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The Visible Hand
As I write this, there is panic on Wall Street despite Washington’s $700 billion rescue attempt. The crisis is not contained by U.S. borders, but extends to Europe and Asia. Like many people, I’m incredulous. How could this happen?
Wall Street hired the best and the brightest, paid them handsomely, and gave them unlimited resources and technology. It turns out they were building enormously complicated castles made of sand. A great wave washed them away, astounding all the smart people who devoted their lives to speculation, not production. Their models based on historical data predicted future profits, not collapse. Few people saw this coming until it hit.
“It was the triumph of data over common sense,” ...
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