(i)phluô-i), from the Greek for “boil over, bubble up”, and (i)-nomicsi), from the Greek for “management”.
Econophysics, that issue of a dubious union between economics and physics, may have produced its first successful prediction. One Didier Sornette at the Swiss Federal Institute of Technology says that the Shanghai Composite Index has of late been growing at a greater-than-exponential rate and is thus a ‘bubble’ and ready for a crash.
On July 10 2009, Sornette called for the Shanghai Composite to top out in the period July 17-27, 2009 and to retrench by about 20-25%. Sornette seems to have been off on his prediction by a week or so, as the index instead peaked August 4 2009 at 3471 and has come off 16% since.
It’s too early to be sure, but a new sub-discipline, Phluonomics, aka bubble management, may well have been born. …of course, they’re probably going to want to label it something less naff.
The Shanghai Composite is an index of all stocks (about 865) that are traded on the Shanghai Stock Exchange.
The Chinese Equity Bubble: Ready to Burst – arXiv, July 10 2009
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With so many financial transactions being handled by computers now, maybe a mixture of physics and economics finally does make sense.
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