Evolution

Survival of the fittest and evolution of myself and the world.

The world has evloved since I last blogged. Economic imbalances have gone through corrective times. It is hard to see the world around you fall apart especially if it was someone else's fault. How do you survive in a system which has blatantly rewarded reckless risk-taking? How do you verify that you are not throwing away your hard earned money into a black hole? It is easy to find out a mathematical model to explain historical phenomena. It is much more difficult to really be sure of the future.

With greater linking and leveraging, the world economy is now more unstable than ever before. Economists have been pursuing efficiency of markets as the holy grail. What we have failed to realise is that actions which allow the market to react fast are also the actions which make it unstable.

The second and more interesting question to ask is do we understand the economics of the world in an integrated manner or are we just trying to make do with parts and live on the faith that they will all fit together. My guess is that even though we use very complex statistical methods to analyze how the world economy shakes and moves, we only use them because we do not know the basic fundamental behaviour.

This gives me hope that there is still a lot to discover out there and a few Nobel Prizes just waiting to be grabbed if one can figure out even a part of the puzzle called the global economy.