How “Quant” Trading Triggered the Credit Crisis


Greedy CEOs, bad regulators, short sellers, debt-happy Americans, and politicians of all stripes have been blamed for the great credit crisis of 2008.

Add another name to the blame list, says Scott Patterson, staff reporter at The Wall Street Journal: Quants, which is shorthand for the elite mathematicians and computer experts who’ve come to dominate trading in recent decades.

As chronicled in Patterson’s new book “The Quants“, the runaway success of computer-driven trading in the 1980s, ’90s and early ’00s led to complacency and hubris, ending in near total disaster for Western-style capitalism.

“Mathematical constructs” such as CDOs, derivatives and mortgage-backed securities “caused banks essentially to implode,” Patterson says, placing blame for the credit crisis squarely on the quants

Rise of the Machines: How “Quant” Trading Triggered the Credit Crisis
Aaron Task
Yahoo Tech Ticker, Feb 11, 2010

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