Does anyone know of an economist making an error, causing his company to suffer a billion dollar loss?

Question

my professor told me this story, but i forgot who it was and how it was caused. it may have been an inputting error, like putting the decimal in the wrong place or an extra zero to the $ figure.

OR does anyone know of any other good stories where economists have made mistakes causing a loss?

Answer 1

The biggest loss I know of caused by economists was the collapse of Long Term Capital Management a fund that offered "safe" above market returns by diversifying their investments according to mathematical principles of risk. On its board of directors and divisors of the strategy were Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economics. They lost almost 5 billion dollars ( all of their investor equity) and without a bailout might have brought down major US banks because in had over a trillion dollars in loans as operating capital.
http://en.wikipedia.org/wiki/Long-Term_Capital_Management

Answer 2

Look no further. IMF has hundreds of economist. If you follow their prescription, am sure that country will lose billions. i.e. case of thailand, the asian financial contagion

Answer 3

yes i do remember this story it was a japanese girl who had just started work there i believe.

cant find the story but i do remember it my wife works in finance industry