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Financial Crisis The Blaming Of The Nerds

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by Kevin Maney
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Oct 13 2008 9:54am EDT

Financial Crisis: The Blaming of the Nerds

Kevin Maney writes: Back during the stock crash of 1987, I was in the thick of coverage for USA Today. And once the smoke cleared, we all found something to blame that let the greed and poor judgment of the broader population off the hook: program trading.


Program trading referred to computer systems that watched the markets and automatically triggered trades when certain things happened. As the markets fell off a cliff in October 1987 (and why is it ALWAYS October? has anyone studied that?), the computers kept selling, making it worse. In 1987, most people didn't own a computer, so this seemed particularly alien and scary -- as if humans had no control over what was happening. So in the end, fingers pointed to those blasted machines and the pocket-protector-wearing nerds who programmed them.

This time around, it looks like we're also ready to blame the nerds -- only this time around, it's more the mathematical nerds who create these quantitative risk analysis algorithms that run on computers. Mark Cuban in his blog goes after the "financial engineers." Dan Vergano in USA Today wonders if we should "blame all the scientists." (If you want to really hate one, take a look at this self-important British dandy profiled a year ago by the BBC.)

Like in 1987, it's easy to blame something so esoteric and seemingly out of the average person's control. And just like in high school, it's always easier to hate the math nerds. No doubt they should get some of the blame for making the weapons, but they usually weren't the ones who pulled the trigger.

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