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There can be little doubt that we live in times of profound crisis, economic, environmental, political and social. For example, 2008 saw the near collapse of the world banking system, the implications of which are profound and frightening. The great temptation has been to "blame the bankers' and to demand that they curb their earnings and, in particular, their bonuses. There is some justice to this demand, but it fails to grasp the more important aspect of this crisis, which is not driven entirely by either greed or stupidity. The crisis was caused in large part by the development of the means to, apparently, mitigate the risk of investment, or even to remove it altogether, thus producing a fantasy that the markets could be managed safely while still producing considerable profits. Such means involved the use of complex algorithmic techniques combined with digital technology to produce highly abstracted models of investment risk.

DOI: 10.1057/9781137026675_11

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