Jaulent Patrick, President of Balanced Scorecard & Performance Club Europe.
Mularski Philippe, Chief Financial Officer.
The title of this article has probably intrigued and you wonder what might well be the relationship between the Millennium Bridge London and the financial crisis we are experiencing. Before answering your expectations start with some reminders about this beautiful work of art. The Millennium Bridge (in English: Millennium Bridge) is a bridge to "lateral suspension" in London.
This is a steel walkway for pedestrians crossing the Thames to Southwark link on the left bank in the City on the right bank .
The bridge was inaugurated June 10, 2000 by the Queen in the presence of the BBC and several thousand people. If you check the archives the BBC you will find some awesome pictures and videos of this beautiful day. These immortalize an event that took place moments before the inauguration. The Millennium Bridge has started to wobble so violently that many pedestrians on the bridge have been held to railings to avoid falling. Two days later, due to a resonance phenomenon, the bridge swayed sideways unexpectedly. That day, a charity walk to cross the bridge drew many people. The swinging movements were caused by the large number of pedestrians (90 000 people the first day and up to 2000 people at the same time on the bridge). The first vibration encouraged and sometimes forced pedestrians to walk to the rhythm of the swing, which accentuated the oscillations, even early in the day when the bridge was still relatively light. The bridge was closed to the public to allow engineers to identify the causes of this phenomenon of resonance and remedy.
This is a steel walkway for pedestrians crossing the Thames to Southwark link on the left bank in the City on the right bank .
The bridge was inaugurated June 10, 2000 by the Queen in the presence of the BBC and several thousand people. If you check the archives the BBC you will find some awesome pictures and videos of this beautiful day. These immortalize an event that took place moments before the inauguration. The Millennium Bridge has started to wobble so violently that many pedestrians on the bridge have been held to railings to avoid falling. Two days later, due to a resonance phenomenon, the bridge swayed sideways unexpectedly. That day, a charity walk to cross the bridge drew many people. The swinging movements were caused by the large number of pedestrians (90 000 people the first day and up to 2000 people at the same time on the bridge). The first vibration encouraged and sometimes forced pedestrians to walk to the rhythm of the swing, which accentuated the oscillations, even early in the day when the bridge was still relatively light. The bridge was closed to the public to allow engineers to identify the causes of this phenomenon of resonance and remedy.
To identify the causes of this phenomenon engineers have put the bridge vibration using a special machine. They found that horizontal shaking of 1 hertz (cycles per second) triggered a oscillation similar to that observed with the thousands of people walking on the bridge. Knowing that normal walking is about one step per second, this means that every second one of our not hit the ground. Our legs slightly apart, your body sways from side to the other as we walk. Naturally, the probability that the 2000 people on deck come together to march at the same time is close to zero. But what would happen if the bridge was moving on, for example, a gust of wind. It's a safe bet that people on the bridge would react to their environment.
If the bridge is not stable through the people will naturally seek to adopt a position that maintains the balance. Thus, when the bridge will move people through it all at the same time seek a position that ensures balance. Pedestrians quickly realizing that it is more comfortable to walk together in sync with the swaying of the bridge.
They will walk and not as shown in the various videos available on the Internet, ignoring, not all is the army, we must avoid not to market on a bridge.
And therein lies the problem because the simultaneous movement of people to reach equilibrium provides an impetus to bridge that moves even more. The bridge moving even more strongly, people are looking at the same time a new equilibrium position. You understood it, the bridge between feeds and thus oscillation. This situation illustrated by the following principle (see the Fourier transform), will continue and grow even when the gale is long over.
What is the relationship between the Millennium Bridge in London and the global financial crisis?
The financial crisis we are experiencing like all the major crises resulting from the conjunction of several phenomena. There is however no doubt that the housing market in the U.S. is the epicenter. The size of the mortgage market in the United States is 13 000 billion. Imagine the impact of a modest variation: A variation of 5% is $ 650 billion in assets.
Scenario the market problem (the famous subprime ) is simple to understand as was that of the instability of the bridge rising house prices increases the value of the collateral and the ability of the borrower to incur more debt as net wealth increases. The self-reinforcing process in the manner of the Millennium Bridge: a rise in asset prices leads to an expansion of credit that fuels the demand for assets, resulting in higher asset prices, and so on. On the real estate market in the U.S. there was a doubling of property values between 2000 and 2006 and then there was this bubble burst.
The Millennium Bridge moves -> Pedestrians on the bridge adjust their position -> The Millennium Bridge is still moving more -> Pedestrians ...
Prices assets increase -> banks lend -> asset prices increase even more -> Banks lend further underestimating increasing the likelihood of a market downturn: archetype known as the "the face of disaster myopia."
In the case of the Millennium Bridge, corrective measures were taken and the problem has been resolved, "before it breaks" by installing dampers and mass to control the horizontal oscillations and side. The work was conducted from May 2001 to January 2002. After a trial period, the bridge was reopened to the public February 22, 2002: since then no significant vibration has been reported.
In the case of the financial crisis, the regulatory measures have been taken "after the burst . Hopefully they can finally solve the "great vibrations" of the market. Like the shock of the bridge installed preventively and required nine months of work, the shock of the crisis created, a posteriori , will bear results for some time because the financial system heavily oscillated in the manner of the Millennium Bridge. Hopefully this time not too long.
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