Well written article (+ the writer is kinda cute) --
http://blogs.discovermagazine.com/r...scientists-to-blame-for-the-financial-crisis/
http://blogs.discovermagazine.com/r...scientists-to-blame-for-the-financial-crisis/
"Blame the Quants"
- Thread starter Turhovach
- Start date
I disagree with the whole article, devoid of any substance.
This was not a LTCM smartest guys in the room fiasco, it was a carnival of dunces begining with Congress, rating agencies, interets rate reset and ordinary people who couldn't pay their mortgage. It was a been there done that slice and dice. The rating agencies should have been on the hook since Enron, just plain old unfinished business on the part of regulators.
This was not a LTCM smartest guys in the room fiasco, it was a carnival of dunces begining with Congress, rating agencies, interets rate reset and ordinary people who couldn't pay their mortgage. It was a been there done that slice and dice. The rating agencies should have been on the hook since Enron, just plain old unfinished business on the part of regulators.
Your leaving out Wall St I-Bank boys who orchestrated the CDS markets and the the rating agencies/bond insurers.
Post inet IPO/M&A revenue frenzy wall st was desperate to keep the party going.
I guess they forgot to leave the party before the cops showed up.
Oh, and NOW they want to give the $ back. HA!
first it was wall street. then the hedge funds. then greenspan
and the agencies. and now the quants.
and we will find other scapegoats. the fact is that the
economics as we know it suffers substantial weaknesses.
bubbles and consequent bursts have accompanied the
way of capitalism ever since its birth. there is always
someone to blame and next time it is someone else.
capitalism achieved a lot. me writing this here right now
for example. but i believe we have to adapt the principles.
global warming and the financial crisis show: we are all
involved and we are all in the game. private consumers
need to learn that credit requires responsibility. personal
responsibility. banks have to learn that leverage is a
thing better handled with a lot of care. the fed has to
learn that claiming free markets and subsidizing the
economy with too easy money is a contradiction.
yes, the quants have to learn lessons too. i serviced
some people with CDO modeling and i suggested three
years ago that we incorporate 1930ies stress into the
analysis. we did that, but they did not like the outcome.
the idea behind was the fact that all historic default
studies started in the seventies and there was no period
of AAA stress in the decades since then. so all models
assumed that AAA can hardly default at all.
the thing quants have to learn is to withstand the
pressure by "business", which is very, very difficult.
and the agencies. and now the quants.
and we will find other scapegoats. the fact is that the
economics as we know it suffers substantial weaknesses.
bubbles and consequent bursts have accompanied the
way of capitalism ever since its birth. there is always
someone to blame and next time it is someone else.
capitalism achieved a lot. me writing this here right now
for example. but i believe we have to adapt the principles.
global warming and the financial crisis show: we are all
involved and we are all in the game. private consumers
need to learn that credit requires responsibility. personal
responsibility. banks have to learn that leverage is a
thing better handled with a lot of care. the fed has to
learn that claiming free markets and subsidizing the
economy with too easy money is a contradiction.
yes, the quants have to learn lessons too. i serviced
some people with CDO modeling and i suggested three
years ago that we incorporate 1930ies stress into the
analysis. we did that, but they did not like the outcome.
the idea behind was the fact that all historic default
studies started in the seventies and there was no period
of AAA stress in the decades since then. so all models
assumed that AAA can hardly default at all.
the thing quants have to learn is to withstand the
pressure by "business", which is very, very difficult.
