Archive for the ‘Future perspectives’ Category
The face of the crisis – and some alternatives
March 27th, 2012 | 
Author: By Johan Galtung
From Madrid, Universidad Nacional de Educación a Distancia-UNED, Foro Los Nuevos Problemas Sociales, 24 Mar 2012
Here is one of the hidden faces of the economic crisis:
(¶C/¶t) + (¶C/¶S)rS + (1/2)(¶2C/¶S2)q2S2 = rC
The famous Black-Scholes equation to find the “correct price” for financial derivatives. Based on partial derivatives over time, this is classical calculus for continuous change; useful within a zone of stability, but not at the edge of that zone, the tipping points explored in René Thom’s catastrophe theory years earlier.
Black-Scholes is intellectually like calculating increasing speed of an accelerating car heading for a wall or an abyss. But, with warnings, no 1997 “Nobel Prize in Economics” (actually a Swedish State Bank’s prize honoring Alfred Nobel)? And one year later their company “Long Term Capital Management” had lost $100 billion and collapsed. The trade in derivatives is now at $1 quadrillion a year (15 zeros), ten times the industrial economy of the whole 20th century. Many got rich, but the system collapsed. Maybe prison would have been more adequate for intellectual sloppiness? Read the rest of this entry »
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Davos: The 1% world
By Johan Galtung
From Alfàz del Pi, Spain
We are heading for a new load of advice from the self-appointed “World Economic Forum”, still having fresh in mind their utter inability to come to grips with the September 2008 manifestation of the world economic crisis when they met three years ago. So, what are they going to talk about now?
Lee Howell, in “The failure of governance in a hyperconnected world”, International Herald Tribune, 11 Jan 2012, gives us a preview. Read the rest of this entry »