Are we accursed to live in these tumultuous times that we are crossing now? Nowadays, one of the most heard questions is: What is the economic crisis and how it manifests itself over the years? However, we ask about causes and consequences and most of all when it will ends? Economic crises are...

Recent episodes (October 2008, May 2010, August 2011) have witnessed huge spikes in equity price risk (implied volatility). Apart from their large size, several features characterize these risk panics. They are global phenomena, shared among a broad set of countries. There is substantial...

Recent crises have seen very large spikes in asset price risk without dramatic shifts in fundamentals. We propose an explanation for these risk panics based on self-fulfilling shifts in risk made possible by a negative link between the current asset price and risk about the future asset price....