Paul Jorion's Blog

Author: Paul Jorion

  • Foresight and Despair

    A review of my just published book L’implosion. La finance contre l’économie: ce que révèle et annonce “la crise des subprimes” by Adrien de Tricornot in Le Monde, dated June 16th (translation by Jiro Tanaka – many thanks Jiro!) Foresight and Despair (“Oracle, ô désespoir !”, pun on a famous line from Corneille’s play “Le…

  • Would an interruption of the Gulf Stream be reversible? And if so, at what cost?

    I’m blessed with a very popular blog in French. One of the questions that came up lately in my dialogue with commentators is that of the reversibility of major ecological disasters induced by human activity and of the feasibility of reversing such disasters with the tools pertaining to our current technology. This is a serious…

  • The cunning of Reason

    The very justification of a Human Complex System’s approach to the operation of human societies, implying a continuous explanatory spectrum from the individual (particle) to the cultural or societal levels (field), is offered by Hegel when he writes in Reason in History (*) that … human actions in history produce additional results, beyond their immediate…

  • A population dynamics approach to the subprime crisis

    One way of looking at the subprime crisis – and by this I mean only the properly real estate–based part of the unfolding drama – is in terms of population dynamics, in terms of three populations of borrowers who first entered the market and then left it in reverse order as the last to come…

  • The Implosion, Finance vs. the Economy

    My new book called “The Implosion, Finance vs. the Economy – What the subprime crisis reveals and foretells” (L’Implosion, La finance contre l’économie – Ce que révèle et annonce la crise des subprimes) will be published on May 4th. The publisher is Arthème Fayard, one of the top French publishers who will realize here a…

  • The reasoning artificial toddler

    I was interviewed earlier today by Richard Adhikari, a journalist at TechNewsWorld, about an Artificial Intelligence project. I didn’t know anything about that project except what would be the title of the article: “AI Program Thinks Like a 4-Year-Old”. There is an excellent summary of what I had told the journalist: “I’m always suspicious of…

  • The end of trust in the subprime crisis and how to model it

    The subprime crisis is often explained in terms of trust: one day trust between financial counterparties vanished and here was a crisis. Explanations in terms of “market confidence” refer in fact to two distinct phenomena, one being indeed trust and the other one being more plainly straightforward profitability. Let me start with profitability. Subprime loans…

  • The subprime crisis at UCLA

    I’m happy with the way things worked out yesterday, March 8th, at the UCLA Complexity Science Conference with my paper: The Subprime Crisis: A Human Complex Systems Phenomenon. Of course, trying to squeeze the whole crisis into an hour (1 ¼ with John Bragin’s express permission), it turned out I had much too much material.…

  • Pricing models: why the good ones are useless and the true ones, priceless

    I’ve mentioned already in Agents using financial models and the “human cognitive cocktail” a number of pitfalls linked to the task of modeling the subprime crisis in a Human Complex Systems perspective, especially those related to agents’ partial understanding of the models they’re using or in errors they’re making when using them. I’ve also hinted…

  • Agents using financial models and the “human cognitive cocktail”

    I’m working on the paper to be given at the Human Complex Systems’ one-day conference on March 8th. I don’t want to divulge prematurely any scoop but at the same time I’d like to share some of my puzzlement as I go, and as if thinking aloud. To recap: I’m toying with the concept of…

  • The subprime crisis: a human complex system phenomenon

    I’ll be speaking at UCLA on Saturday March 8th, 2008 at the Human Complex Systems – UCLA Four Campus Complexity Conference, UCLA Haines Hall 352. The conference starts at 9 AM, my own talk is at 2:30 PM. If it looks like proposing an entirely new paradigm for financial studies, that’s because that’s precisely what…

  • The subprime crisis in 2007

    I’m aware I’ve neglected my English blog but there were two good justifications for that: I was finishing writing up a new book called “La crise des subprimes en 2007” (untranslatable) and I was promoting that coming book in Paris by speaking at the Ecole Normale Supérieure, talking on the radio and giving several interviews…

  • 2008’s new fad: “rating cliffs” and “credit cliffs”

    Do you know what will be all the rage in 2008 in the wake of the subprime crisis? “Rating cliffs” and “credit cliffs” when firms that have seen a slow erosion of their credit will all of a sudden drop like a stone. As I devoted a whole chapter to the subject back in 2003…

  • The individual unit in the network as far as speech generation is concerned is a word-pair

    Thought as word dynamics. II. Architecture (5) Mathematically speaking, a graph is a set of ordered pairs. It can be decomposed in elementary units of individual pairs. Each of the two elements in an ordered pair represents a node in the graph and every pair represents an edge. Say, there are four nodes, A, B,…

  • The long-term goals of businesses

    Businesses don’t seem to have any long–term goals apart from staying in business. They no doubt provide benefits to their shareholders and executives during their lifetime but why they aim at persisting in their existence with little reflection devoted to the “why?” of it is far from obvious. There is a clear analogy here with…

  • Human Complex Systems

    My French blog was started on February 28th, my English blog, a few days later, on March 3rd, both of this year. By mid-July, the French blog had an average readership of 40 per day, among whom about 20 new readers; by now, 4 months later, the average readership is 160 (over the past 30…

  • Gold fish

    I just had an odd vision. It happens on Judgment Day and I am shocked at the questions being asked from me: “How many gold fish in your care died of neglect? How many babies did you leave crying in the dark? Who were they? How many daisies did you trample?” I say “I feel…

  • The network comprises a subset of the words (the “content words”) of a particular natural language

    Thought as word dynamics. II. Architecture (4) In Indo-European languages there are two types of words. Every speaker has a very strong intuitive feeling of this. We have no difficulty when defining the meaning – or offering a definition – of words of the first type: “a rose is a flower that has many petals,…

  • How wars get started

    When in 1975 I became a student at Cambridge University my parents visited me there. It was actually their first stay in England. My mother was enchanted with the country. I wanted to know why and she explained that houses were “normal”, people behaved “normally”, everything in England was so essentially “normal”. I pressed her…

  • A talking subject experiences the dynamics of speech generation as emotional or “affective”

    Thought as word dynamics. I. General principles. (3) A thoroughly “physical” account of the objective dynamics of speech performance will be provided later. In the meantime I’m indicating here that as far as talking subjects are concerned, their subjective experience of the dynamics of speech performance is – from the initiation of a speech act…