Dear John,
In majority of discussions the financial crises is considered as a disaster, as
well as all
previous crises. Each time when a new crises demonstrates its power. people are
surprised
that it happened again (and again and it will definitely happen again).
However, the cyclic character
of crashes of the financial market may induce the impression that these
crasches are of
objective nature. Moreover, it seems that they are really nessasary for
successful functioning
of the financial market. I elaborated this trivial observation in a
phemenological thermodynamical model
of functioning of the financial market, as a Carnot cycle for Heat Machine. By
this model the financial market is not able to
start a new cycle without crash in the same way as Heat Machine could not start
a new cycle without cooling, see more detail
http://arxiv.org/abs/cond-mat/0408560
The model is in fact purely informational, it is about dynamics of expectations
(in this aspect it is close to ideas of G. Soros)
which is realized as dynamics of money:
" We consider dynamics of financial markets as dynamics of expectations and
discuss such a dynamics from the point of view of phenomenological
thermodynamics. We describe a financial Carnot cycle and the financial analogue
of a heat machine. We see, that while in physics a perpetuum mobile is
absolutely impossible, in economics such mobile may exist under some
conditions. Our thermodynamical model for the financial market induces a rather
unusual interpretation of the role of financial crises. In the opposition to
the common point of view, in our model financial crises play the crucial role
in functioning of the modern financial market. This is an important
(concluding) stage of a financial cycle that is analogous to the stage of
cooling in the ordinary Carnot cycle. A financial cycle could not be completed
without such a stage as well as the ordinary Carnot cycle. Thus, inspite its
destructive (at the first sight) consequences the stage or financial crises is
as well important as the stage of "boiling of the financial market" ("heating
of expectations").
Comments: Journal publication; comments on financial interpretation of
consequences of the thermodynamical model
Subjects: Other (cond-mat.other)
Journal reference: Physica A, 350, 487-490 (2005)
----- Original Message -----
From: John Collier <[EMAIL PROTECTED]>
Date: Monday, November 3, 2008 21:11
Subject: [Fis] The complexity of the current financial panic
To: fis@listas.unizar.es
> Here is somebody who blames it on oil prices (surely a factor):
>
> http://www.theglobeandmail.com/servlet/story/RTGAM.20081103.wrecession1103/BNStory/energy/home
>
> ----------
> The pursuit of truth is what prevents us from pursuing each other.
> -- James H. Billington, Librarian of of Congress
> Professor John
> Collier [EMAIL PROTECTED]
> Philosophy and Ethics, University of KwaZulu-Natal, Durban 4041
> South Africa
> T: +27 (31) 260 3248 / 260
> 2292 F: +27 (31) 260 3031
> http://www.nu.ac.za/undphil/collier/index.html
>
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>
Andrei Khrennikov, professor of applied mathematics,
director of International center for mathematical modeling in physics,
engineering and cognitive science, University of Vaxjo,
Sweden
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