Don’t ask me — I’m a Qualit!

[ by Charles Cameron — Christmas pudding UK circa 1950, math, banks, and moral authority ]

.

.

As I recall, the plum pudding served in our family on Christmas day was not only rich in raisins, sultanas, currants and candied peel, it not only had brandy poured over it and a flame swiftly set to it, it was not only served with brandy butter…

It also had, somewhere within it, a silver coin — I understand these were originally related to coins of healing and the Royal Touch — and one of us, my sister and I, would be the one to find it in our slice. So equality of opportunity was important, both of us wanted to have an equal chance at winning the coveted prize.

Or perhaps I should say, equantity? Because believe me, the quality in each and every slice was just fine.

All this by way of saying that yes, I understand that quantity has its uses.

**

In Recipe for Disaster: The Formula That Killed Wall Street a while back, Felix Salmon proposed the upper (and more colorful) of the two equations below, suggesting that it was the root cause of the financial failure of 2008:

Comes now Chris Arnade blogging on Scientific American for the defense, claiming that The Real—and Simple—Equation That Killed Wall Street was the lower of the two equations (the one in black on white).

**

Arnade writes of Salmon’s Wired article:

It was not the first piece that made this type of argument, but it was the most aggressive. Since then it has been a common theme in the media that mathematics, especially obscure advanced mathematics, is largely responsible for the catastrophe that doomed the world to the last five years of recession and slow growth.

This theme plays on the fallacy that danger always comes from complexity. It’s a fabrication that obscures the real causes, that makes it easier to say, “Hey, it wasn’t my fault, I was blinded by science.”

The reality is much simpler and less sexy. Wall Street killed itself in a time-honored fashion: Cheap money, excessive borrowing, and greed. And yes, there is an equation one can point to and blame. This equation, however, requires nothing more than middle school algebra to understand and is taught to every new Wall Street employee. It is leveraged return.

What is leveraged return? It’s the return on assets using borrowed money.

I am depicted as the fellow with glasses and a squint, squeezed in between the two equations. When I recover from my discombobulation, I will push my glasses up high on my brow and say, Don’t ask me — I’m a Qualit!

**

And now we Anglicans have a new Archbishop who, well, as the Guardian puts it, Archbishop of Canterbury accuses banks of hypocrisy over bonuses:

Two months ago HSBC was also fined a record £1.2bn over allegations of money laundering for Mexican drug barons. Regulators said HSBC had allowed at least $881m of drugs money through its accounts.

Page 1 of 2 | Next page