Economics
University at Buffalo TED Talk Regarding Economic Recession and Its Impact on Economy Discussion

university at buffalo

ECON

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TED Talk: Didier Sornette Original Post: https://www.ted.com/talks/didier_sornette_how_we_can_predict_the_next_financial_crisis/upnext?language=en#t-3126 1. Do you agree or disagree? 2. How does this relate to this week's material? This week's material focused on: 1. Part III- Trouble at the Border. This is the textbook link: https://epdf.pub/travels-of-a-t-shirt-in-the-global-economy.html 2. AN INTRODUCTION TO INTERNATIONAL ECONOMICS New Perspectives on the World Economy KENNETH A. REINERT. Chapter 9 and 10. This is the textbook link: http://docshare04.docshare.tips/files/24429/244299892.pdf Two people discus this video and your jobs is to response their discussion. Your response should a minimum of 150 words incorporating materials, relevant outside references, and or personal experiences cited properly both in text and at the end of the posting. Address classmates by name. Show, discuss and prove that you read the textbook. 1st person- Jordan post the original post by discussion: I agree with the video and what Mr. Sornette is talking about in this TED talk. He starts out with talking about the great recession and how much the world lost in its GDP and stock markets which grew to trillions which I did not know was that high. I think an interesting take on this is the dragon king approach and to me it makes a lot of sense. Many economists have looked at the crisis of 2008 as a black swan so to speak which is something that is very rare and wont happen again but Mr. Sornette argues that they were wrong and the Dragon Kings approach is more appropriate. The Dragon Kings method shows that these crashes from the market are predictable and able to be seen which I think is true. If you look at the crisis of 2008, the banking system was giving out to many and to high of loans to just about anyone who wanted to buy a house even if they could not afford them. This could have been avoided by the bubbles that Mr. Sornette is talking about in his video which gave signs at the time that in the future, something could be coming due to the volatility that the market was seeing. The global bubble was one that should have been closely monitored as the stock market was inflated on its value. This finally broke in 2008 and was one of the reasons why the stock market went down so much. Mr. Sornette was successful in making a lot of these bubble predictions and it is interesting to that we have not learned to much from this in my opinion. If you look at what we are dealing with today with the Covid-19 pandemic, foreign investments and other types of trade should have been halted to allow for china to try and control this outbreak. There are some people as well as myself that wonder if this outbreak was on purpose as we had seen trade issues between the US and China in prior months. What do you guys think? If we are looking at chapter 9 and 10 of the textbook, we can look at how the exports and imports and production in foreign markets could be affected if not closely watched(Reinert, 2015)). As companies want to continue to export and build factories in other countries to further their products, they need to keep a close eye and be able to look at the markets. If one market enters in a recession like the US did in 2008, many other markets around the world are going to feel it as they are so closely intertwined. The Dragon king theory would be a good model to use as they can try and predict and forecast when the market may not be steady. Reinert, K. A. (2015). An introduction to international economics: new perspectives on the world economy. Cambridge: Cambridge University Press. Please response here: 2nd person: Bella post the original post by discussion: I wouldn't necessarily say that I agree or disagree with anything that the speaker is referencing. What I would say is that I can understand his points and I really like how he supports the key concept he is trying to preach, which is how we could predict the next financial crisis such as the recession in 2008-2009. I really enjoyed how the speaker used a comparison between the slow heating of water to his dragon-king theory by showcasing that climax of the "bubble" is often the crash just like when water reaches its boiling point and the instability occurs (4-4:30 min mark). It makes a concept like this much more easy to understand when a speaker compares it to something else. He does this again at about 7 minute mark in the video when he talks about how scientists used acoustic emissions to predict when there may be a rupture in the iron rocket. I thought this was a very cool example. It was also interesting to me to see how Didier predicted some crashes that would happen, for example, in China in the mid-2000's. He is basically saying that when instability has happened and the system becomes ripe, if any irregular movement of the system occurs, it is almost impossible to control. This point speaks volumes and I really do think that this is the case, as we saw with the fact his prediction came true just weeks later. The speaker's dragonking theory is a good way to help make predictions so that the economy can prevent crises like the ones we have seen in the past. I think that this video applies to the material we are covering in chapter 9 and 10 because these chapters deal with foreign market entry, foreign direct investment and international production. Foreign direct investment involves at least 10 percent of shares in a foreign productive enterprise (pg. 142). This relates because it should be important for firms to consider how foreign economies work and use theories like the dragon-king theory that help to prevent crashes. It would be in a firm's best interest to acquire knowledge like this before deciding to make a foreign direct investment and produce internationally. Please response here: This is page 142 from textbook. ...
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Final Answer

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Running head: RESPONSES

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Responses
Student’s Name
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RESPONSES

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Responses
Response #1: Jordan

Jordan has outlined all issues that Mr. Sornette spoke about in the TED talk regarding
economic recession and its impact on the global economy. Based on Jordan’s explanation, I
agree with him regarding the dragon king approach, which Mr. Sornette claimed that economists
could use it to predict market crushes. Indeed, the devastating effects of the 2008/09 economic
crisis made economis...

Professor_Rey (17126)
Cornell University

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