ABSTRACT
When I began developing this book, large parts of the world were confronted with a threatened slowdown in economic activity. This provoked a sudden shift in economic outlook, which subsequently spread to other countries and continents-like an oil slick. The previous part of this book discussed single mood shifts. This chapter is about a more complicated combination of euphoria and panic. But what remains noteworthy is that the financial system seems to be in an entirely different state, whenever it is relatively calm or highly agitated. Under certain conditions, it may slide from one state into an entirely different one, without this process being either completely foreseeable or controllable. In order to try and understand what is happening here, we take a look at a last metaprinciple of sudden change, that of so-called phase transitions. It is comparable to ice melting into a liquid, and to water evaporating into a gas, or vice versa.
