Did software cause the credit crunch‾

The Guardian reports that one group is yet to face criticism for its part in the global financial meltdown - the analysts who created the software that drove the derivatives market.

The articles says, "Since the Big Bang of the 1980s, large amounts of stocks and shares - and derivatives of them - have been traded automatically by computers rather than by humans. These so-called "˜algotrades' accounted for as much as 40% of all trades on the London Stock Exchange in 2006; on some American equity markets the figure can be as high as 80%."

It continues, "The people who write the algorithms that drive the software are called quantities analysts, often referred to simply as "˜quants'. They are generally physics and mathematics graduates working in risk management - calculating whether a given deal is a good idea - and derivatives pricing, which entails putting a figure on trades that in effect bet on other trades. It's enormously complex, which is why only the quants could understand it - if, that is, they did. History now suggests they didn't."

See here for the full story.