Does the Flap of a Butterfly's Wings in Brazil Set Off a Tornado in Texas? Or – in a version better suited to today’s events – does the approval of a loan by a mortgage specialist in the U.S. cause a two-day closure of the Dacia auto factory in Pitesti, Romania?

The interconnected reality we live in is both a very complicated and a very simple affair. It’s complicated because every day, we all make billions of independent decisions and it’s virtually impossible to understand at the close of the day what great achievements or innate stupidities we might have collectively come to.

It’s also a simple world because, despite the theoretical possibility of independent decision making, reality shows a heavy bias towards a crowd effect.

To make sense of it all we listen to professionals and we extract the essence of the theory into something simple and easy to understand. We reduce complexity without losing the core ideas. "Make everything as simple as possible, but not simpler." — Albert Einstein

Excessive panic and conformism come from our difficulty in understanding the mechanics behind the Wizard of Oz curtain. In more than 200 years, capitalist economies developed rather sophisticated instruments, difficult to understand unless you are a professional in the field.

We recommend a few good books which explain in common terms the economic and finance theory and practice transformations that took place in the last decades. These form the basis on which the real estate bubble took shape and which ultimately led to the "Great Recession."