NPR: Predicting The Crash: Tracking Tipping Points

OKIsItJustMe

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Wed Sep-16-09 04:54 PM
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NPR: Predicting The Crash: Tracking Tipping Points

Edited on Wed Sep-16-09 05:25 PM by OKIsItJustMe

http://www.npr.org/templates/story/story.php?storyId=112886911

Predicting The Crash: Tracking Tipping Points

by Richard Harris

September 16, 2009

What do sardine populations, Wall Street and Antarctica have in common? The answer is, they can all reach a critical moment — a tipping point — and change dramatically and unexpectedly.

Fish populations can crash. Markets can, too. And Antarctic ice shelves can melt with little warning. Those sudden changes can have an enormous impact, so it would be great to know about them before they happened.

Some scientists believe they might be able to predict tipping points. And they have issued a progress report in a recent issue of Nature.

Despite the huge differences between financial markets, fish and ice, there are deep patterns they have in common. Ice can stay stable for long periods of time, but with the right trigger it can melt rapidly. And, we all know that financial markets can do the same, says George Sugihara at the Scripps Institution of Oceanography.

…

(Follow link for transcript and audio.)

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Terry in Austin

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Wed Sep-16-09 05:50 PM
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1. The mathematics of tipping points

The NPR piece seems to treat the math as a new thing, but Sugihara is probably already familiar with bifurcation theory and its aptly-named subset, catastrophe theory -- both of them part of dynamical systems theory. Another close relative is http://en.wikipedia.org/wiki/Chaos_theory">chaos theory, which studies nonlinear dynamic systems, and gives us the "butterfly in Beijing" effect.

The thing about nonlinear systems is that it kicks the props out from under our expectations of being able to predict stuff, prediction being mostly a matter of extrapolating out along a linear function. The butterfly effect reminds us that some systems are inherently unpredictable -- the tipping point can come at any ol' time, basically.

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OKIsItJustMe

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Wed Sep-16-09 06:17 PM
Response to Reply #1

2. A tipping point is most easily seen in hindsight

TIMING TOAST
Grook on how to char for yourself

There's an art of knowing when.
Never try to guess.
Toast until it smokes and then
twenty seconds less.

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