Wired Magazine Attempts to Explain Financial Crisis

March 17, 2009

Wired Magazine recently had an interesting article it called 'Recipe for Disaster: The Formula that Killed Wall Street,' speculating that the roots of the American financial crisis might be traced back to an economic model created by mathematician David X. Li. As I read it, I couldn't help but think the underlying message throughout the piece was to point the finger conveniently at one Asian guy for everything. Funny, I didn't see any positive articles about this guy when things were going well before the crisis. I think it's much too simplistic to blame one mathematician, when there were many more influential factors at play in the lost trillions of wealth (sub-prime, credit default swaps, off balance-sheet derivatives trading, and unregulated hedge funds).

The writer also mentioned how this mathematician has since left North America for work for CIC in China. Sure enough, there is a reader discussion below that article about whether this guy was a Chinese agent in a "planned" demolition of the American economy. Listen, if Japan and China were hostile and actually wanted to destroy the American economy, they wouldn't keep using (i.e., essentially burning) their earnings to continue buying US Treasuries and helping us recover by keeping interest rates low. It would be much easier to collapse the American economy by unloading their trillions in current US Treasury holdings.

Overall I was disappointed with the article.  To give credit, near the end, it quoted Li's own warnings about his model, and differentiated between the formula itself and its misuse. However, given the sensationalistic title and premise, the point of this Wired article could easily be misconstrued -- just as financiers misused one math geek's equation for their own destructive ends -- by ignorant readers looking for an easy individual, and a foreign country, to blame.


Alvin Lin


Alvin Lin was born in Taipei, Taiwan and hails from New England. He blogs about Asian American pop culture, film, music, literature and politics, as well as relevant news around the world. He also writes for Imprint Talk. Alvin has degrees from Cornell and MIT.



White people. Always running to jump on some bullshit.
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