Team.. have I mentioned that I do read on occasion. The kindle does help tremendously. I actually read a number of books to try to figure out this global debt fiasco. Endgame: The End of the Debt Supercycle and How It Changes Everything by John Mauldin The Debt Supercycle—when the easily managed, decades-long growth of debt results in a massive sovereign debt and credit crisis—is affecting developed countries around the world, including the United States. For these countries, there are only two options, and neither is good—restructure the debt or reduce it through austerity measures. Endgame details the Debt Supercycle and the sovereign debt crisis, and shows that, while there are no good choices, the worst choice would be to ignore the deleveraging resulting from the credit crisis. ---------------------------------------------------------------------------------- Red Skins Endgame: The End of the Debt Supercycle Excerpt: The United States national debt is more than $17 trillion. We all had fun as kids going to the beach and playing in the sand. Remember taking your plastic buckets and making sand piles? Slowly pouring the sand into even-bigger piles, until one side of the pile started an avalanche? Imagine, Buchanan says, dropping just one grain of sand after another onto a table. A pile soon developers. Eventually, just one grain starts an avalanche. Most of the time it is a small one, but sometimes it gains momentum, and it seems like one whole side of the pile slides down to the bottom. Well, in 1987 three physicists, named Per Bak, Chao Tang, and Kurt Weisenfeld, began to play the sand pile game in their lab at Brookhaven National Laboratory in New York. Now, actually piling up on grain of sand at a time is a slow process, so they wrote a computer program to do it. Not as much fun, but a whole lot faster. Not that they really cared about sand piles. They were more interested in what are called nonequilibrium systems. They learned some interesting things. What is the typical size of an avalanche. After a huge number of tests with millions of grains of sand, they found out that there is no typical number. Some involved a single grain; others, ten, a hundred or a thousand. Still others were pile-wide cataclysms involving millions that brought nearly the whole mountain down. At any time, literally anything, it seemed might be just about to occur. It was indeed completely chaotic in its unpredictability. Now, lets read these next paragraphs slowly. They are important, as they create a mental image that helps me understand the organization of the financial markets and the world economy. youtube/watch?v=FzW-3wHT8Js To find out why such unpredictability should show up in their sand pile game, Bak and colleagues next played a trick with their computer. Imagine peering down on the pile from above, and coloring it in according to its steepness. Where it is relatively flat and stable, color it green; where steep and, in avalanche terms, ready to go, color it red. What do you see? They found that at the outset the pile looked mostly green, but that, as the pile grew, the green became infiltrated with ever more red. With more grains, the scattering of red danger spots grew until a dense skeleton of instability ran through the pile. Here then was a clue to its peculiar behavior: a grain falling on a red spot can, by domino-like action, cause sliding at other nearby red spots. If the red network was sparse, and all trouble spots were well isolated one from the other, then a single grain could have only limited repercussions. but when the red spots come to riddle the pile, the consequences of the next grain become fiendishly unpredictable. It might trigger only a few tumblings, or it might instead set off a cataclysmic chain reaction involving millions. The sand pile seemed to have configured itself into a hypersensitive and peculiarly unstable condition in which the next falling grain could trigger a response of any size whatsoever.
Posted on: Wed, 15 Jan 2014 21:03:18 +0000
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