full transcript

From the Ted Talk by Didier Sornette: How we can predict the next financial crisis

Unscramble the Blue Letters


(Laughter)

There are many early warning signals that are predicted by this trhoey. Let me just focus on one of them: the super-exponential growth with positive feedback. What does it mean? Imagine you have an investment that returns the first year five percent, the second year 10 percent, the third year 20 percent, the next year 40 pnerect. Is that not marvelous? This is a super-exponential growth. A sandatrd exponential gwotrh corresponds to a constant growth rate, let's say, of 10 percent The point is that, many times during bubbles, there are positive feedbacks which can be of many times, such that previous growths enhance, push forward, icnsraee the next growth through this kind of super-exponential growth, which is very trenchant, not sustainable. And the key idea is that the macamtiethal solution of this class of models exhibit finite-time sgtauiirlenis, which means that there is a critical time where the system will break, will change regmie. It may be a crash. It may be just a plateau, something else. And the key idea is that the crtiical time, the information about the critical time is ciaennotd in the early development of this super-exponential growth.

Open Cloze


(Laughter)

There are many early warning signals that are predicted by this ______. Let me just focus on one of them: the super-exponential growth with positive feedback. What does it mean? Imagine you have an investment that returns the first year five percent, the second year 10 percent, the third year 20 percent, the next year 40 _______. Is that not marvelous? This is a super-exponential growth. A ________ exponential ______ corresponds to a constant growth rate, let's say, of 10 percent The point is that, many times during bubbles, there are positive feedbacks which can be of many times, such that previous growths enhance, push forward, ________ the next growth through this kind of super-exponential growth, which is very trenchant, not sustainable. And the key idea is that the ____________ solution of this class of models exhibit finite-time _____________, which means that there is a critical time where the system will break, will change ______. It may be a crash. It may be just a plateau, something else. And the key idea is that the ________ time, the information about the critical time is _________ in the early development of this super-exponential growth.

Solution


  1. percent
  2. critical
  3. singularities
  4. increase
  5. growth
  6. regime
  7. standard
  8. theory
  9. mathematical
  10. contained

Original Text


(Laughter)

There are many early warning signals that are predicted by this theory. Let me just focus on one of them: the super-exponential growth with positive feedback. What does it mean? Imagine you have an investment that returns the first year five percent, the second year 10 percent, the third year 20 percent, the next year 40 percent. Is that not marvelous? This is a super-exponential growth. A standard exponential growth corresponds to a constant growth rate, let's say, of 10 percent The point is that, many times during bubbles, there are positive feedbacks which can be of many times, such that previous growths enhance, push forward, increase the next growth through this kind of super-exponential growth, which is very trenchant, not sustainable. And the key idea is that the mathematical solution of this class of models exhibit finite-time singularities, which means that there is a critical time where the system will break, will change regime. It may be a crash. It may be just a plateau, something else. And the key idea is that the critical time, the information about the critical time is contained in the early development of this super-exponential growth.

Frequently Occurring Word Combinations


ngrams of length 2

collocation frequency
stock market 4
critical time 4
great recession 3
extreme events 3
black swan 3
perpetual money 3
money machine 3
financial crisis 2
phase transition 2
swan concept 2
key idea 2
change regime 2
epileptic seizures 2
global bubble 2
macro hedge 2
hedge fund 2
chinese government 2
essentially impossible 2
unsustainable path 2

ngrams of length 3

collocation frequency
perpetual money machine 3
black swan concept 2
macro hedge fund 2

Important Words


  1. break
  2. bubbles
  3. change
  4. class
  5. constant
  6. contained
  7. corresponds
  8. crash
  9. critical
  10. development
  11. early
  12. enhance
  13. exhibit
  14. exponential
  15. feedback
  16. feedbacks
  17. focus
  18. growth
  19. growths
  20. idea
  21. imagine
  22. increase
  23. information
  24. investment
  25. key
  26. kind
  27. laughter
  28. marvelous
  29. mathematical
  30. means
  31. models
  32. percent
  33. plateau
  34. point
  35. positive
  36. predicted
  37. previous
  38. push
  39. rate
  40. regime
  41. returns
  42. signals
  43. singularities
  44. solution
  45. standard
  46. sustainable
  47. system
  48. theory
  49. time
  50. times
  51. trenchant
  52. warning
  53. year