS BOOK PUTS A theory forward of how and why economic value works, starting with the first principles of tiny innovation sparks and scaling all the way up to the full scope of the economy. This story of value borrows from many other disciplines, including anthropology, ecology, psychology, math, physics, biology and sociology. Most of all, it examines how evolution's processes help us understand the economy for growth. Examining value creation through behavioral and systems thinking models will explain the ebb and flow of capital, energy, resources, knowledge, and value over time.

of Products and Platforms...

Systemic Risk

The Dynamics of Modern Financial Systems

~ Prasanna Gai

Systemic Risk opens new ground in the study of financial crises. It treats the financial system as a complex adaptive system and shows how lessons from network disciplines - such as ecology, epidemiology, and statistical mechanics - shed light on our understanding of financial stability. Using tools from network theory and economics, it suggests that financial systems are robust-yet-fragile, with knife-edge properties that are greatly exacerbated by the hoarding of funds and the fire sale of assets by banks. This book studies the damaging network consequences of the failure of large interconnected institutions, explains how key funding markets can seize up across the entire financial system, and shows how the pursuit of escured finance by banks in the wake of the global financial crisis can generate systemic risks. The insights are then used to model banking systems calibrated to data to illustrate how financial sector regulators are beginning to quantify financial system stress.