Project Management October 2014 part 2 robindcmatthews 1
Project Management October 2014 part 2 networks Synergies and feeedback robindcmatthews 2
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More complex networks robindcmatthews 4
Networks: default state Small world: highly clustered, short path lengths • Degree of a node is the number of edges (k) connecting it to other nodes. • High degree nodes have many connections (high k); low degree nodes have few (low k) • P(k) probability of degree k follows a power law • P(k) ~ z k – α. . robindcmatthews P(k)~ z k – α. . 5
Haldane (2009) robindcmatthews 6
Haldane (2009) robindcmatthews 7
Haldane (2009) robindcmatthews 8
Project Management October 2014 part 3 The Crisis 2007 – 20012 The financial tower of Babel robindcmatthews 9
GLOBAL DEMAND Outsourcing FDI Consumption Investment Asset prices Sovereign wealth funds FINANCIAL REVOLUTION Flexible exchange rates Deregulation New asset pricing models Securitization GLOBAL POSITIVE FEEDBACKS 1980 – 2006 (circa) TECHNOLOGICAL REVOLUTION Investment funds Shorter product cycles Pressure to reduce costs Outsourcing
The financial tower of Babel: 21 ST century CDO’s CDC’s CDW’S SWF’S SPV’’s SPE’s CONDUITS IPO’s PRIVATE EQUITY FUNDS unregulated HEDGE FUNDS DERIVATIVES/OPTIONS SHADOW BANKING SYSTEM REGULATED BANKING SYSTEM CORPORATE BONDS GOVERNMENT BONDS LIQUID ASSETS CASH regulated
Causes of crises • Low interest rates • Savings glut • Financial innovation • Moral hazard • None of the above • All of the above • Samudaya (the second noble truth: thirst)
Causes of the crisis? Low interest rates Savings glut Moral hazard Greed Financial innovation
Exposure to Greek debt robindcmatthews Source rge monitor 15
Long term bond robindcmatthews yields july 2011 Source rge monitor 16
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