Even so, still not a mix up of cause and effect. Wrong cause in this case.

I agree.

Also, I'll address the accusation that Nate is confusing cause and effect.

Nate's assertion is A<-B If he had confused cause and effect than that corrected form would be B<-A, or, that the financial crisis caused bad models.

So the Author's mistake is that (A<-C AND B<-C) != (B<-A), or, that her attack on Nate is inconsistent with what she believes is the correct logic.

The author isn't saying that A<-B is a confusion of cause and effect. She is saying that B is itself an effect of C, not a cause. (A better way to say it would be "B is not a root cause".)