The Formula That Killed Wall Street

http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all

Well basically this is what the article says
"For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels. His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. ... [T]he real danger was created not because any given trader adopted it but because every trader did. In financial markets, everybody doing the same thing is the classic recipe for a bubble and inevitable bust."

And an useful information from the article
"Americans now owe more than $11 trillion on their homes"

But blaming Li for investors greed is wrong.... the model might be wrong or right.... it is responsibility of the follower to understand the model and its limitations.... the model might work only if one person follows it and others don't.... it might fail if everyone follows it.... or it might create a hugely inflated bubble.... without understanding the model, traders use it... because they didn't have the brains to understand it.... so they just saw a single number which said it would benefit them and they just followed