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If you are interested in a quality explanation of what actually happened with this sub prime rate mortgage crisis, this isa good article:
Reading the news lately, I've come across an amazing example of how ubiquitous bad math can be used. Most of you have probably heard about what's been called "the sub-prime crisis". Despite a lot of media hand-wringing about how complicated it all is, the sub-prime crisis is really a very simple phenomenon: basically, you've got a lot of banks that have loaned out money without worrying about whether or not it could get paid back, and now those loans aren't getting paid back, which is causing all sorts of grief to people who invested in them.
Good Math, Bad Math : The Total Stupidity of Crowds: Bad Mortgages and Circular Solutions
Reading the news lately, I've come across an amazing example of how ubiquitous bad math can be used. Most of you have probably heard about what's been called "the sub-prime crisis". Despite a lot of media hand-wringing about how complicated it all is, the sub-prime crisis is really a very simple phenomenon: basically, you've got a lot of banks that have loaned out money without worrying about whether or not it could get paid back, and now those loans aren't getting paid back, which is causing all sorts of grief to people who invested in them.
Good Math, Bad Math : The Total Stupidity of Crowds: Bad Mortgages and Circular Solutions