Tito's Blog

Herd Behaviour in Financial Markets and Model Agencies

Great parallel between financial market and the modeling world on social / behavioral similarities: how supermodels are like toxic assets

In the face of complex decisions in a highly uncertain environment, modeling agency clients (and financial investors) pick what everybody else is choosing, triggering the social-induced feedback loop (“Matthew effect” or “the rich get richer”).

Credit Expansion As Tool To Limit Social Unrest

Albert Edwards, chief strategy of Societe Generale backs up my theory of credit expansion used purposely to reduce tensions in an unequal society …

Hence, while governments preside over economic policies which make the very rich even richer, national consumption needs to be boosted in some way to avoid underconsumption ending in outright deflation. In addition, the middle classes also need to be thrown a sop to disguise the fact they are not benefiting at all from economic growth. This is where central banks have played their pernicious part.