He's a bit more specific that that: > One major problem–which I’ve been on about for years, and which I am quoted about in the Nautilus piece–is that counterpa

He's a bit more specific that that: > One major problem–which I’ve been on about for years, and which I am quoted about in the Nautilus piece–is that counterparty credit exposure is only one type of many connections in the financial network: liquidity is another source of interconnection. > As a practical example, not only does mandatory clearing change the topology of a network, it also changes the tightness of the coupling through the imposition of rigid variation margining. Tighter coupling can change the probability of the failure of connections, and the circumstances under which these failures occur. > Another problem is that models frequently leave out some participants. As another practical example, network models of derivatives markets include the major derivatives counterparties, and find that netting reduces the likelihood of a cascade of defaults within that network. But netting achieves this by redistributing the losses to other parties who are not explicitly modeled. As a result, the model is incomplete, and gives an incomplete understanding of the full effects of netting. > Thus, any network model is inherently a very partial one, and is therefore likely to be a very poor guide to understanding the network in all its complexity. FWIW, I think he's right to bring this up, as there are things that we already know of that the topology model doesn't cover.