Showing posts with label Nassim Nicholas Taleb. Show all posts
Showing posts with label Nassim Nicholas Taleb. Show all posts
Sunday, August 16, 2020
Being Open to the Opinions of Others Matters
Much to my surprise I was called a "leftard" this morning after questioning a photo that included the caption "socialism has a documented record of colossal failure. World history has proven that. Socialism is NOT AN OPTION in America. Capitalism is how America became a super power." These early morning discussions are probably not for me, as I would rather not do such ideological battles so early. For example:
"It is an inescapable fact of life" that "all wealth comes from thrift and productivity" I was told in a discussion about the ills of socialism in praise of capitalism. I pointed out that historically the statement was patently false. The Wealth of Nations has been built on centuries of free labor and indentured servitude, and that big banks and big business have always run the government. I included the Theodore Roosevelt quote that "behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people." I identified this "invisible government" as big business.
In the praise of American capitalism and the decline of socialist states in Europe, I countered that we are presently in economic decline because of a system of capital sanctioned by the government that allows "too big to fail" and disables us from making our own toilet bowl brushes. I noted that there are no pure -isms of any sort. I pointed out that Iceland had a booming economy, clean energy initiatives, and a great educational system. Then entered Goldman Sachs. I quoted Nassim Nicholas Taleb that we "socialize debts and privatize profits."
Regarding big business and small business, I made the distinction that "thrift and productivity" have been the hallmark of small business success, but not so much with big business. Government through trade policies tinker with productivity (often immorally when you consider the success of companies like Apple's production in Asia--as I type on my MacBook--sigh!), and bailout to the likes of GE to the tune of billions when thrift has long not been a hallmark of business and the engineering that once made that company great has largely been replaced with financial engineering tantamount to Wall Street gambling.
There were several replies that insisted that after all of the above and more that I had not answer the "simple" question about where wealth comes from. The discussion ended for me with jingoism about freedom and capitalism, and how Beijing after embracing capitalism soars. Differences of opinions I do not oppose, but often our differences are packaged in idealism and ideology which do not move discussions forward. How do we extract ourselves in order to really hear what others are saying? I suppose humility is a big factor here. I will examine myself further.
Tuesday, January 26, 2010
Nassim Nicholas Taleb XII
Nassim Nicholas Taleb in a upcoming issue of ai5000 to be released in February gives six reasons that inhibit Federal Reserve chairman Ben Bernanke:
1. His education is in tools that aren't helpful - and he doesn't know it.
2. He studied the Great Depression, but the current economic environment is not comparable.
3. Bernanke doesn't recognize that 99% of risk is tied to debt/leverage and the explosion of connectivity. It's like he did not see a truck coming right at him.
4. He has no notion of nonlinearities, and how monetary policies can be responsive in non-linear ways.
5. He doesn't understand fat tails.
6. He doesn't realize that the biggest risk of failure is signified by the Federal Reserve. We do not need more regulation. We actually need smaller institutions.
With regards to investors he advocates doing nothing with your money sometimes. "It's like smokers," he explains. "The best thing you can do for a smoker's health is to tell him not to smoke. And what has been the best investment over the past ten years? Cash and short-term bonds."
1. His education is in tools that aren't helpful - and he doesn't know it.
2. He studied the Great Depression, but the current economic environment is not comparable.
3. Bernanke doesn't recognize that 99% of risk is tied to debt/leverage and the explosion of connectivity. It's like he did not see a truck coming right at him.
4. He has no notion of nonlinearities, and how monetary policies can be responsive in non-linear ways.
5. He doesn't understand fat tails.
6. He doesn't realize that the biggest risk of failure is signified by the Federal Reserve. We do not need more regulation. We actually need smaller institutions.
With regards to investors he advocates doing nothing with your money sometimes. "It's like smokers," he explains. "The best thing you can do for a smoker's health is to tell him not to smoke. And what has been the best investment over the past ten years? Cash and short-term bonds."
Saturday, October 17, 2009
Being Goldman Sachs IV
Having written repeatedly about Goldman Sachs as being a moral hazard in the clinical business sense, I was heartened to see more scrutiny of this mammoth bailout bank where the once former CEO, Henry Paulson, became the Treasury Secretary and allowed its competitors Bears Stearns and Lehman Brothers to fail and allowed AIG with its connection to billions as a counter party be bailed out. Goldman Sachs got a total of $70 billion dollars from taxpayers.
Dylan Ratigan of Morning Meeting explains how Goldman Sachs made 3.4 billion dollars in 3 months. But the interesting thing is that Wall Street banks are still not lending to Americans, including small businesses, refuse to renegotiate the loans before homes are foreclosed upon, and continue to raise credit card interest rates. Goldman Sachs is getting rich on on the dime of the American taxpayers without reinvesting in America. They are creating no real value, only profit for themselves. But without us they would have gone bankrupt. Goldman Sachs would not exist.
As a taxpayer, how does this make you feel? Goldman Sachs has all the money, profit and power. The taxpayer has not benefited. What should be done? Nassim Nicholas Taleb has long advocated clawbacks. Americans need to demand clawbacks from Goldman Sachs and all of the other Wall Street Banks.
Let's demand that our government work for our best interest. We must demand clawbacks. Henry Paulson gave the banks a blank check without the interest of the American people and Timothy Geithner seems to be continuing the plan. Let's demand clawbacks now! Join Nassim Nicholas Taleb's Facebook Group, Make Banks Accountable, and let's figure out how to do this thing! Can you think of what billions could do? It could help pay for health care reform while not increasing the deficit.
Dylan Ratigan of Morning Meeting explains how Goldman Sachs made 3.4 billion dollars in 3 months. But the interesting thing is that Wall Street banks are still not lending to Americans, including small businesses, refuse to renegotiate the loans before homes are foreclosed upon, and continue to raise credit card interest rates. Goldman Sachs is getting rich on on the dime of the American taxpayers without reinvesting in America. They are creating no real value, only profit for themselves. But without us they would have gone bankrupt. Goldman Sachs would not exist.
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Let's demand that our government work for our best interest. We must demand clawbacks. Henry Paulson gave the banks a blank check without the interest of the American people and Timothy Geithner seems to be continuing the plan. Let's demand clawbacks now! Join Nassim Nicholas Taleb's Facebook Group, Make Banks Accountable, and let's figure out how to do this thing! Can you think of what billions could do? It could help pay for health care reform while not increasing the deficit.
Tuesday, October 6, 2009
Being Timothy Geithner III
William Black, a former federal banking regulator who was active during the Saving and Loans crisis of the 1990's, have scathing words about the current Secretary of Treasury, Timothy Geithner, and the administration's effort or lack thereof to reform banks.
In a recent Newsweek interview Black says,
In a recent Newsweek interview Black says,
The administration's officials have all been failures as regulators. [Chairman of the Securities Exchange Commission] Mary Shapiro's big thing was self-regulation. That worked real well: the self-regulation of the investment banks. Ben Bernanke [Chairman of the Federal Reserve] I'm also very critical of, but I do give him credit for being willing to drop a lot of his anti-regulatory ideology in the face of the crisis. He literally wrote the book on the Great Depression, but he was not going to go down in history as the person who caused the second Great Depression. Some of the things Bernanke did were very bad, but he is in sharp contrast to Geithner who has been wrong about everything in his career. When Geithner was once answering a question in response to Ron Paul, he said, 'I've never been a regulator.' He was then the President of the New York Federal Reserve, and he purports that he was never a regulator? That is a demonstration of what is wrong with the Federal Reserve banks if the head of the unit doesn't think he's a regulator. He's a disaster.Mr. Black points out that during the S&L scandal that there were convictions. During the banking scandal there have been none:
During the Saving & Loans crisis, we had over 1,000 convictions that involved insiders and gigantic borrowers. Now we have zero. The FBI did not even begin to investigate the large subprime lenders until March 2007. People would be upset if they had the facts, or if you asked them how many criminal referrals there were for mortgage fraud. (There were 65,000 last year.) Meanwhile, the administration is saying there is no problem and that the financial crisis is over. That's the exact opposite of what you want to say and do if you want dramatic resources to change things.There has obviously been and apparently continues to be misconduct on Wall Street. Nassim Nicholas Taleb has been shouting this for some time now. So, why haven't there been any convictions and why do we expect that the same people who got us in the mess will now get us out?
Friday, September 11, 2009
Being Conservative
Nassim Nicholas Taleb espouses in a discussion with conservative British MP, David Cameron, the conservation of natural complex systems which would be ecological and what he describes as Brooklyn derivative trading as opposed to a MIT-based one. In this vein, I am very much a conservative.
Taleb is against debt and for robust systems. Politically speaking, we have not had such conservatism in a very long time in politics. What we have had for many years is a masquerade, a hypocritical scheme. The iconoclastic Republican president, Ronald Reagan, increased the deficit more than any other president besides our last president, George W. Bush. Both were conservatives.
President Obama and his financial team seem to be following in the same vein. Taleb sees this as a faulty system of forecasting that the president's financial team engages in. President Obama says that health care reform will not add one penny to the deficit. We are waiting to see how this will be achieved. It would seem that Geithner, Summers, and Bernanke were all a part of the problem. I wonder if they can also be a part of the solution. Taleb makes a great analogy:
"The patient has cancer. OK. They're giving him painkillers. If you're giving the cancer patient painkillers, what's going to happen to him? Physically, the cancer is going to get worse but he's going to not feel it. So, the problem we have in America is that nobody has addressed the fundamental error, the over reliance on forecasts. Larry Summers blew up Harvard's endowment forecasting what's going to happen with its endowment. They're going to do the same with the US administration and build the government deficit based on that. What should we do? Transform debt into equity."
By the way, a year ago my partner and I went to our state senator and proposed a great plan that would "transform debt into equity" with regards to the abundant of foreclosure in Michigan. The senator's chief of staff with whom we met thought it was a great idea. We were given platitudes and nothing happened. I sent various emails and made several calls.
My partner in a real estate venture is a senior executive at a Fortune 100. He didn't appreciate the meeting at all. I noticed this immediately. I could tell by the corners of his mouth and the dart in his eyes, though they seemed to escape the chief of staff. But since I had been a consultant with governments large and small, I thought I recognized the hoops necessary. But he was right. The senator's office was not really interested in solutions, but in seemingly maintaining the status quo. They did not seem interested in making the Michigan economy robust.
Our plan remains the better one than any others that we have heard coming out of the past or current administrations. It doesn't rely on debt and increases a robust economy. In creating such solutions, I am very much a conservative.
Taleb is against debt and for robust systems. Politically speaking, we have not had such conservatism in a very long time in politics. What we have had for many years is a masquerade, a hypocritical scheme. The iconoclastic Republican president, Ronald Reagan, increased the deficit more than any other president besides our last president, George W. Bush. Both were conservatives.
President Obama and his financial team seem to be following in the same vein. Taleb sees this as a faulty system of forecasting that the president's financial team engages in. President Obama says that health care reform will not add one penny to the deficit. We are waiting to see how this will be achieved. It would seem that Geithner, Summers, and Bernanke were all a part of the problem. I wonder if they can also be a part of the solution. Taleb makes a great analogy:
"The patient has cancer. OK. They're giving him painkillers. If you're giving the cancer patient painkillers, what's going to happen to him? Physically, the cancer is going to get worse but he's going to not feel it. So, the problem we have in America is that nobody has addressed the fundamental error, the over reliance on forecasts. Larry Summers blew up Harvard's endowment forecasting what's going to happen with its endowment. They're going to do the same with the US administration and build the government deficit based on that. What should we do? Transform debt into equity."
By the way, a year ago my partner and I went to our state senator and proposed a great plan that would "transform debt into equity" with regards to the abundant of foreclosure in Michigan. The senator's chief of staff with whom we met thought it was a great idea. We were given platitudes and nothing happened. I sent various emails and made several calls.
My partner in a real estate venture is a senior executive at a Fortune 100. He didn't appreciate the meeting at all. I noticed this immediately. I could tell by the corners of his mouth and the dart in his eyes, though they seemed to escape the chief of staff. But since I had been a consultant with governments large and small, I thought I recognized the hoops necessary. But he was right. The senator's office was not really interested in solutions, but in seemingly maintaining the status quo. They did not seem interested in making the Michigan economy robust.
Our plan remains the better one than any others that we have heard coming out of the past or current administrations. It doesn't rely on debt and increases a robust economy. In creating such solutions, I am very much a conservative.
Tuesday, August 25, 2009
Being Nassim Nicholas Taleb XI
President Obama reappointed Ben Bernanke chairman of the Federal Reserve today. If you have read this blog, I have not been a great fan on President Obama's economic team, Timothy Geithner and Larry Summers, along with Ben Bernanke, as they are largely the reason that we are currently in this economic mess.
Having written more than a few posts here on the financial crisis, it seems imperative that we hear and employ ideas from outside of the current system. Nassim Nicholas Taleb succintly outlines why he is no fan of "the triplets" as he calls them on a recent appearance on "Morning Meeting with Dylan Ratigan."
Having written more than a few posts here on the financial crisis, it seems imperative that we hear and employ ideas from outside of the current system. Nassim Nicholas Taleb succintly outlines why he is no fan of "the triplets" as he calls them on a recent appearance on "Morning Meeting with Dylan Ratigan."
Let's look at them. They don't seem to understand risk. They have their models and were blinded by their models. The first person not to understand risk is Larry Summers ... [L]ook at Harvard's finances, all right? He is going to do to us what he did to Harvard?These are biting words, but true nonetheless. We need more voices out there like Nassim Nicholas Taleb who speak against the current failed system and ask simple questions that rally the people. The question is...are we listening? In order for our voices to be heard in Washington we have to first understand "what's going on."
Second one, look at Geithner. In the rare instance in which you have to look at someone's behavior, the gentleman's house, he couldn't understand the risk of the real estate market? That the house could drop in value? Look at him. He is stuck with his house. Look at the numbers. You can see a lot of jokes on the way with someone with these mortgages.
The third person is Bernanke. We're giving more power to the Fed, who got us here?
Saturday, August 1, 2009
Being David Brooks III
Conservative columnist, David Brooks, whom I have followed for years and whose columns I often appreciate, wrote a thoughtful piece on Bernanke and the Fed that is worth considering, "Wise Muddling Through." I have written of Brooks here before.
Brooks writes:
First, it is very difficult to speak about another's moral intuition, especially when that one was over Goldman Sachs and when he and Geithner, who was over the NY Fed, have such cozy relationships with Wall Street bank executives.
Morality is shown by consistent actions and decisions. Paulson insisted that Merrill Lynch and Bank of America merge, giving the latter a pretty hefty bailout. BofA would probably be insolvent without it, as well as Goldman Sachs.
Second, it was their lack of complete oversight of these banks over many years that led to the crisis, not just merely allowing Lehman to fail, but allowing AIG to essentially become a Hedge Fund that insured Goldman Sachs, becoming too big too fail.
While Brooks is appreciated, I am with Jack Bogle, Nassim Nicholas Taleb, Arianna Huffington and Eliot Spitzer. Their words and actions have mattered most in this economic crisis.
Brooks writes:
Their decision not to bail out Lehman Brothers was based on a complete misreading of the economic psychology. Paulson was sick of doing bailouts. He seems to have had some sort of intuitive moral sense that it was time for some bank to pay for its mistakes. Bernanke and Geithner went along, and none of them anticipated the meltdown that followed.As I see it, there are two things wrong here:
But this is not a story of failure. It’s a story of effective muddling through. Bernanke & Co. never really got control of events. But they did avert disaster and committed only a few big blunders. In the real world, that counts as a job well done.
First, it is very difficult to speak about another's moral intuition, especially when that one was over Goldman Sachs and when he and Geithner, who was over the NY Fed, have such cozy relationships with Wall Street bank executives.
Morality is shown by consistent actions and decisions. Paulson insisted that Merrill Lynch and Bank of America merge, giving the latter a pretty hefty bailout. BofA would probably be insolvent without it, as well as Goldman Sachs.
Second, it was their lack of complete oversight of these banks over many years that led to the crisis, not just merely allowing Lehman to fail, but allowing AIG to essentially become a Hedge Fund that insured Goldman Sachs, becoming too big too fail.
While Brooks is appreciated, I am with Jack Bogle, Nassim Nicholas Taleb, Arianna Huffington and Eliot Spitzer. Their words and actions have mattered most in this economic crisis.
Saturday, July 25, 2009
Being Knowledgeable II
In an excellent polemic on knowledge and theory, "History Written by Losers", Nassim Nicholas Taleb makes this very thoughtful comment:
Perhaps we need more hypotheses, that which is not known or accepted as fact. It is knowledge itself that seems to come in between practical evolutionary application.
But it is also a posturing, a lack of humility, that undermines knowledge. By this I mean, those with knowledge can become non-theoretical by simply adjusting their mindsets to the vast continuous possibilities of their own limited understanding.
Knowledge is itself limiting; it is forever evolving; we enter this world in a place of unknowing and leave in the same state, for we do know from where we have come or where we will go even though we have experienced life and shall experience death and see the same in others.
Knowledge in this regard still evades us. Others spoke of our birth and will speak of our death. This is humbling in itself and should teach us something about the not-knowing of knowledge. Openness is essential to knowledge for in it lies the essence of not-knowing, the forever disproving of theory.
The biggest myth I've encountered in my life is as follows: that the road from practical know-how to theoretical knowledge is reversible-in other words, that theoretical knowledge can lead to practical applications, just as practical application can lead to theoretical knowledge. After all, this is the reason we have schools, universities, professors, research centers, homework, exams, essays, dissertations, and the strange brand of individuals called 'economists.'It seems like our whole educational system should be based on disproving knowledge, as opposed to approving it. How do we ever evolve if knowledge becomes a theory?
Yet, the strange thing is that it is very hard to realize that knowledge cannot travel equally in both directions. It flows better from practice to theory-but to understand it you have nontheoretical knowledge. And people who have nontheoretical knowledge don't know these things.
Indeed, if knowledge flowed equally in both directions, then theory without experience should be equivalent to experience without theory-which is not the case.
Perhaps we need more hypotheses, that which is not known or accepted as fact. It is knowledge itself that seems to come in between practical evolutionary application.
But it is also a posturing, a lack of humility, that undermines knowledge. By this I mean, those with knowledge can become non-theoretical by simply adjusting their mindsets to the vast continuous possibilities of their own limited understanding.
Knowledge is itself limiting; it is forever evolving; we enter this world in a place of unknowing and leave in the same state, for we do know from where we have come or where we will go even though we have experienced life and shall experience death and see the same in others.
Knowledge in this regard still evades us. Others spoke of our birth and will speak of our death. This is humbling in itself and should teach us something about the not-knowing of knowledge. Openness is essential to knowledge for in it lies the essence of not-knowing, the forever disproving of theory.
Monday, May 4, 2009
Being Warren Buffett II
Warren Buffett and Charlie Munger, partners in Berkshire Hathaway, have finally come around to what Nassim Nicholas Taleb has been saying for years now. VAR models are dangerous, though they are taught widely in business schools and used on Wall Street. Mr. Munger even now talks about the risk of such mathematical theories being taught in business schools. While Mr. Buffett and Mr. Munger seem to be late to the game, better late than never--I guess.
Perhaps Mr. Buffett needed to speak out now as the Oracle, whom I like as a person who lives moderately and seems like a basically good guy, after Berkshire lost big over the last year and a half, even its coveted triple-A credit score rating. Berkshire has a 24% stake in Moody's Investor Service, the credit scoring company that gave Wall Street companies that engaged in credit default swaps and the like triple-A ratings, even after it was obvious that such a rating was not deserved. Does this feel like collusion?
Some might wonder if Berkshire's rating did not go down until early this year because of its stake in Moody's. After all, Berkshire seems to have itself written complicated financial instruments that have been hammered for some time now. Berkshire has gone down 39% since December 2007. Oh, what a racket it all seems to be, even among the seemingly good guys. Because of this, the mere whiff of impropriety, the public's ire musn't wane. Arianna Huffington has been hitting Wall Street banks hard and rightfully so!
Below Mr. Buffett and Mr. Munger speak about the dangers of mathematical theories, making it clear their mistrust of the use of "higher-order mathematics in finance." But where were they before now? I have not heard them speak against such while Berkshire had its triple-A credit rating or when they were writing these complicated financial instruments. I don't mean to be accusatory, as I am most certainly no financial expert. But it all just feels so incredibly wrong right about now considering this harrowing time on Wall Street.
Mr. Buffett was asked about Moody's, which gave a triple-A rating of billions of dollars to mortgage backed securities that subsequently lost value.
Perhaps Mr. Buffett needed to speak out now as the Oracle, whom I like as a person who lives moderately and seems like a basically good guy, after Berkshire lost big over the last year and a half, even its coveted triple-A credit score rating. Berkshire has a 24% stake in Moody's Investor Service, the credit scoring company that gave Wall Street companies that engaged in credit default swaps and the like triple-A ratings, even after it was obvious that such a rating was not deserved. Does this feel like collusion?
Some might wonder if Berkshire's rating did not go down until early this year because of its stake in Moody's. After all, Berkshire seems to have itself written complicated financial instruments that have been hammered for some time now. Berkshire has gone down 39% since December 2007. Oh, what a racket it all seems to be, even among the seemingly good guys. Because of this, the mere whiff of impropriety, the public's ire musn't wane. Arianna Huffington has been hitting Wall Street banks hard and rightfully so!
Below Mr. Buffett and Mr. Munger speak about the dangers of mathematical theories, making it clear their mistrust of the use of "higher-order mathematics in finance." But where were they before now? I have not heard them speak against such while Berkshire had its triple-A credit rating or when they were writing these complicated financial instruments. I don't mean to be accusatory, as I am most certainly no financial expert. But it all just feels so incredibly wrong right about now considering this harrowing time on Wall Street.
"There is so much that's false and nutty in modern investing practice and modern investment banking, that if you just reduced the nonsense, that's a goal you should reasonably hope for," Mr. Buffett said. Regarding complex calculations used to value purchases, he said: "If you need to use a computer or a calculator to make the calculation, you shouldn't buy it."Here is Mr. Buffett on Moody's credit agency. But this too doesn't seem right, especially with Berkshires stake in Moody's. It also seems like a whole lot of people should go to jail. (The reference here is not specifically with regards to Mr. Buffet or Mr. Munger.)
Said Mr. Munger: "Some of the worst business decisions I've ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn't. They teach that in business schools because, well, they've got to do something.
Mr. Buffett said: "If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won't get tenure....Higher mathematics my be dangerous and lead you down pathways that are better left untrod."
Mr. Buffett was asked about Moody's, which gave a triple-A rating of billions of dollars to mortgage backed securities that subsequently lost value.
"Basically, four or five years ago, virtually everybody in the country had this model in their heads, formal or otherwise, that house prices could not fall significantly," Mr. Buffett said. He later added that "it was stupidity and the fact that everyone else was doing it."Nassim Nicholas Taleb and Arianna Huffington are clear voices that can help guide us out of this Wall Street morass. Taleb's firm did not engage in such because "everyone else was doing it." Is this really an excuse for such? Sometimes even oracles are misguided. Who am I to say such a thing?
He said that if Moody's had started to take a negative view on residential real estate, the ratings provider would have been hauled before Congress to testify about why it was hurting the U.S. economy with its bearish ratings. "They made a huge mistake, and the American people made a huge mistake," he said.
Thursday, April 16, 2009
Being a Philosopher
In a brilliant article written for GQ by Will Self, Nassim Nicholas Taleb is described as "a genuinely significant philosopher; and by this I mean someone who is able to change the way we view the structure of the world through the strength, originality and veracity of his thoughts alone."
There is really no other kind of philosophy that matters. The philosophy that matters is the kind that induces change to existing structures of all kind. This well-written article gives us glimpse of the life and mind of this brilliant philosopher, derivatives trader, and best-selling author.
There is really no other kind of philosophy that matters. The philosophy that matters is the kind that induces change to existing structures of all kind. This well-written article gives us glimpse of the life and mind of this brilliant philosopher, derivatives trader, and best-selling author.
Wednesday, April 8, 2009
Being Nassim Nicholas Taleb X
In yesterday's Financial Times Nassim Nicholas Taleb gives "Ten Principles of a Black Swan-Proof World." Here they are:
1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.
2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
4. Do not let someone making an incentive" bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.
5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.
6. Do not give children sticks of dynamite, even if they come with a warning. Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.
7. Only Ponzi schemes should depend on confidence. Governments should never need to "restore confidence." Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.
8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).
10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
Maybe Nassim Nicholas Taleb should be advising the President.
1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.
2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
4. Do not let someone making an incentive" bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.
5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.
6. Do not give children sticks of dynamite, even if they come with a warning. Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.
7. Only Ponzi schemes should depend on confidence. Governments should never need to "restore confidence." Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.
8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).
10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
Maybe Nassim Nicholas Taleb should be advising the President.
Being a Pundit, Newscaster and Analyst VII
It looks like Jim Cramer is being lambasted for his financial ignorance and apparent arrogance yet once again. But this time by a respected economist, Nouriel Roubini. "Cramer is a buffoon," said Roubini, professor of economics at New York University. "He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame."
Like Nassim Nicholas Taleb in the Black Swan, Roubini predicted that we were heading for the worst recession in many decades. His truthful, though gloomy, prediction of the global financial meltdown garnered him the name of Dr. Doom. In an interview with the Associated Press Roubini said this about Cramer: "He's not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong."
Cramer responded by writing a blog entry that Roubini was "intoxicated" and full of his own "prescience and vision." He also asserted that things are getting better since the stock market reached bottom in early March. I'm no economist, but this seems unlikely. I have not even heard this from any economist or financial analyst. Most are uncertain of where the bottom is. In a Youtube video roundtable discussion with economic expert, Linda Yueh and Harvard economist Kennth Rogoff, Taleb says, "I tell you one thing. You tend to think that the current crisis is in the middle or toward the end. I think we may be in the very beginning." This was a few months back.
Cramer also wrote that Roubini and Paul Krugman, a Nobel Prize Laureate in economics--not that this means much these days, are a part of "the nationalization jihad." Roubini responded by saying that he is in support of Treasury Secretary Geithner's plan. (Hmmm, there maybe some qualms with this. There is a reason the banks stress test report has been completed but not released. The TARP probably has not helped many of these banks; many seem to be failing in spite of it.) "He keeps insulting me personally and saying a bunch of lies," Roubini said. "He doesn't even know I was supporting it so he says lies." Maybe CNBC should find another financial analyst. I wondered after the Stewart evisceration if he would last a week after. He appears to be hanging on, but maybe not for much longer.
Like Nassim Nicholas Taleb in the Black Swan, Roubini predicted that we were heading for the worst recession in many decades. His truthful, though gloomy, prediction of the global financial meltdown garnered him the name of Dr. Doom. In an interview with the Associated Press Roubini said this about Cramer: "He's not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong."
Cramer responded by writing a blog entry that Roubini was "intoxicated" and full of his own "prescience and vision." He also asserted that things are getting better since the stock market reached bottom in early March. I'm no economist, but this seems unlikely. I have not even heard this from any economist or financial analyst. Most are uncertain of where the bottom is. In a Youtube video roundtable discussion with economic expert, Linda Yueh and Harvard economist Kennth Rogoff, Taleb says, "I tell you one thing. You tend to think that the current crisis is in the middle or toward the end. I think we may be in the very beginning." This was a few months back.
Cramer also wrote that Roubini and Paul Krugman, a Nobel Prize Laureate in economics--not that this means much these days, are a part of "the nationalization jihad." Roubini responded by saying that he is in support of Treasury Secretary Geithner's plan. (Hmmm, there maybe some qualms with this. There is a reason the banks stress test report has been completed but not released. The TARP probably has not helped many of these banks; many seem to be failing in spite of it.) "He keeps insulting me personally and saying a bunch of lies," Roubini said. "He doesn't even know I was supporting it so he says lies." Maybe CNBC should find another financial analyst. I wondered after the Stewart evisceration if he would last a week after. He appears to be hanging on, but maybe not for much longer.
Monday, March 30, 2009
Being in Davos II
I posted earlier on Being in Davos and Being at Davos vs TED which included Arianna Huffington. Here is Nassim Nicholas Taleb in the same idyllic setting. Taleb asks why should we socialize the debts and privitize the gains of Wall Street banks?
Sunday, March 29, 2009
Being Arianna Huffington VI
This Tuesday morning on CNBC's Squawk Box from 7-9 Arianna Huffington will be the guest host. The show will feature Nassim Nicholas Taleb, Nouriel Roubini, and Congressman Barney Frank. Maybe this will begin the process of resuscitating CNBC's tattered image. After the Jon Stewart evisceration of CNBC's financial analysts, we all know they need it. Arianna Huffington's piece on Jon Stewart's interview with Jim Cramer and John King's interview with Dick Cheney is great.
The Huffington Post article can be read here. Brilliant comparisons are made between the Jon Stewart and John King interviews. Squawk Box this Tuesday promises to be interesting with both professionalism and punch. While the intentions and knowledge of Huffington, Taleb and Roubini my be trusted, the same may not be said of Barney Frank. I tend to distrust politicians generally. Senator Chris Dodd (D) and Senator Richard Shelby (R) would be among these. Neither would get my vote if I were constituents in theirs states.
I have some thoughts about Congress and some questions for Congressman Frank. Has the Federal Reserve become a hindrance to a viable democratic capitalistic system where there should be checks and balances? The Fed does not have absolute power! Not only has the Federal Reserve failed us, but Congress too in their lack of oversight of the Fed—instead there appears to have been, rightly or wrongly, collusion in regulating these big American banks with ties with hedge funds and the likes of Barclays in London and Deutsche Bank in Germany.
This week Treasury Secretary Geithner asked that the Treasury be given more power to regulate some companies, namely those such as AIG, and perhaps GE, who are not banks but behave as such. To give the Federal Reserve more power seems like a sick solution. How do you give more power to those who have utterly failed the American people who seem bent on a global imperialistic financial agenda to concentrate wealth among the few in the world? JP Morgan, the founder, was astute at this kind of global financial focus many years back shortly after the Civil War.
There is no surprise that Wall Street bankers are arrogant and self-centered. Although JP Morgan served the US well with his financing of Thomas Edison, and his investments in infrastructure, big banking seems to have been conceived out of arrogance and dominance, the necessity of centralized global power in banking. Some may assert that it is simply human nature. OK. Regulation is then mandatory, perhaps the kind that is revisited for efficacy and maintained for stability.
As a member of Congress how is it that Congress' oversight of the Federal Reserve went completely unwatched? For many yeas Alan Greenspan was instead a revered demigod of sorts with Congress shaking its heads in agreement to everything he proposed. I have written here on Being Alan Greenspan that included a scathing critique by Bill Flickenstein. He has written of Greenspan often, beginning some years back. Mr. Flickenstein provided more oversight over the past years than members of Congress on the right, left and center. They, by and large, seem to have their self-interest at heart, one that seems to go straight to the heart of campaign financing in order to keep their "illustrious" civil servant careers.
I hope that Mr. Frank will have to answer hard-hitting questions, perhaps from those coming from the people. While Arianna Huffington never seems to shy away from hard-hitting questions for all sides, Democrats and Republicans, I also understand that polticially sometimes it is not always the platform, especially considering certain shows on certain networks work, not to mention the rescuitation of CNBC. My very wealthy Republican partner said that since Taleb and Roubini will be on Squawk Box with Huffington that he will sell short on Tuesday. As one who does not take tips from anyone, he took Huffington's guest appearance on Squawk Box with Taleb and Roubini as Tuesday tip. That was funny! Truth generates short-selling.
I'm really looking forward to the show on Tuesday. Maybe Huffington should have a show every Tuesday. It would be great to have a finance show that addresses critical issues and how decisions made by government and private coroporations affect the masses. The perfect storm seems to have been created in that the masses were duped, though not without culpability with the complicit will of Congress through legislation and the creation policy for the likes of Fannie Mae and Freddie Mac, to accept mortgages so that individuals and Wall Street banks could collect billions of dollars in fees beforehand and a bailout thereafter.
These are some of the questions and thoughts that I'd like to see addressed when Arianna Huffington hosts Squawk Box this Tuesday. What would you like answered or what comments would you make?
The Huffington Post article can be read here. Brilliant comparisons are made between the Jon Stewart and John King interviews. Squawk Box this Tuesday promises to be interesting with both professionalism and punch. While the intentions and knowledge of Huffington, Taleb and Roubini my be trusted, the same may not be said of Barney Frank. I tend to distrust politicians generally. Senator Chris Dodd (D) and Senator Richard Shelby (R) would be among these. Neither would get my vote if I were constituents in theirs states.
I have some thoughts about Congress and some questions for Congressman Frank. Has the Federal Reserve become a hindrance to a viable democratic capitalistic system where there should be checks and balances? The Fed does not have absolute power! Not only has the Federal Reserve failed us, but Congress too in their lack of oversight of the Fed—instead there appears to have been, rightly or wrongly, collusion in regulating these big American banks with ties with hedge funds and the likes of Barclays in London and Deutsche Bank in Germany.
This week Treasury Secretary Geithner asked that the Treasury be given more power to regulate some companies, namely those such as AIG, and perhaps GE, who are not banks but behave as such. To give the Federal Reserve more power seems like a sick solution. How do you give more power to those who have utterly failed the American people who seem bent on a global imperialistic financial agenda to concentrate wealth among the few in the world? JP Morgan, the founder, was astute at this kind of global financial focus many years back shortly after the Civil War.
There is no surprise that Wall Street bankers are arrogant and self-centered. Although JP Morgan served the US well with his financing of Thomas Edison, and his investments in infrastructure, big banking seems to have been conceived out of arrogance and dominance, the necessity of centralized global power in banking. Some may assert that it is simply human nature. OK. Regulation is then mandatory, perhaps the kind that is revisited for efficacy and maintained for stability.
As a member of Congress how is it that Congress' oversight of the Federal Reserve went completely unwatched? For many yeas Alan Greenspan was instead a revered demigod of sorts with Congress shaking its heads in agreement to everything he proposed. I have written here on Being Alan Greenspan that included a scathing critique by Bill Flickenstein. He has written of Greenspan often, beginning some years back. Mr. Flickenstein provided more oversight over the past years than members of Congress on the right, left and center. They, by and large, seem to have their self-interest at heart, one that seems to go straight to the heart of campaign financing in order to keep their "illustrious" civil servant careers.
I hope that Mr. Frank will have to answer hard-hitting questions, perhaps from those coming from the people. While Arianna Huffington never seems to shy away from hard-hitting questions for all sides, Democrats and Republicans, I also understand that polticially sometimes it is not always the platform, especially considering certain shows on certain networks work, not to mention the rescuitation of CNBC. My very wealthy Republican partner said that since Taleb and Roubini will be on Squawk Box with Huffington that he will sell short on Tuesday. As one who does not take tips from anyone, he took Huffington's guest appearance on Squawk Box with Taleb and Roubini as Tuesday tip. That was funny! Truth generates short-selling.
I'm really looking forward to the show on Tuesday. Maybe Huffington should have a show every Tuesday. It would be great to have a finance show that addresses critical issues and how decisions made by government and private coroporations affect the masses. The perfect storm seems to have been created in that the masses were duped, though not without culpability with the complicit will of Congress through legislation and the creation policy for the likes of Fannie Mae and Freddie Mac, to accept mortgages so that individuals and Wall Street banks could collect billions of dollars in fees beforehand and a bailout thereafter.
These are some of the questions and thoughts that I'd like to see addressed when Arianna Huffington hosts Squawk Box this Tuesday. What would you like answered or what comments would you make?
Saturday, March 28, 2009
Being Nassim Nicholas Taleb IX
Nassim Nicholas Taleb, author of The Black Swan, has simple solutions to "save capitalism from the banks." Click here and read how.
Thursday, March 26, 2009
Being at a Crossroad
America is at a crossroad. The Wall Street crisis and the responsibility place on average Americans in what Nassim Nicholas Taleb calls, "socializing debt and privatizing gain," must not continue. President Obama was elected to bring change; let's hope that change is initiated on Wall Street and in Washington.
There is no doubt that we will get change; we don't expect one of the greatest entrepreneurial countries of the world to fail. It won't. The recession will end; markets will turn around. But we may not get fundamental change where power structures on Wall Street and in Washington are shaken to the core and actually turn directions.
Talking to one of my brothers last night, he reminded me of the very real necessity of being behind the President Obama and supporting his agenda, like those designed by Timothy Geithner, who allowed this collapse under his watch as the President of the New York Fed and Larry Summers who allowed deregulation under President Clinton supported by Republicans such as Phil Graham.
My brother, though rather conservative now, began as a real lefty in the late 60's and early 70's. As I listened to him I could hear in his voice the respect and love that he has for the President on so many levels. I have the same respect and love but I admit to being annoyed at what is occuring. Do we expect too much from one man as we did with Franklin Delano Roosevelt or Martin Luther King,Jr.?
President Obama is probably simply being judicial. Do we not realize the political web and the necessity of picking battles and aligning with enemies? As I was railing against Geithner and Summers, my brother took another position. he took another position. "Judith, we can't let President Obama fail," he calmly said in softly spoken tones toward the end of our hour-long conversation. There was a hush on the line.
These words reverberated in my mind again and again as I prepared for bed at some 2:30 in the morning. Should we support our president as many supported past presidents to our detriment? Maybe the politically correct thing is to lie low and let some things settle.
While things may get better for us, as glimmers of hope begin to emerge, I really wonder about the possibility of real change. While I totally support the President, I'm not feeling incredibly optimistic about Geithner and Summers when it comes to the change we need for long-term sustainability. This crisis can't be wasted.
America is at a crossroads. Will we demand change or simply want an increase in our 401Ks? Can we have both?
There is no doubt that we will get change; we don't expect one of the greatest entrepreneurial countries of the world to fail. It won't. The recession will end; markets will turn around. But we may not get fundamental change where power structures on Wall Street and in Washington are shaken to the core and actually turn directions.
Talking to one of my brothers last night, he reminded me of the very real necessity of being behind the President Obama and supporting his agenda, like those designed by Timothy Geithner, who allowed this collapse under his watch as the President of the New York Fed and Larry Summers who allowed deregulation under President Clinton supported by Republicans such as Phil Graham.
My brother, though rather conservative now, began as a real lefty in the late 60's and early 70's. As I listened to him I could hear in his voice the respect and love that he has for the President on so many levels. I have the same respect and love but I admit to being annoyed at what is occuring. Do we expect too much from one man as we did with Franklin Delano Roosevelt or Martin Luther King,Jr.?
President Obama is probably simply being judicial. Do we not realize the political web and the necessity of picking battles and aligning with enemies? As I was railing against Geithner and Summers, my brother took another position. he took another position. "Judith, we can't let President Obama fail," he calmly said in softly spoken tones toward the end of our hour-long conversation. There was a hush on the line.
These words reverberated in my mind again and again as I prepared for bed at some 2:30 in the morning. Should we support our president as many supported past presidents to our detriment? Maybe the politically correct thing is to lie low and let some things settle.
While things may get better for us, as glimmers of hope begin to emerge, I really wonder about the possibility of real change. While I totally support the President, I'm not feeling incredibly optimistic about Geithner and Summers when it comes to the change we need for long-term sustainability. This crisis can't be wasted.
America is at a crossroads. Will we demand change or simply want an increase in our 401Ks? Can we have both?
Thursday, March 19, 2009
Being Eliot Spitzer
Pesonal sordid sex scandals have never really held incredible interest for me. While I am an advocate for integrity and honesty and believe that how we live our lives matter, we all have personal failures and at any time we may need to ask forgiveness from our loved ones and the community at large.
For this reason, I was not particularly interested in the Spitzer prostitution scandal. If I'm remembering correctly, his undoing was personal and did not include impropriety as the Governor of New York. What I hoped for then and now is for Eliot Spitzer and family to be made whole as they work through a most difficult time. It's been a year and they seem to be healing. Let's hope so.
Now, what does have incredible interest for me is Spitzer's appearance on "Fareed Zakaria GPS" this afternoon. During the interview, I was particularly struck by the comment that the red herrig is the AIG bonuses instead of focusing on the "12.9 billion dollars" paid to Goldman Sachs the same company where President Bush's Treasury Secretary, Henry Paulson, was CEO. The $168 billion dollar bailout to AIG was given and Bear Stearns was allowed to fail.
Timothy Geithner, as the former President of the New York Federal Reserve, is also under a cloud of suspicion. Nassim Nicholas Taleb and Noureil Roubini assert that those who were a part of the financial crisis, Geithner et al, could not possibly now manage it. Nassim Taleb and Nouriel Roubini, including Arianna Huffington, have all said that the same people who got us in this mess cannot get us out of it. It's not looking good. I am not a conspiracy theorist, but is it coincidental that the sex scandal with Spitzer came out at such an opportune time?
For this reason, I was not particularly interested in the Spitzer prostitution scandal. If I'm remembering correctly, his undoing was personal and did not include impropriety as the Governor of New York. What I hoped for then and now is for Eliot Spitzer and family to be made whole as they work through a most difficult time. It's been a year and they seem to be healing. Let's hope so.
Now, what does have incredible interest for me is Spitzer's appearance on "Fareed Zakaria GPS" this afternoon. During the interview, I was particularly struck by the comment that the red herrig is the AIG bonuses instead of focusing on the "12.9 billion dollars" paid to Goldman Sachs the same company where President Bush's Treasury Secretary, Henry Paulson, was CEO. The $168 billion dollar bailout to AIG was given and Bear Stearns was allowed to fail.
Timothy Geithner, as the former President of the New York Federal Reserve, is also under a cloud of suspicion. Nassim Nicholas Taleb and Noureil Roubini assert that those who were a part of the financial crisis, Geithner et al, could not possibly now manage it. Nassim Taleb and Nouriel Roubini, including Arianna Huffington, have all said that the same people who got us in this mess cannot get us out of it. It's not looking good. I am not a conspiracy theorist, but is it coincidental that the sex scandal with Spitzer came out at such an opportune time?
Wednesday, March 18, 2009
Being Nassim Nicholas Taleb VIII
Nassim Nicholas Taleb addresses some very important issues in an interview with CNBC. I have written more than a few posts on this brilliant thinker. His book, The Black Swan, is the single most important book that I read last year followed by Enough by
John Bogle.
In this interview Taleb and Nouriel Roubini make some great points. The only problem is that the newscasters' questions and responses are glib and idiotic. It's as if they want to tag team and simply hear themselves speak, repeating "witty" dimwit ditties.
Taleb and Roubini make their points nonetheless.
Here are some of Taleb's highlights:
*Those who did not see the crisis coming in government should be out of there.
*Those responsible should not only be punished but removed from office.
*Bernanke did not see the risk coming.
*Bernanke should not be the Fed Chairman.
*Bankers who got us here are still around and we're giving them more money.
*Unless we do something drastic we are not going to pull out of this.
*The responsible people, need only be punished, but out of there.
*The dependence on debt needs to be eliminated.
*You cannot trust someone making a bonus and handling risks.
*Society pays for this risk. This can't be.
*We need to de-leverage massively.
*Build robustness by eliminating debt.
*Change the culture, maybe change the system too.
*This class of people, i.e., Geithner et al, can't manage this problem.
*Geithner et al have failed before and they will fail again.
Nassim Nicholas Taleb and Nouriel Roubini should be advising President Obama.
What do you think?
John Bogle.
In this interview Taleb and Nouriel Roubini make some great points. The only problem is that the newscasters' questions and responses are glib and idiotic. It's as if they want to tag team and simply hear themselves speak, repeating "witty" dimwit ditties.
Taleb and Roubini make their points nonetheless.
Here are some of Taleb's highlights:
*Those who did not see the crisis coming in government should be out of there.
*Those responsible should not only be punished but removed from office.
*Bernanke did not see the risk coming.
*Bernanke should not be the Fed Chairman.
*Bankers who got us here are still around and we're giving them more money.
*Unless we do something drastic we are not going to pull out of this.
*The responsible people, need only be punished, but out of there.
*The dependence on debt needs to be eliminated.
*You cannot trust someone making a bonus and handling risks.
*Society pays for this risk. This can't be.
*We need to de-leverage massively.
*Build robustness by eliminating debt.
*Change the culture, maybe change the system too.
*This class of people, i.e., Geithner et al, can't manage this problem.
*Geithner et al have failed before and they will fail again.
Nassim Nicholas Taleb and Nouriel Roubini should be advising President Obama.
What do you think?
Friday, February 27, 2009
Being Disruptive II
John O'Leary wrote an excellent post recently on "creative disruption" where he uses The Beatles as an example. I have written here on being disruptive a few times. As brilliant as they are, disrupters are often marginalized and isolated.
While often being maligned, disrupters, in fact, are those who make the difference in business, painting, music, science, education, medicine, poetry, fashion, communities, novels, religion, community philosophy, etc.
Who are these disrupters?
Jesus Christ
Martin Luther
Joan of Arc
Toni Morrison
Nassim Nicholas Taleb
Jean Paul Gautier
Emily Dickinson
Friedrich Nietzsche
Chuck Berry
Tom Peters
Oscar Wilde
Leonardo Da Vinci
Gianni Versace
Muhammad Yunnus
Bela Bartok
Copernicus
Henry Miller
Malcolm X
Jean Paul Sartre
Marie Currier
Anita Roddick
Georgia O'Keefe
Nelson Mandela
Virgina Woolf
Igor Stravinsky
Vincent Van Gogh
Anais Nin
Martin Luther King, Jr.
Galileo
Nat Turner
History is replete which such ones, yet we seek to allow disruption to be. Perhaps without the struggle it would not find a place or consistency. Perhaps resistance is at the heart of disruption a necessity.
While often being maligned, disrupters, in fact, are those who make the difference in business, painting, music, science, education, medicine, poetry, fashion, communities, novels, religion, community philosophy, etc.
Who are these disrupters?
Jesus Christ
Martin Luther
Joan of Arc
Toni Morrison
Nassim Nicholas Taleb
Jean Paul Gautier
Emily Dickinson
Friedrich Nietzsche
Chuck Berry
Tom Peters
Oscar Wilde
Leonardo Da Vinci
Gianni Versace
Muhammad Yunnus
Bela Bartok
Copernicus
Henry Miller
Malcolm X
Jean Paul Sartre
Marie Currier
Anita Roddick
Georgia O'Keefe
Nelson Mandela
Virgina Woolf
Igor Stravinsky
Vincent Van Gogh
Anais Nin
Martin Luther King, Jr.
Galileo
Nat Turner
History is replete which such ones, yet we seek to allow disruption to be. Perhaps without the struggle it would not find a place or consistency. Perhaps resistance is at the heart of disruption a necessity.
Friday, January 30, 2009
Being Nassim Nicholas Taleb VI
"Scandalous! Why do they keep their bonuses," Taleb asks? He makes the significant point that executives like Stanley O'Neal, after tanking Merrill Lynch, has kept his bonus--not to mention those who got bonuses of $18 BILLION just last year while their hands were out and small businesses were closing all over America. With the Bank of America bailout, we have essentially bailed out Merrill Lynch and not held O'Neal accountable. This is Taleb's point.
Stanley O'Neal is now on the board of Alcoa, Inc, "one of the world's largest producer of primary aluminum, fabricated aluminum, and alumina," according to its website, after having served on the board of General Motors from 2001 - 2006. Did General Motors not just receive a massive bailout? Are these board members rewarded for inefficiency?
What's the matter with these large companies? Tank a company, run away with billions, and reward these with board positions where they are likely to allow more of the same. No wonder nothing changes. But we can change. Let's hold the board members responsible and give no more money to companies who seat the likes of these on their boards.
Stanley O'Neal is now on the board of Alcoa, Inc, "one of the world's largest producer of primary aluminum, fabricated aluminum, and alumina," according to its website, after having served on the board of General Motors from 2001 - 2006. Did General Motors not just receive a massive bailout? Are these board members rewarded for inefficiency?
What's the matter with these large companies? Tank a company, run away with billions, and reward these with board positions where they are likely to allow more of the same. No wonder nothing changes. But we can change. Let's hold the board members responsible and give no more money to companies who seat the likes of these on their boards.
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