Did Excel cripple the world economy?

February 13th, 2013

It turns out that we might have a new culprit to whom we can apportion a share of the blame for the financial meltdown of 2007/8. After the investment banks, the credit ratings agencies, ineffective regulators, politicians who preferred to look the other way and a section of the public that was in thrall to the idea that living on credit was a good idea, bring on Microsoft, for making Excel so temptingly easy to use any time you need to juggle some numbers. James Kwak takes up the tale:

I spent the past two days at a financial regulation conference in Washington (where I saw more BlackBerries than I have seen in years – can't lawyers and lobbyists afford decent phones?). In his remarks on the final panel, Frank Partnoy mentioned something I missed when it came out a few weeks ago: the role of Microsoft Excel in the "London Whale" trading debacle.

The issue is described in the appendix to JPMorgan's internal investigative task force's report. To summarize: JPMorgan's Chief Investment Office needed a new value-at-risk (VaR) model for the synthetic credit portfolio (the one that blew up) and assigned a quantitative whiz ("a London-based quantitative expert, mathematician and model developer" who previously worked at a company that built analytical models) to create it. The new model "operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another." The internal Model Review Group identified this problem as well as a few others, but approved the model, while saying that it should be automated and another significant flaw should be fixed. […] After the London Whale trade blew up, the Model Review Group discovered that the model had not been automated and found several other errors. […]

Truth be told, this isn't really Excel's fault. If Lotus 123 for Windows and the rest of the IBM/Lotus SmartSuite had won out in the early/mid 1990s against Microsoft's Office bundle, they'd be saying exactly the same thing about Lotus 123 in that report. The real issue is that spreadsheets by their very nature just beg to be used as a quick, interactive tool for iterating your way to a solution that's 'good enough'. As various commentators at the associated Hacker News thread explain, the difficulty is that – unlike a formal programming environment used by someone who has learned the hard way that all programs have bugs so you need to test for them – spreadsheets provide almost no real framework for testing and debugging unless the user (who as often as not knows nothing of programming beyond creating Excel spreadsheets and has a worryingly elevated view of their own competence) implements one for themselves.

The two articles are fascinating; I'm going to be following some of the links in that Hacker News thread for days to come. I had no idea there was such a thing as a European Spreadsheet Risks Interest Group, but there's no denying that there absolutely should be one.

[Via The Browser]



September 11th, 2012

I've watched the demo videos for GRID™ multiple times now, and I'm puzzled. Perhaps it's just a sign that I'm getting on a bit, but whatever the subhead on their web site says I'm not seeing how that's a spreadsheet in any meaningful sense of the word.

Don't get me wrong, GRID™ looks to be slick, and flexible and make it easy to embed all sorts of different types of information in one document1 but it's more of a free-form mind-mapping tool than anything resembling a spreadsheet.

Which, of course, may just end up proving that what most people need isn't a spreadsheet at all. It's entirely possible that five years from now the founders of GRID™ will be deciding whether they'd rather use some small fraction of their immense pile of cash to buy up Apple or Google or Facebook, while I'll still be writing Excel spreadsheets and wishing I'd downloaded that demo back in 2012.

[Via The Tao of Mac]

  1. And would probably be horrible to use on an iPhone-sized screen, just because of the way that a grid sprawls across the infinite page and relies on the ability to be able to see a fair number of cells at once to orient yourself.

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Magic and spreadsheets

October 12th, 2010

Dan Bricklin's essay on what makes the iPad feel 'magical' might very well be the first essay on that topic that draws a parallel between the directness and immediacy of the iPad interface and the experience of using a spreadsheet for the first time:

30+ years ago, when I developed VisiCalc, the first personal computer spreadsheet as we know them today, I was challenged to displace paper, pencil, and a calculator. I had to make the electronic version easy and natural enough to use that you'd use it instead of the paper version, even if you thought you'd only do the calculations once. I ended up giving the accountant, business person, planner, and others a feeling of control of their data and calculations that they didn't have before with paper. The thrill of control that a good car racing program gives the user became the thrill of control to the MBA planning a marketing campaign on a limited budget.

I can totally understand what Bricklin is getting at there. It's all too easy to forget now, just over thirty years later, how freeing it was to be able to throw numbers together quickly, easily and – crucially – without the need to learn a programming language.1

  1. In principle, stringing together spreadsheet functions is a limited form of computer programming. Nontheless, I think it's safe to say that VisiCalc and its successors radically lowered the barriers to (data) entry and greatly enhanced the ability of non-programmers to extract useful information from raw data.

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Cell Z24

May 10th, 2009

Should I be worried that when I read the story of Cell 24Z my first reaction was to start thinking about a more efficient, less opaque way to write that function?

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