Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy

by Cathy O'Neil

The troubles had actually started a year earlier. In July of 2007, “interbank” interest rates spiked. After the recession that followed the terrorist attacks in 2001, low interest rates had fueled a housing boom. Anyone, it seemed, could get a mortgage, builders were turning exurbs, desert, and prairie into vast new housing developments, and banks gambled billions on all kinds of financial instruments tied to the building bonanza. But these rising interest rates signaled trouble. Banks were losing trust in each other to pay back overnight loans. They were slowly coming to grips with the dangerous junk they held in their own portfolios and judged, wisely, that others were sitting on just as much risk, if not more. Looking back, you could say the interest rate spikes were actually a sign of sanity, although they obviously came too late.