Recipe for Disaster: The Formula That Killed Wall Street

Felix Salmon, Wired, Feb 25, 2009
Commentary by Stephen Downes

I found this a fascinating read. There are lessons in this for educators (the same lessons as before, but people are paying more attention now). Note well the formula that was at the core of the meltdown: "It was a brilliant simplification of an intractable problem. And Li didn't just radically dumb down the difficulty of working out correlations; he decided not to even bother trying to map and calculate all the nearly infinite relationships between the various loans that made up a pool." The lesson is, you can't reduce complex things to simple formulae. Getting some is often not better than getting no answer at all.
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