In the 2009 Wired mag article “Recipe for Disaster: The Formula That Killed Wall Street,” writer Felix Salmon blames the Gaussian Copula Function for the financial meltdown in American markets.
A SciAm article today by Chris Arnade argues that another equation is more to blame, and that it “requires nothing more than middle school algebra to understand and is taught to every new Wall Street employee. It is leveraged return.”
In other words, the return on assets using borrowed money.
* NB: Same Chris Arnade whose beautiful photography we’ve featured on Boing Boing before.