His note suggested that the financial network might be robust in some situations and extremely fragile in others. The idea was well-established in ecology: the structure of a network might make it resilient to minor shocks, but the same structure could also leave it vulnerable to complete collapse if put under enough stress. Think about a team at work. If most people are doing well, weaker members can get away with mistakes because they are linked to high performers. However, if most of the team are struggling, the same links will instead drag strong members down. ‘The basic point was that all
...more
