Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Dumb (Ideology) and Dumber (Modelling)Fine piece by the Financial Times' exceptional Gillian Tett:Insight: Volatility returns with a vengeance By Gillian Tett Monday Oct 27 2008 11:25 A couple of years ago - or before banks started to go bust - economists sometimes liked to talk about a phenomenon they christened The Great Moderation. This was the idea that the 21st-century financial system and global economy had become so stable and sophisticated that dramatic swings in activity had seemingly disappeared. Volatility, in other words, was supposed to be an issue of the past. These days a new phrase is needed to describe these Not-So-Moderate-After-All times (the Great Panic, perhaps?). On Friday, the Chicago Board Options Exchange Volatility Index, the Vix, rocketed 32.1 per cent to 89.53, as equity markets suffered another dramatic sell-off. The gyrations of the yen, euro, sterling and dollar have also been wild, pushing levels of currency volatility to heights barely seen in decades. Read the rest of the article Labels: financial crisis, Gillian Tett |
