The Fall of Wall Street: How the Crisis Was Made and How it Could Have Been Avoided
Bibliographic record
Abstract
This paper focuses on the convoluted process that played a critical role in triggering the worldwide financial crisis of the 2007-2009. This financial crisis was clearly man-made. It was not a “perfect storm.” not an act of God. The all too familiar duo of greed and avarice played their number in the vast, rich, unregulated financial markets, in every nook and cranny of this wide-open domain. Unaware of the cumulative, correlated pressures that were building up in the system, reassured by precise but inaccurate mathematical models, vaguely worried but soothed by the immense pay-offs, most players rushed onward until the music stopped.When the first and weakest link, the sub-prime mortgage securitized notes, broke, the edifice that poor or corrupt financial engineers had designed fell like a house of cards. There were no back-up system, no built-in redundancies, no fail-safe mechanism. All parts of the worldwide financial system had become connected and interdependent. One piece failed, the whole system, brittle and vulnerable, collapsed.The causes of this crisis must be well understood and measures taken to prevent a crisis of the same kind in coming years. The last crisis of similar scope, in the 1930s did result in regulations that kept the financial world relatively crisis-free for some 40 years. Then, as is wont to happen, this period of relative calm led many to believe that de-regulation and under-regulation of the financial industry would bring large benefits. Financial markets, some believed, had become so efficient that they would swiftly correct any anomaly, reward rational risk-taking, and punish deviant behaviour.That turned out to be more ideology than grounded policy. The set of prescriptions contained in this paper, some of them anyway, may well be adopted in watered down form as policies and regulations. However, the fundamental causes of the recurring crises lie elsewhere.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.004 | 0.011 |
| Meta-epidemiology (narrow) | 0.001 | 0.001 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.002 | 0.002 |
| Science and technology studies | 0.015 | 0.018 |
| Scholarly communication | 0.028 | 0.025 |
| Open science | 0.002 | 0.008 |
| Research integrity | 0.011 | 0.015 |
| Insufficient payload (model declined to judge) | 0.024 | 0.006 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".