Comments on: Does globalization create interlocking fragility? http://www.decisionsciencenews.com/2008/10/08/does-globalization-create-interlocking-fragility/ A website about decision research in Marketing, Psychology, Economics, Behavioral Economics, Finance, Medicine, Law, Management, Public Policy, Statistics, Computer Science. Mon, 06 Feb 2012 21:44:44 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Deepankar Thakur http://www.decisionsciencenews.com/2008/10/08/does-globalization-create-interlocking-fragility/comment-page-1/#comment-297 Deepankar Thakur Fri, 31 Oct 2008 06:13:52 +0000 http://www.decisionsciencenews.com/?p=497#comment-297 As a practicing manufacturing engineer, I can attest to the idea of global fragility by comparison of a complex closed loop system. Whenever there is some sort of disruption on one of the sub-systems, the over all process feels the impact, albeit to differing degrees. The current fiscal problem is affecting manufacturing, service, energy, mining/natural resource sectors to name a few. The interesting part of this issue is the question: "Will banking and commerce sector corrections help bring the other sectors back on track or will they also need oversight and assistance from governmental agencies?" Time will tell. As a practicing manufacturing engineer, I can attest to the idea of global fragility by comparison of a complex closed loop system. Whenever there is some sort of disruption on one of the sub-systems, the over all process feels the impact, albeit to differing degrees. The current fiscal problem is affecting manufacturing, service, energy, mining/natural resource sectors to name a few.

The interesting part of this issue is the question: “Will banking and commerce sector corrections help bring the other sectors back on track or will they also need oversight and assistance from governmental agencies?”

Time will tell.

]]> By: Kevin McReynolds http://www.decisionsciencenews.com/2008/10/08/does-globalization-create-interlocking-fragility/comment-page-1/#comment-288 Kevin McReynolds Tue, 14 Oct 2008 17:38:39 +0000 http://www.decisionsciencenews.com/?p=497#comment-288 As a technology professional, I have to agree with the idea of global fragility. If someone could bring down the root servers (Domain Name Server), the internet would collapse. There are less than 30 of these root servers. It is scary to think that the internet is dependent on so few servers. As a technology professional, I have to agree with the idea of global fragility. If someone could bring down the root servers (Domain Name Server), the internet would collapse. There are less than 30 of these root servers. It is scary to think that the internet is dependent on so few servers.

]]> By: Miguel Barbosa http://www.decisionsciencenews.com/2008/10/08/does-globalization-create-interlocking-fragility/comment-page-1/#comment-284 Miguel Barbosa Sat, 11 Oct 2008 01:55:43 +0000 http://www.decisionsciencenews.com/?p=497#comment-284 Hello, Thanks for the excerpt. I rather enjoyed re reading the black swan this past summer. I have already posted your excerpt on my website as well as Mr. Talebs talk to LongNow.org. If you get a chance please take a look at my website. I highly value your opinion. Best Regards, Miguel A Barbosa www.simoleonsense.com Hello,

Thanks for the excerpt. I rather enjoyed re reading the black swan this past summer. I have already posted your excerpt on my website as well as Mr. Talebs talk to LongNow.org. If you get a chance please take a look at my website. I highly value your opinion.

Best Regards,

Miguel A Barbosa
http://www.simoleonsense.com

]]> By: michael webster http://www.decisionsciencenews.com/2008/10/08/does-globalization-create-interlocking-fragility/comment-page-1/#comment-281 michael webster Wed, 08 Oct 2008 14:42:14 +0000 http://www.decisionsciencenews.com/?p=497#comment-281 Our current crisis is similar, in one respect, to the problem of portfolio insurance in the late 80's. Replace "portfolio insurance" with "bond default insurance" and you see the similarities. When the stock market fell, and everyone wanted to exit according to their insurance models, they had to sell. Repeat and rinse. When the credit market, in its gloomy darkness, tanked for some bond issuers, those who provided insurance for the default had to sell assets, further lowering the value of the reserves held by other bond issuers. Repeat and rinse. This problem will get sorted out, but the overhang of producing too much housing creates externalities that will take much longer to deal with because the Special Purpose Vehicles which hold a lot of these mortgages are designed as trusts - meaning that the trustee is bound by law not to rejig the mortgage commitments. Oops, bad idea. Our current crisis is similar, in one respect, to the problem of portfolio insurance in the late 80′s.

Replace “portfolio insurance” with “bond default insurance” and you see the similarities.

When the stock market fell, and everyone wanted to exit according to their insurance models, they had to sell. Repeat and rinse.

When the credit market, in its gloomy darkness, tanked for some bond issuers, those who provided insurance for the default had to sell assets, further lowering the value of the reserves held by other bond issuers.
Repeat and rinse.

This problem will get sorted out, but the overhang of producing too much housing creates externalities that will take much longer to deal with because the Special Purpose Vehicles which hold a lot of these mortgages are designed as trusts – meaning that the trustee is bound by law not to rejig the mortgage commitments. Oops, bad idea.

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