ONE of the most alarming things about the crisis in the global financial system is that the warning signs have been out there for some time, yet no one heeded them. Exactly 10 years ago a hedge fund called failed to convince investors that it could repay its debts, thereby bringing the world to the brink of a similar “liquidity crisis” to the one we now see. Disaster was averted then only because regulators managed to put together a multibillion-dollar bailout package.
LTCM’s collapse was particularly notable because its founders had set great store by their use of statistical models designed to keep…
