Everybody and their brother seems to be calling for a “return to basics” as the most appropriate response to the credit crisis. If only banks dealt with simpler strategies and products, the thinking goes, we would forever avoid a repeat of the nastiness down the road. Discard complexity and save the world, appears to be the argument.

It is only too obvious that too much complexity played a decisive role in the unleashing of the crisis. The stuff directly responsible for the mayhem (those pesky subprime collateralised debt obligations) as well as the mathematical models used to value, rate and risk manage them were inappropriately convoluted, and worse based on flawed foundations.