George Soros, in a speech at Davos, stated that we know very little about how financial markets work(click here). 61 years after Harry Markowitz's famous paper, and 50 years since Samuelson and Fama developed the efficient markets hypothesis, and 40 years after the Black-Scholes-Merton model, we are still no further forward in understanding financial markets according to Soros! What are we to do? Some scholars think that behavioural finance is the way to go. The application of psychology to financial markets is certainly interesting and potentially fruitful. However, my own hunch is that we need to understand better the role of government in manipulating and influencing financial markets.
The Berkeley Earth Project , an independent study of global warming, has found that the earth has become a degree warmer over the past half century. However, the statistical uncertainty surrounding pre-1920 estimates makes it very hard to say much about long-term trends - click here for graph . This is one of my concerns with the global warming debate - we simply don't have trustworthy long-run data which looks at temperature changes over the last millennium (or two). My second concern with the global warming debate is that it is very hard to prove any sort of casual link between global warming and human activity. The scientists may be able to show correlation between global warming and our production of carbon dioxides etc., but correlation is not causation. My third concern with the debate is that those who are sceptical or agnostic are stereotyped as flat-earthers or intellectually-challenged crackpots. This only stifles debate and the progress of science itself.