Bad Bailout Math

There is no doubt that bad math helped get the country into crisis. Some homeowners couldn't calculate how much their mortgages would cost, some ratings agencies couldn't calculate how likely securities were to default, some banks couldn't calculate how much capital they needed, some insurance companies couldn't calculate if they could afford the credit-default swaps they were writing, and some central bankers couldn't calculate if homes were overvalued.

Before long, bad math left the economy on the verge of collapse, and the Treasury went to Congress to ask for $700 billion to bailout the nation's banking system. Quickly, the era of bad bailout math was upon us.