The "August 2007 quant equity crisis" is referenced in http://blog.quantopian.com/meet-quantopians-newest-advisor-wes-mckinney/. Perhaps someone could write or suggest a Quantopian algorithm that would illustrate what happened and why? Specifically, I am wondering if there is a set of predictive indicators that could be derived from the 2007 market data that could be used to flag future crises.
Generally, I'm kinda astounded that more alarm bells weren't going off in the finance community prior to the 2008/2009 meltdown.
Here's one reference that I'm aware of that predicted a potential sharp drop in equity prices: