| I was just reading Paul Krugman's article (love that guy!) and noticed his comment about: ... derivatives, the complex financial instruments Warren Buffett famously described as "financial weapons of mass destruction". I recall when I thought derivatives meant dy/dx. I also recall this humorous look at derivatives. Well ... it makes me laugh.  ----------------------------- Math may have caused the financial crisis. Conclusion? Math is dangerous!   |
Friday, April 16, 2010
Derivatives
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How Mathematics Might Have Caused the Financial Crisis >>>
ReplyDeletehttp://moneywatch.bnet.com/economic-news/blog/maximum-utility/how-mathematics-might-have-caused-the-financial-crisis/577/
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My Dear Professor Ponzo,
ReplyDeleteI think that Paul Krugman maybe used the wrong analogy in his article. The correct analogy should have been: If your neighbor ran a crack house, a bordello, consorted with violent gang types, mafia types, etc., and had obscene amounts of "drug" money to throw around; would you call the fire department if you saw the house on fire??? This is how much of the the masses see the big Wall Street investment firms and many really wish that some of them would fail.
SirHorace