Considering the financial crises of the past years, it would seem that the collapse of banks, most notably that of Lehman Brothers, was also caused by a failure to understand or predict what consequences it would have if everyone worldwide did what a few "financial geniuses" had devised as novel tools for making money, namely derivatives. Derivatives, like short selling, works well for a few who do it under the assumption that the financial markets follow their established habits of selling and buying stocks or bonds or, in particular, loans. However, if everyone is doing that at the same time, there is no tangible value left in the objects of trade, and the market collapses.
In a way, this is the analogon of each country trying to maintain a positive trade balance -- at least one country has to collapse then, as discussed in the previous post.
It would appear that in a global market with a sufficiently short reaction time constant (as compared to local effects) or in anything global that involves some exchange of items such as money, goods, or ideas, the assumption of a predictable behavior is fallacious. Like in congested car traffic on highways, new phenomena emerge that are fundamentally different from horse carriage traffic. New rules needed to be established to govern road traffic, and new effects like traffic jams in the absence of road obstacles were observed.
The state of current affairs calls for the development of a systems theory that describes the new phenomena we have recently witnessed. It looks as if those trained in traditional economics cannot deliver on this. In view of the fact that the new financial tools that caused the recent collapse of global finance was to a large part developed by physicists, it might as well come from that community of scientific minds already used to developing complex models of intricate naturally occurring systems.
