91Èȱ¬

It's not normally the case that when a country suffers a hurricane, it soon endures an earthquake. Hurricanes and earthquakes are uncorrelated.

But the main lesson to draw form the events of the last year is that in the economy, when the hurricane strikes the earthquake is not far behind. When things go wrong, everything goes wrong at once.

It's worth having an understanding of this variant of Murphy's law because in general, when life is stable we are good at imagining all sorts of things that can turn sour. But what we are not good at preparing for, is everything turning sour in one go.

I suspect the reason that bad news comes in waves is that economic systems are far more integrated than most of us realise. You change one piece of the machine (turn house price rises to house price falls, for example) and more things are affected than you could have imagined.

And in the economy, because so many different variables are upheld largely by confidence or sentiment, a knock to confidence in one area can easily be the trigger for a knock in confidence somewhere else as well.. (for example, sub-prime disasters in the US damage confidence in the reliability of UK banks .. so no-one lends to them for non-sub-prime mortgages).

Disasters that are correlated with each other are far worse than those that are not - they imply that you don't go from one stable situation to some small perturbation away from stability.

No. You go from one kind of stability to a new, very different stability a long way from the first.

This kind of jump defies the risk modelling that most clever institutions engage in.

This is an interesting issue in a year that has seen a lot of broad economic assumptions change. Just to name four "paradigms lost" since the credit crunch took hold:

the confidence of the financial sector has taken a knock, and with it the presumption that the future of our economy lies in expanding the city ever further

the reliance on consumer spending in the UK (and US) is no longer seen as being able to carry on sustaining the economy - saving is cool again

the unipolar economic world order, centred around the United States, has been significantly diluted as Asia strengthens in relative terms, and the US even depends on exports to Asia to cushion its slowdown.

the idea that raw materials can permanently be cheap has been challenged - commodity price hikes have alerted the world to possible shortages

Is it coincidence that you can say the last year has been significant in all four of these different respects?

Of course not. In many respects, at least the first three of the four are really simple re-expressions of each other.. the same formula that allowed banks to make money, encouraged consumers to borrow and allowed the resultant spending which made the US uni-polar global economy look strong. Un-do the formula and it's not just one thing that changes, but everything.

The harder one to explain of course is the rise in prices in commodities - this is the one that few of us predicted and which defies the usual logic that when the global economy slows down, raw material prices fall.

But we should have been prepared for everything to turn bad at once. In this case the low inflation conditions bestowed upon us by China's cheap exports in the early years of this decade, also led to the inflationary over-stimulation of demand for oil and other commodities.

Next time, we should be ready for the fact that however sure we are of ourselves, however strong the economy: after the earthquake, get ready for the hurricane.

It is perhaps surprising that hitch-hiking been in decline.

With petrol pricey and a heightened consciousness of carbon footprints, shouldn't hitching be all the rage these days? So why is it that we don't see backpackers wielding their thumbs at every motorway junction?

There are lots of theories of course. I'm not sure if you ever saw Rutger Hauer's movie, "The Hitcher" back in the 80s. I don't need to give you a "spoiler warning" to say that in the film things didn't go well for the ones who picked the hitcher up.. If there was a moral, it was shut the windows and lock the car doors.

But not enough people saw that movie for it to have brought the hitching habit to a close.

No, my theory of the decline of hitching draws on economics. It's this: we are approximately twice as affluent as we were thirty years ago (on average). The young as much as the rich. So these days people can afford to buy themselves a more reliable form of transport - like rail, airline or coach.

I say reliable - I should probably correct that. Trains, planes and buses are not always reliable, but they do involve less standing around on busy streets with nothing to protect you from the rain.

Given the choice, that's what people would prefer and these days people have more choices.

And to accentuate that affluence effect, I have a second economic theory to bring to bear: it's called adverse selection. It is that as the hitching habit fades, fewer people hitch which makes drivers think that anyone left hitching is probably a bit weird and should be avoided. The less hitching there is, the harder it is to sustain.

If only we all hitched the theory goes, it would somehow feel safer.

Well, those are my theories. I should say that everyone else I talk to attributes the decline of hitching to the danger of getting into a stranger's car, or allowing one into your car.

But can it really be that? The proportion of weird and dangerous nutters is surely fairly constant over time.

Anyway, enough theorising on the demise of hitching. it's always best to test these things out.

So the Today programme set me - accompanied by producer Nina Manwaring -- the simple task of hitching to Bournemouth. (seaside holidays in the UK are what everyone's doing this year after all). The task allowed us to see whether hitching really has died or not.

Empirically, the answer is that yes it has - we met only two other hitchers on the way, and that was just as we got a lift and left them behind.

But can you hitch sucessfully? Well, for us it was surprisingly little problem.

We got to the pier at Bournemouth from Heston services on the M4 in four hours twenty minutes, having stopped for lunch on the way (actually buying that lunch at a motorway service station could almost have wiped out the economic benefit of our free transport).

We did the journey in five legs with waits of: 5 minutes, 15 minutes, 2 minutes, 2 minutes and 20 minutes.

The two long waits were in places where it was hard to stop, or where there was little traffic.

No-one seemed the slightest bit weird, or appeared the slightest bit scared.. though I think it did help that we were well shaven and not too scruffy.

It probably also helped that we were mixed in gender - I suspect drivers are reassured by the presence of a woman.

The most pleasant aspect of the experience - riding in a couple of big trucks, and meeting and enjoying conversations about house prices with several people I would never have otherwise encountered.

All in all, it was a mightily pleasant day.

As for the demise of hitching, all once can surmise from the fact that it was so easy for us to get several rides, is that it is surely the demand for lifts that has fallen away, rather than the supply of people offering them.

I did get some insight into that fall in demand though. For while it was a lovely day I do have a confession to make. The 91Èȱ¬ laid on a photographer to produce the web accompanying this item.. he tracked our journey by car, and we decided to go home in his vehicle.

Well, we had to get to back, and it was just more practical that way.