You know, the more connections something has the more unstable it becomes. I’m not talking in the engineering sense where additional rigid connections actually stabilise a structure, but loose connections affecting something – like the economy, your own brain or the weather. In these cases increasing the interconnected and dependent nodes adds complexity and moves the whole system closer to the edge of chaos, where it sits waiting for the final nudge from a totally unexpected source to tip it into a fully chaotic state of collapse.
Think of adding individual grains of sand to a pile of the stuff; before long just an additional grain can tip the balance, chaos is achieved and the whole pile collapses until it reaches a new state of equilibrium.
The world’s financial institutions and economies are linked in this manner; we buy each others’ derivatives and financial instruments, exporting them across national boundaries while all the time edging the system toward a chaotic state. When a critical point is reached the slightest critical factor among a myriad can result in a cataclysmic collapse of the entire system, which is just what happened when the global financial melt-down occurred (and why economics is no better at being able to predict a financial collapse than astrology).
Given the foregoing, I think that it’s high time that regulators introduced financial firebreaks to prevent too many interdependent connections.
I was reading a copy of Liverpool Life over the weekend (something about the Toxteth Literary Festival or the Everton Opera House) and thought Liverpool could be such a firebreak: before the system collapses in its entirety we arrange things such that Liverpool is obliterated from the map first as a warning of over-criticality.
1 comment:
I am quite fond of Liverpool. Although the idea is sound, can I not nominate Cheltenham Spa instead.
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