Prof. Jayanth R. Varma's Financial Markets Blog

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Prof. Jayanth R. Varma's Financial Markets Blog, A Blog on Financial Markets and Their Regulation

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Tue, 11 Mar 2008

Theory building in real time

The global turmoil of 2007-08 has been a crisis in slow motion that has allowed an astonishing amount of theory building and conceptualization to happen in real time even as the crisis is evolving. I think that the theorization is much greater both quantitatively and qualitiatively than what I saw during the Asian (and LTCM) crisis of 1997-98 which was also a crisis in slow motion. I have spend the last several days reading and digesting a part of the huge literature that has emerged. That explains why there have been no posts on my blog for a long time now. The sense that I get is that, at a deeper theoretical level, what has happened is not quite so puzzling though financial market participants find the crisis inexplicable.

I will not attempt to summarize all the excellent work that I have been reading – they all deserve to be read in full. I shall just provide the links:

Posted at 15:43 on Tue, 11 Mar 2008     View/Post Comments (0)     permanent link