Archive for March, 2010

The Quants in Canada

I appeared on a Canadian business show with structured finance expert Janet Tavakoli on March 31. Janet and I don’t completely agree about the role of the quants in the meltdown — she fingers fraudulent behavior in the structuring of the billions of structured products (all those complex deals packed with subprime mortgages). I completely agree that there probably was a great deal of fraud — or something very close to it — although I also believe that the bad actors used the complexity of these products to mask their actions.

I also believe that the credit crisis was much bigger than toxic CDO (collateralized debt obligations). Banks were overlevered using overnight “repo” markets. Hedge funds were overlevered using faulty risk models. There was a popular delusion that the global economy was in a period of low volatility, which Ben Bernanke, in 2004, called the Great Moderation. Wall Street was collectively congratulating itself that, due to the great innovations of the quants, the entire system was more efficient.

As we all know, that was dead wrong.

Categories: Financial

The Quants on The Daily Show

I was on The Daily Show with Jon Stewart on March 4 talking about the book.

Categories: Financial
About the Author

Scott Patterson is a freelance writer covering Wall Street. He is currently working on a new book about the rise of electronic trading and artificial intelligence.

He spent six years as a staff reporter for The Wall Street Journal and has also written for the New York Times, Rolling Stone and Mother Earth News....

More about Scott Patterson »

Praise for THE QUANTS

“Scott Patterson has the ability to see things you and I don’t notice. In The Quants he does an admirable job of debunking the myths of black box traders and provides a very entertaining narrative in the process.”

Nassim Nicholas Taleb, New York Times bestselling author of FOOLED BY RANDOMNESS and THE BLACK SWAN

More praise for THE QUANTS »

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DARK POOLS: High-Speed Traders, A.I. Bandits and the Threat to the Global Financial System
-- By Scott Patterson, Staff Reporter, The Wall Street Journal

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