Epigraph

Man has only one life, and must live it so that he does not recall with pain and regret the aimless lost years, and does not blush with shame over his mean and trivial past, so that when he dies he can say, ‘All my life has been devoted to the struggle for the liberation of mankind.’
Nikolai Ostrovsky: How the Steel Was Tempered

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Quant insuff.

John Lanchester's Whoops! Why Everyone Owes Everyone and No One Can Pay, is an entertaining account of the economic crash that uses farce as its narrative model and, for the economically-illiterate (most of us), unriddles those mysterious instruments (CDOs, CDSs, SPVs, junk bonds, sub-prime mortgages) used by finance industry's Masters of the Universe to create what appeared to be a casino filled with fruit machines that spewed a jackpot at every tug of the handle. I don't buy into his theory that it all started with the collapse of communism, which freed the West of the need to emulate communism's cradle-to-grave care and let loose unbridled libertarian capitalism, but it's an interesting thesis that would make a good SF story (Gardens of the Sun is a somewhat similar story of triumphalist hubris trashed by nemesis, but required the unity of a despotic government to work). But his dissection of the root cause of the crash is masterly. Briefly, it was caused by underestimation of risk, because of overreliance on equations devised by the clever maths PhDs (quants) hired by the banks. The quants devised nice, tidy equations which they applied without taking into account of the real world's messiness, and the inability of most people to make rational assessments of risk:

Most of this exemplifies what I would argue is the most common mistake of very smart people: the assumption that other people's minds work in the same way theirs do. To non-exonomists, the mathematically based models and assumptions of rational conduct which permeate the field often have the appearance at best of toys, entertaining but by definition of limited utility; at worst, they can seem wilful delusions, determinedly ignoring reality.

Gosh, Lanchester could be talking about science fiction - the Analog school of storytelling that irritates the hell out of me with its childish just-so logic; the armchair critics who complain that characters don't behave logically or consistently while failing to notice, all around them, the blooming, buzzing confusion of ordinary life.

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