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The Formula That Killed Wall Street
We recently discussed the perspective that the harrowing of Wall Street was caused by over-reliance on computer models that produced a single number to characterize risk. Wired has a piece profiling David X. Li, the quant behind the formula that enabled the creation of such simple risk models. "For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels. His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. ... [T]he real danger was created not because any given trader adopted it but because every trader did. In financial markets, everybody doing the same thing is the classic recipe for a bubble and inevitable bust."
"I have nothing against economists: ... But beware: they can be plain wrong, yet frame things in a way to make you feel stupid arguing with them. So make sure you do not give any of them risk-management responsibilities."
Well, I have nothing against medical doctors: ... But beware: they can be plain wrong, yet frame things in a way to make you feel stupid arguing with them. So make sure you do not give any of them medical responsibilities.
I also have nothing against IT professionals: ... But beware: they can be plain wrong, yet frame things in a way to make you feel stupid arguing with them. So make sure you do not give any of them technology-management responsibilities.
Need I continue?
No please don't. Your wrong but I feel stupid arguing with you.
>>>Its my fault GW spent our country into oblivion
Okay. And what do you call what Obama's doing? Dubya spent around 100 billion on his two wars, which is certainly alot, but Obama has spent 800 billion, plus 350 billion on TARP's second phase (just approved this year by the Demo Congress). Now he's pushing for even more spending for mortgage bailouts and another bank bailout bill.
At the end of 2009 Obama will have spent about 20 times more money in just one year, as Bush spent in six years fighting Iraq/Afghanistan. If Bush's 100 billion is "spending to oblivion" then Obama's ~2000 billion of spending and proposed spending can only be described as "spending like a teenager who was just handed a credit card with no limit".
I'm not happy with either the past or the current president.
Current national debt load: $105,000 per American home and growing. In 2012: $130,000 per home. Obama should be cutting spending not raising it ever higher. He will increase the national debt more than any other president - even more than Reagan did.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall