The fault does not fall on them. It falls on the bankers and investors with calculators who figured smart investments were as easy punching in digits on their calculators. Very poor calculations were made because these bankers had no idea how the equations actually worked.

I’m beginning to hope so.

* “Charged GBH” are a UK hardcore punk rock band. GBH also stands for the British legal phrase, grievous bodily harm.
* 127 is a Mersenne prime (2^7 - 1) and as such it is the largest integer that can be represented by a signed byte. Additionally, 127 is related to the perfect number 8,128 (Pythagoras studied perfect numbers for their mystical properties). In 1876, 127 was discovered as a double Mersenne number (2^127 - 1) which was and still is the largest prime ever discovered (by hand calculations).
* At the end of the movie when the entire car is glowing, the car’s license plate appears to be mirrored backwards. This mirroring shows that the strange “glowing effect” of the car was partly created using a photographic negative.
[thanks to Wikipedia for filling in some blanks of what I knew had to be my comment to John Baez]

# Jonathan Vos Post Says: Your comment is awaiting moderation.
September 21st, 2008 at 11:33 am

With all due respect to Physicists who migrated to finance “rocket
science” — their models had too many false assumptions. In particular,
the Black-Scholes equation, in all the textbooks, key to a Nobel prize
in Economics, blithely assuming Gaussian distributions.

This led to Long-Term Capital Management (LTCM), the U.S. hedge fund
which failed spectacularly in the late 1990s, leading to a massive
bailout by other major banks. Now that looks like a beta test of the
current $7×10^11 bailout proposal.

What the physicist-quants did not address was the origin of clustered
volatility in real markets. There are some
physicists-turned-complexity theorists at the Santa Fe Institute who
have a good agent-based model.

Keywords: Heteroskedacity and heteroskedasticity.

- One can get hired as Sanatan says. One also has to be able (and want) to program.

- Actually if the federal government ends up owning pools of debt, it wouldn’t be a bad idea to turn at least part of a national lab over to computable models of correlation with a reasonable number of parameters. Even if it doesn’t make sense to estimate the parameters after such a regime-change in the historical data. Scenario analysis is still useful. In fact, even if the government doesn’t own the ‘bad assets’ it’s probably still in our national interest to do such research.