Thesis statement from "The Myth of the Rational Market"

Without estimating what could go wrong (and, if possible, insuring against it), one cannot begin to make the long-term investments that undergird economic growth. Without quantification of risk, modern capitalism would be unimaginable. Quantifying risk in financial markets, though, is far more fraught than estimating the likelihood of fire or burglary or death. Financial market are not natural phenomena. They are man-made - made by men and women whose business is gazing into an uncertain, risky future. The act of managing risk in such an environment alters that environment, creating a never-stable feedback loop. The crash of 1987 was the first alarming demonstrating of the inherent instability of mathematical risk-management models in finance. It was not to be the last.

Justin Fox

Available at Amazon.com

If you want to understand how we got here, this is one excellent book to read.