In a recent article Nassim Nicholas Taleb and Pablo Triana co-wrote a piece,
Bystanders to the Financial Crisis Were Many for the
Financial Times. In it they write of the not so innocent role bystanders play in financial crises, one that continues to hail quantitative methods such as Value-at-Risk that have been proven faulty and destructive.
As in the
Black Swan, Taleb does not give those who teach and continue to ascribe to such methods, including Nobel economists, a break. He considers them disingenuous. Taleb has little regard for the position of Nobels; his quest is toward an empiricism that challenges such theories that continue to create greater risks than the value such Value-at-Risk methods purport.
The article goes a little further and requires us all to get off the bystander fence and act. The article begins with a historic event where a woman was raped and robbed while others stood near and not come to her rescue. The authors conclude that there are no innocent bystanders.
Taleb and Triana have a “bias for action” as Tom Peters would say. Action is needed by all and the lack thereof is akin to those who have actually committed the crime. Aligned with this type of criminal behavior is that of professors and the like who continue to teach methods that have been proven to be faulty, perpetuating fallacies. Everybody has a responsibility. There are no innocent bystanders.
Reading the article, I could not help but to align the many investors who invested with Bernard Madoff who proclaim him now to be a crook but who themselves had great returns beforehand, probably the likes that would raise the eyebrow of a neophyte investor, let alone one who has done so for many years to the tune of hundreds of millions of dollars.
Over these few days I have heard known and unknown investors talk about the Madoff Ponzi scheme. Those well-known ones speak of the criminal behavior of Madoff, but after reading this article I wonder about their implicit or complicit role in the scandal.
Some investors seemed to have literally been duped by Madoff and their life savings and earnings devastated. But others seem to have washed their hands of him taking the loss now after the great gains before.
These investors now come across as bystanders, innocent of any guilt. But after reading this article I come away with a different perception. Perhaps they too, as the bystanders in the this, are indeed not guilt-less.
