So is this an analytics-driven crisis?

So is this an analytics-driven crisis?

I have been following the goings-on in the world of economics and finances.  (Not that I have investments that are being affected - for some reason, I am still not in the red. Must be the instincts working...)  I have been reading WSJ-Asia's headlines and analysis of the news, BusinessWeek's, The Economist's, and more recently, Fortune's and Financial Times' analyses.  But it's becoming more and more complicated for my puny brain to understand.

All that I can think of right now is that this all seems to be a fruit of over-creative minds of financial analysts and quants.  It's irrational exuberance - and well, "super-God" complex, really: "nothing could go wrong".

Tom Davenport of "Competing Through Analytics" has this to say:

Going forward, however, financial services organizations need to radically change their analytical focus. They need to incorporate "model management"--the systematic capturing and monitoring of analytical models--into their businesses. They need to be much more explicit and transparent about the assumptions behind models. They--and their regulators--need to be skeptical about the ability to model and manage risk in extraordinary circumstances. And financial firm executives need to learn much more about the models that are running their businesses.

Naseem Nicholas Taleb's book The Black Swan argues that there are some events that are impossible to model or predict. It appears lately that there are more black swans in financial markets than white ones. Our analytical approaches and philosophies must be adjusted to accommodate them. (Emphasis mine.)

I can only say "What?  They did not take into consideration the black swan in their models?"

I am sure there is more to this crisis than analytics - and over-creative minds.  McCain would call out 'greed' as a reason - others would call it 'the failure of capitalism'.  Still, others would say 'it's the rich's fault...'

I have no answer really - nor do I have any POV.

But as one who's been into models (no, not the human kind... although it wouldn't hurt having one!), there's gotta be always a room for the possibility of the model being wrong.  That's one thing I am still trying to learn.  But I honestly hope that others who have a bigger stake in this crisis learns faster than I do.