New in tattoos: The formula of Wall Street doom

Here’s one the prof won’t even care about — you can’t cheat with this one, and if you do, you get burned:

Tattoo of the formula that created the 2008 financial crisise, from Marketplace

Tattoo of the formula that created the 2008 financial crisise, from Marketplace.

Marketplace, the radio program, noted it, and described it:

The financial crisis in one handy tattoo: surely you remember the formula that caused the financial crisis. But you haven’t seen it like this, from a creative friend of Marketplace who works for advertising firm Wieden + Kennedy, based in Portland. He enlisted “the ever-brilliant designer James Tung, computational typeface author Donald Knuth, and the steady hand of Cheyenne at Atlas Tattoo, according to his Facebook post[.]

Earlier, Marketplace interviewed Felix Salmon, who wrote about the formula for Wired.

RYSSDAL: This guy, David Li, what was he trying to do?

SALMON: What David Li was trying to do was look at lots of different bonds and try and work out whether they were all moving in the same direction or not. Whether they were correlated or not. Whether they were independent of each other or not. And he created this astonishing piece of mathematics called the Gaussian copula function, which sought to answer that very question.

RYSSDAL: What does that mean — Gaussian copula? I mean, if I can just take a little sidebar here for a second.

SALMON: People get very scared when they hear the word Gaussian. But this is just one way of looking to see whether one set of probabilities is associated with another set of probabilities. The really key part of the Gaussian copula function is the copula bit. It’s what’s known as a multivariant copula. You can take lots of different bonds or stocks or any kind of securities you like, and you can throw them all into one big equation and out the end get a single number which is easily manipulable and trackable as they say in the world of quantitative finance.

If you mention “Gaussian copula functions” at a cocktail party, you might do well to avoid anyone who appears to know what you’re talking about . . .

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