Seems the infamous mathematical probability distribution function, the Gaussian Copula, is at the forefront of controversy once again. It seems those financial engineers, the Quants, the ones who use advanced probability and statistics to model financial markets, upon whose work many derivatives are based, knew the use of Gaussian Copulas was fundamentally flawed.
Individual economic predictions are usually pretty useless, and predictions of catastrophe are as ubiquitous as rednecks at a NASCAR race. Therefore when I see general doom-and-gloom predictions for the economy I tend to ignore them.
On the other hand, there is a tipping point. When both official and private sources all over the world that aren't known for being alarmist start screaming "fire!" then it is time to pay attention.
Before I make a few personal comments let me quote my sources.
The International Monetary Fund today warned authorities worldwide to "think the unthinkable" in planning to cope with a mounting crisis in the global financial system.
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