[Futurework] global economic crisis, statistical physics predicts

[Darryl or Natalia]

Don't know if real physicists consider this real science. In this 
analysis, strength and targets of business links are more relevant 
indicators than size of a nation. Potentially, Sweden or Switzerland 
could trigger a world wide crisis.

Natalia

*http://www.world-science.net/exclusives/100825_crisis*

*World mone**y meltdown can start in surprising places, physicists say*

Aug. 25, 2010
Special to World Science <http://www.world-science.net>

*A small group of coun­tries---in­clud­ing not just the mighty Un­ited 
States but al­so ti­ny Lux­em­bourg---have the du­bi­ous hon­or of 
be­ing able to spread an eco­nom­ic cri­sis glob­ally once it sprouts on 
their soil, five phys­i­cists say.

The re­search­ers say they ar­rived at the find­ing us­ing con­cepts 
from "s­tatis­ti­cal phys­ics" and availa­ble da­ta that quanti­fies 
trade and busi­ness own­er­ship ties among al­most all na­tions. The 
sci­en­tists, from Greek, Swiss and Is­rae­li uni­vers­i­ties, al­so 
used spe­cial for­mu­las meant to es­ti­mate the prob­a­bil­ity of an 
ef­fect, such as a dis­ease, spread­ing be­tween links in a net­work.

Their meth­od in­di­cat­ed that 10 na­tions are so tightly linked in­to 
the glob­al busi­ness net­work that they can trig­ger a world­wide 
cri­sis, re­gard­less of wheth­er the cal­cula­t­ion con­sid­ers trade 
ties alone or ow­ner­ship ties alone. The coun­tries are: Ja­pan, Spain, 
the U.K., the Neth­er­lands, It­a­ly, Ger­ma­ny, Bel­gium, Lux­em­bourg, 
the Un­ited States, and France.

More­o­ver, if only own­er­ship ties but not trade ties are 
con­sid­ered, Swe­den and Switz­er­land join the list. If only trade but 
not own­er­ship ties are con­sid­ered, then Chi­na and Rus­sia march 
on­to the ros­ter.

"For both net­works we are able to lo­cate a nu­cle­us of coun­tries 
that are the most likely to start a glob­al cri­sis, and to sort the 
re­main­ing coun­tries' cri­sis spread­ing po­ten­tial ac­cord­ing to 
their 'cen­tral­ity,' the re­search­ers wrote in re­port­ing their 
find­ings.

"Ini­tially, a cri­sis is trig­gered in a coun­try and prop­a­gates from 
this coun­try to oth­ers. The propaga­t­ion prob­a­bil­ity de­pends on 
the strength of the eco­nom­ic ties be­tween the coun­tries in­volved 
and on the strength of the econ­o­my of the tar­get coun­try."

The re­search­ers, in­clud­ing An­to­nios Garas of the Uni­vers­ity of 
Thes­sa­loniki, Greece posted a re­port <http://arxiv.org/abs/1008.3893> 
on their find­ings on the web­site Arx­iv.org, a da­tabase of phys­ics 
re­search pa­pers.

The work may be par­tic­u­larly rel­e­vant as the world lurches from a 
re­cent re­ces­sion to what some an­a­lysts pre­dict could be an all-out 
de­pres­sion in the months and years ahead.

The sci­en­tists ran com­put­er sim­ula­t­ions of fic­ti­tious 
eco­nom­ic cri­ses based on their equa­tions. In these sim­ula­t­ions, a 
cri­sis would un­fold in a series of in­di­vid­ual steps. In each step, 
each na­tion was char­ac­ter­ized as ei­ther "sus­cep­ti­ble" to 
cri­sis, "in­fect­ed" by cri­sis, or "reco­vered."

A si­m­i­lar sys­tem "has been used suc­cess­fully to mod­el spread­ing 
of epi­demics in var­i­ous net­works," the team wrote.

The group re­ported that in their sim­ula­t­ions of a cri­sis 
orig­i­nat­ing in the Un­ited States, the overall re­sults were 
si­m­i­lar to what ac­tu­ally oc­curred in the 2008-2009 re­ces­sion, in 
terms of the num­bers and ident­i­ties of the coun­tries in­fected.

A coun­try's "spread­ing pow­er" de­pends not so much on its size as on 
the strength and the tar­gets of its busi­ness links, the group wrote. 
That ex­plains, they added, why "even smaller coun­tries have the 
po­ten­tial to start a sig­ni­fi­cant cri­sis out­break."

Some smaller coun­tries "are a hav­en for for­eign in­vest­ments, as 
they at­tract funds from large coun­tries for taxa­t­ion pur­poses, 
safe­keep­ing, etc. and a prob­lem in such in­vest­ments can easily lead 
to a chain re­ac­tion in oth­er coun­tries," Garas and col­leagues wrote.

Coun­tries such as Lux­em­bourg (popula­t­ion about 489,000) and 
Switz­er­land "are head­quar­ters for some of the world's larg­est 
com­pa­nies and sub­sid­i­aries [and] in­ter­act very strongly with a 
very large num­ber of coun­tries," they added. "For ex­am­ple, about 95 
per­cent of all phar­ma­ceu­ti­cal prod­ucts of the Swiss in­dus­try are 
not in­tend­ed for lo­cal con­sump­tion, but for ex­port­ing."**
*
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