Learning to cope with uncertainty: on the spatial distributions of financial innovation and its fallout

The final year of the boom will enter financial history books as a Janus-faced year. While the problems that were ultimately to unlock the triumphant course that the financial markets had taken since 2003 had been brewing for quite some time, disaster nevertheless struck like lightning. The increasing degree of self-confidence that had characterized financial agents up to July 2007 was shattered in a mere couple of weeks when calculable risk appeared to hide immeasurable uncertainty. This chapter uses the return of uncertainty to test the usefulness of a number of fundamental sociological claims concerning the importance of social, spatial, and reputational proximity for inter-organizational trust-building, and suggests that these claims are particularly relevant to understand the current responses of financial agents to the new conditions of uncertainty under which they operate.