Nassim Nicholas Taleb: Economists and bankers are subhuman

[metalman]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

Why sick and paranoid and not prudent?

a boston globe article on ej from 2002 was flattering except for comments at the end. i don't have the article but the reporter said something like the prediction of inflation coming was kooky, impossible, silly, what have you. no lack of conviction... guilty of innocence? guilty of optimism? hah! who wants to believe that the fed is so corrupt or stupid or both? i still resist. the mind is repelled.

oh, don't get me wrong. i'm emptying out my safe box.

[ax]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

you still don't get it. the housing bubble was manufactured the way the dot com bubble was manufactured the way the railroad and mississippi bubbles was manufactured and on and on. as in man made. as in not accidental. as in having nothing... zero, nada... whatsoever to do with chance. ej said he knew the fed could create a housing bubble but discounted it because fed policy had in the past, as in the 1960s, 70s, and 80s, been to nip housing bubbles in the bud because the fed knows that when they crash they wreck the economy and banking system, and protecting the banking system is mission numero dos for the fed.

but a policy change happened... the fed became so corrupt that it didn't even follow its mission to protect the banking industry. the fed running a housing bubble is like doctors selling crack and cigarettes to children. instead it allowed a housing bubble to grow big and crash and put the entire banking system and economy at risk. the result was totally predictable. only a sick mind and paranoid plans on doctors selling crack to kids. so maybe imagination is not what was lacking... paranoia was lacking.

none of this has anything to do with probability. no black swan.

Arrrggh. Perhaps we're in a semantics debate now, but black swan does not equal accident/non-accident, man made/not man made.
Black swan=improbable. If we're arguing that iTulip did not predict the Fed created housing bubble because the Fed had never acted so recklessly before and therefore, this action was improbable by previous standards, that would still qualify.

[Sapiens]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

only a sick mind and paranoid plans on doctors selling crack to kids.

Why sick and paranoid and not prudent?

[metalman]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

We'll have to disagree on this analogy, Metalman. Saying the govt. shoud never have caused a bubble but did is the Thanksgiving Turkey metaphor from page 1. "Lacking in imagination" is analogous to the lack of tools. or the wrong tools he refers to for gaining exposure to black swans...

you still don't get it. the housing bubble was manufactured the way the dot com bubble was manufactured the way the railroad and mississippi bubbles was manufactured and on and on. as in man made. as in not accidental. as in having nothing... zero, nada... whatsoever to do with chance. ej said he knew the fed could create a housing bubble but discounted it because fed policy had in the past, as in the 1960s, 70s, and 80s, been to nip housing bubbles in the bud because the fed knows that when they crash they wreck the economy and banking system, and protecting the banking system is mission numero dos for the fed.

but a policy change happened... the fed became so corrupt that it didn't even follow its mission to protect the banking industry. the fed running a housing bubble is like doctors selling crack and cigarettes to children. instead it allowed a housing bubble to grow big and crash and put the entire banking system and economy at risk. the result was totally predictable. only a sick mind and paranoid plans on doctors selling crack to kids. so maybe imagination is not what was lacking... paranoia was lacking.

none of this has anything to do with probability. no black swan.

[ax]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

no you're missing the point. the reason ej missed the housing bubble is because all bubbles are created by governments ej figured even our irresponsible government ain't stupid enough to create a housing bubble. but it was! what the forecast lacked was not prescience but imagination.

the housing bubble was a black swan like a train robbery is is a black swan.

We'll have to disagree on this analogy, Metalman. Saying the govt. shoud never have caused a bubble but did is the Thanksgiving Turkey metaphor from page 1. "Lacking in imagination" is analogous to the lack of tools. or the wrong tools he refers to for gaining exposure to black swans...

[metalman]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

You're missing the point a bit. Even EJ admitted that he didn't foresee the housing bubble in 99'. It would've been considered a Black Swan back then, not after houses rose 300%.

no you're missing the point. the reason ej missed the housing bubble is because all bubbles are created by governments ej figured even our irresponsible government ain't stupid enough to create a housing bubble. but it was! what the forecast lacked was not prescience but imagination.

the housing bubble was a black swan like a train robbery is is a black swan.

[ax]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

welcome! if taleb thinks the housing bubble and sub-prime were random, he hasn't been reading itulip... where they were documented and their demise forecast years in advance. for the securitization debacle, see risk pollution from 2006 and the jim finkel interviews on cdos from early 2007 before the june crash.

no, these were schemes ala the next bubble. as you say, corrupt institutions in a corrupted system created them.

but taleb must know that... as you say, he's not stupid. but he does work in the securities/financial services industry. calling the industry corrupt isn't going to get you $60k speaking gigs.

You're missing the point a bit. Even EJ admitted that he didn't foresee the housing bubble in 99'. It would've been considered a Black Swan back then, not after houses rose 300%.

[metalman]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

I've read Fooled by Randomness and I think Taleb's points are worth taking to heart. However, I don't think the sub-prime meltdown and some of the other recent "surprise" events cited above as examples of black swans are good examples of randomness, of random events.

Contrary to Taleb, I think I would trust Bernanke to drive my car-- assuming Bernanke wasn't taking a bribe from someone else to wreck it while he was at the wheel. But that's to problem, as I see it: Bernanke and the rest of these people are taking "bribes" from someone. They're not idiots, they are corrupt. This corruption has intelligibility, too. It's not unguided or unsytematic or disorganized. To interpret it as such is to help to disguise what's going on.

Also- Taleb is obviously a smart guy--and I think a good guy--- but at 60K per talk, he's also highly over-rated. A NASDAQ bubble, A housing bubble....A Taleb-talent bubble? I'm pretty sure I've seen him in a tie, too.

welcome! if taleb thinks the housing bubble and sub-prime were random, he hasn't been reading itulip... where they were documented and their demise forecast years in advance. for the securitization debacle, see risk pollution from 2006 and the jim finkel interviews on cdos from early 2007 before the june crash.

no, these were schemes ala the next bubble. as you say, corrupt institutions in a corrupted system created them.

but taleb must know that... as you say, he's not stupid. but he does work in the securities/financial services industry. calling the industry corrupt isn't going to get you $60k speaking gigs.

[Yusef Asabiyah]

Re: Nassim Nicholas Taleb: Economists and bankers are subhuman

I've read Fooled by Randomness and I think Taleb's points are worth taking to heart. However, I don't think the sub-prime meltdown and some of the other recent "surprise" events cited above as examples of black swans are good examples of randomness, of random events.

Contrary to Taleb, I think I would trust Bernanke to drive my car-- assuming Bernanke wasn't taking a bribe from someone else to wreck it while he was at the wheel. But that's to problem, as I see it: Bernanke and the rest of these people are taking "bribes" from someone. They're not idiots, they are corrupt. This corruption has intelligibility, too. It's not unguided or unsytematic or disorganized. To interpret it as such is to help to disguise what's going on.

Also- Taleb is obviously a smart guy--and I think a good guy--- but at 60K per talk, he's also highly over-rated. A NASDAQ bubble, A housing bubble....A Taleb-talent bubble? I'm pretty sure I've seen him in a tie, too.

[bart]

Re: Nassim Nicholas Taleb:economists, bankers, are subhuman and very, very

Bit of an oversimplification, Bart. He goes a little further into the depths of why we don't account for extreme happenings. The very topic is often the centerpiece of discussion for iTulip forums; having exposure to "unlikely" events. But I'll look into Mackay and Livermore now that you brought them up.

Agreed, it was an oversimplification and there is value in his various observations. It just wasn't terribly valuable to me since it was almost all terra cognita. Unlikely events are where both short term traders and long term investors do best.

• "To buy when others are despondently selling and sell when others are greedily buying requires the greatest fortitude and pays the greatest reward."
  -- Sir John Templeton

• "Speculators in stock markets have lost money. But I believe that it is a safe statement that the money lost by speculators alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride."
  -- Jesse Livermore, "How to Trade in Stocks" (page 25)
• "From my point of view, the investors are the big gamblers. They make a bet, stay with it, and if all goes wrong, they lose it all."
  -- Jesse Livermore, "How to Trade in Stocks" (page 25)

You can find Mackay's work at Project Gutenburg and Livermore's work is also public domain (they're linked on my quotes page at the bottom of the Livermore section).

[ax]

Re: Nassim Nicholas Taleb:economists, bankers, are subhuman and very, very

Amongst others, I've found Mackay's work on manias and Livermore's works on the markets much more useful.

His black swans work strikes me as mostly saying that surprises happen in life... what a surprise. Markets are predictable - by some.

Bit of an oversimplification, Bart. He goes a little further into the depths of why we don't account for extreme happenings. The very topic is often the centerpiece of discussion for iTulip forums; having exposure to "unlikely" events. But I'll look into Mackay and Livermore now that you brought them up.

[bart]

Re: Nassim Nicholas Taleb:economists, bankers, are subhuman and very, very

Pompous = insecure.

Amongst others, I've found Mackay's work on manias and Livermore's works on the markets much more useful.

His black swans work strikes me as mostly saying that surprises happen in life... what a surprise. Markets are predictable - by some.

[phirang]

Re: Nassim Nicholas Taleb:economists, bankers, are subhuman and very, very

Taleb seems pompous, but in fact he's a really, really nice guy. He was very nice to me before I even started my career, and he helped encourage me at a time when everyone else wrote me off.

I like him, but then again, why shouldn't I?

[ax]

Re: Nassim Nicholas Taleb:economists, bankers, are subhuman and very, very

very, but has a lot to say. I have read Fooled by Randomness at least twice but haven't made it once through Black Swan.

Put it on reserve at the library. In the meantime, the Chaim Potak book I checked out is autographed by Chaim Potak and fresh off his most recent jail stint was Vanilla Ice. You never know what you'll find at the library.

[grapejelly]

Re: Nassim Nicholas Taleb:economists, bankers, are subhuman and very, very

very, but has a lot to say. I have read Fooled by Randomness at least twice but haven't made it once through Black Swan.