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How Ignoring Bayes Theorem Caused the Mess


Bad Probability and Economic Disaster; or How Ignoring Bayes Theorem Caused 
the Mess

http://scienceblogs.com/goodmath/2008/09/bad_probability_and_economic_d.php

via Good Math, Bad Math on 9/23/08


There is at least a little bit of interesting bath math to learn from in the 
whole financial mess going on now. A couple of commenters beat me to it, but 
I'll go ahead and write about it anyway.
One of the big questions that comes up again and again is: how did they get 
away with this? How could they find any way of taking things that were 
worthless, and turn them into something that could be represented as safe? 
The answer is that they cheated in the math.
 
 
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Carlos Alberto de Braganca Pereira <cpereira@ime.usp.br>