Abstract:The first global financial sector crash eludes conventional assessments of sector risk. Singling out the usual culprits-the housing bubble, executive pay, regulators, rating agencies, risk models, and global imbalances-fails to explain either the unpredictability or the rapidity of the collapse of 2008, which in many ways resembled the avalanche of a sand pile, where at some point of criticality, avalanches occur that bear no relationship to the grain of sand that triggered them. Since appropriate financial re… Show more
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