Monday, February 25, 2008

Subprime in pictures


In other cases, there may be good ways to visualize something but it is not clear that they should be visualized. The danger comes from the power of images to confuse the viewer or to distort data.

Provisional Theories

A scientist who is just beginning to work out a theory might create pictures simply to test out some ideas. The problem comes in when the quality of the graphics is better than the quality of the theory. Since it is so easy to construct flashy computer graphics, even half baked ideas are endowed with a believability beyond that which even the originator intends. Perhaps researchers should be encouraged to make low quality graphics on purpose for theories that are not yet well supported.

After reading Jim Blinn's (MS Research) paper on Visualization, I asked myself... what does subprime look like?

A major factor in the growth of CDOs was 2001 introduction by David X. Li of Gaussian copula models, which allowed for the rapid pricing of CDOs. 

Of course!  It's a pyramid!  In the "before" photo, the green indicates the happy folks at the top.  Red indicates some serious problems at the bottom.

The bottom seems to have fallen out of the "after" photo.  Happy times?

More on CDOs from Wikipedia.

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