The reponses to this article I find are very strange. Modern financial engineering is critical in managing risk, allowing us to use credit products (bonds for governments, hedging for almost every industry, leverage for financial management). I agree that the industry should do more to make the risk transparent. But the idea that this innovation is "bad", or useless, bad people do it, lame industry" etc.. misses the point that in the world we live in in 2007 the financial services industry is one of our largest exports. Provides millions of jobs, pays hundreds of billions in taxes (people, firms, investors). This industry will only become a bigger part of american life as dozens of countries in the world embrace markets. By 2020 it will be one of the largest industries in the world and we are the market leader in the world.

The coupling (which engineers took from physicists) of financial markets seems likely to be highly non-linear. The interconnections won't look like a simple chain, or chainmail, but more like multi-dimensional matrix or web. If you tried to graph the interconnectedness of the markets, you would not see markets that were just connected to nearest neighbors. You would see far-flung connections, with some areas relatively isolated, and some having connections all over the place.

There is a reason that a lot of math PhDs end up on Wall Street.

Kevin Phillips, in his book, "American Theocracy" pointed out that in 2003 finance became the largest sector of the U.S. economy. And, as posters have pointed out, finance is not really a 'productive' sector in the sense of making or creating anything. It results in wealth transfers, but not wealth creation.

Lenin claimed that monopoly capitalism would end in the triumph of 'finance capital.' Seeems they both agree.

Derivative investments seem to have been made from the immense amounts of capital in the hands of the finance class right now, which is not ever content with ordinary returns.

Quantity into quality hasn't been seriously refuted. It indicates how the 'drip drip drip' of small events can switch reality from one thing to another very quickly at a certain point. Global warming is being understood in just such a way. Gravity was an 'invention' of the 1600s and Newton. I doubt we'll be jettisoning that any time soon. Then there was that fellow Galileo and his old-fashioned theory about the earth going around the sun. Or that geeky Socrates and his damn 'method.' Then there was that 'oh so 20th Century' Einstein stuff.

Dialectics accounts for the motion of events, and incorporates 'quantity into quality.' What does this have to do with "coupled" trading systems? Coupled trading systems have been simply explained in this article. It is when you take a step back that you see a pattern, as Frank did.

The market can stay irrational longer than you can stay solvent.

John Maynard Keynes

that tight coupling is more linear (chain linkage analogy) than-

"tight coupling," a term borrowed from the field of engineering.

A tightly coupled system is one in which a change in one constituent part quickly propagates to everything that it is connected to. In other words, break one little piece, and a space shuttle crashes or a nuclear plant shuts down. "

would indicate.

Which last two examples are more whole systems event or failure...like an

avalanche [the final photon or least additional yodeled decibel ]

or earthquake [the very last 'frictal', y'know]

Unless the system is also highly cross-linked...like chainmail.

I just enjoy twisting the words back upon the neocons. And If some sort of corporate elite businessmen are losing control they shouldn't have leveraged in the first place, it's funny.

Can you imagine any powerful Republican holding hearings such as this? Can you imagine any normal Republican even understanding what the heck they were talking about?

Please, let us get somebody, some group, in power... some group who will allow inquiry and appropriate conclusions, with good regulation to follow.

This economic stuff is not subject to the Bible, nor to silly parables and anecdotes or myths from the good old days. We need to figure it out, and do what we must do.

Cheers to Barney Frank! Let's kick some economic butt, based on fact, rather than on silly, poopy assumptions from neocon numbnutses.

Can you imagine any powerful Republican holding hearings such as this? Can you imagine any normal Republican even understanding what the heck they were talking about?

Please, let us get somebody, some group, in power... some group who will allow inquiry and appropriate conclusions, with good regulation to follow.

This economic stuff is not subject to the Bible, nor to silly parables and anecdotes or myths from the good old days. We need to figure it out, and do what we must do.

Cheers to Barney Frank! Let's kick some economic butt, based on fact, rather than on silly, poopy assumptions from neocon numbnutses.

Can you imagine any powerful Republican holding hearings such as this? Can you imagine any normal Republican even understanding what the heck they were talking about?

Please, let us get somebody, some group, in power... some group who will allow inquiry and appropriate conclusions, with good regulation to follow.

This economic stuff is not subject to the Bible, nor to silly parables and anecdotes or myths from the good old days. We need to figure it out, and do what we must do.

Cheers to Barney Frank! Let's kick some economic butt, based on fact, rather than on silly, poopy assumptions from neocon numbnutses.

either find a place with a heavier IQ or work by yourself (you'll find you are in better company).

Who controls the means of production in this globalism?

and no, i haven't figured it out. i don't see how tightly coupled systems fit into a dialectic. thesis, antithesis, synthesis. in fact it's thesis, antithesis, CHAOS. but that's always the case with earthquake insurance. andrew leonard didn't know what he was talking about - and you called him on it. that much i can see clearly.