Phrase of the Day: "Foolish sophistication"

I enjoyed this article, discussing why the sophisiticated quantitative risk models used in finance have been failing so spectacularly over the last year in describing the expected returns of complex 'Structured Investment Vehicles' used in High Finance (tm).

http://economistsview.typepad.com/economistsview/2008/05/foolish-sophist.html

I like the phrase "foolish sophistication". My own phrase for this phenomenon, coined during my MA in Economics, was "pseudo-rigour".... analysis that covers a whole blackboard with squiggles and LOOKS rigourous, impressive, and irrefutable, but really isn't because the domain of applicability of the analysis has been forgotten. There is a certain kind of person prone to this kind of error, who is very comfortable with mathematics and quantitative analysis but isn't much of a critical thinker (critical thinkers tend to be driven mad by academic economics), and it is exactly THIS kind of person who is selected for in advanced quant finance/econ programs, and goes on to develop risk management models. They really DO believe what the models are telling them.