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Finance and Mechanics

 

Recent events about the financial crisis and generally spread turmoils on Economics and Financial Environments  lead me to these conclusions.

Critical Speed:  informations, a key issue on finance, reached a critical speed. Maybe this is the "first" critical speed of the system. Speed of informations has reached the same order of magnitude of people's judgement (executives and investors more than others) so there's a sort of over-reaction about actual events.

Turbulence: owing to the extreme complexity of derivatives and other financial products, the intricacy of the system is astonishing, tracking the underlying assets sometimes impossible. A sort of Reynold number in some fields (e.g. Mortgage backed securities) has been overcome, and let the defaults spread extremely fast as a pollutant in a turbulent eddie, transversally dragging the rest of financial, economics and manufacturing activities (trough the difficulty of credit and so on).

Chaos: the interrelation is so high that slightly variations of one parameter can capsize the bottom line resultsin an unpredictable way (more than that, emotions and feelings rule, and they are still over our modelization ability). Just like an extremely non linear system.

 

If someone has think about something similar or think I'm wrong, please answer giving also some examples, because transversal procedures and methods can be imported from Mechanics to help predict and comprehend financial markets.

Comments

finance is a major requirement for any country to stable economy within the country.

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Brook

 

http://mls.fastrealestate.net

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