This is a rough cut of an attempt to explain the economic crisis, especially the credit-default swap. It still contains some green screen. Do not adjust your browser.
- For extra detail on David X Li’s copula equation, Felix Salmon’s piece in Wired magazine is pretty much aimed at the layman. The interview with “a nervous David X Li†mentioned in the piece was in the Wall Street Journal. The “only known pictureâ€, if you want to see his apparently-benign face again, is reproduced at China Daily’s China Forum. And the chirpy, irritating music is Raymond Scott’s Ripples.
- “Credit-default swaps†are explained well in a couple of books. Gillian Tett of the Financial Times predicted the financial crisis in 2006. No-one listened, so she’s written Fool’s Gold
, based on some incredible interviews, explaining how it all went down. And then there’s John Lanchester’s Whoops!
. This book, subtitled Why Everyone Owes Everyone And No-One Can Pay, is an attempt to explain the language and concepts of weird modern financial instruments to curious people who find the whole thing bewildering. It succeeds. And for general City shenanigans, Michael Lewis’s Liar’s Poker
is from the 1990s but remains readable, relevant and jaw-dropping.
- Also recommended are John Lanchester’s ongoing series of features for the London Review of Books and his choice of five books on the topic “Understanding High Finance†for Five Books, which is an excellent place where experts in all kinds of fields tell you the five books that will get you up to speed. “Become an instant expertâ€, the site boasts.
Tags: cds, creditdefaultswap, economics, news, predictions, pseudoscience
