ABSTRACT
This chapter describes how the disaster in one domain combined with the tight coupling in Financial Services systems led to a worldwide avalanche of vastly greater scale. Financial innovation and financial markets have always been an essential part of economic growth in both developed and developing countries. Many attempts at financial, economic and social engineering are plagued by an illusion of control typical of complex systems for which we offer some suggestive mathematical models. The financial state of the world follows the collapse of five sequential, partially superimposed, and interdependent bubbles. The ability of a Financial Services system to detect Dragon Kings will therefore influence its ability to withstand the impact of negative events associated with bubbles and market crashes. A 'financial bubble experiment' is underway to rigorously test the predictive power and the limits of the proposed methodology. The motivation of the Financial Bubble Experiment comes from the failure of standard approaches to financial crises.
