Nicholas Nassim Taleb and Mark Spitznagel have a provocative comment up at the Financial Time today, In some ways, it is isn’t surprising for those familiar with his work on risk and uncertainty. On the other hand, it is an eye opener to see what an internally consistent, reasonably comprehensive solution to our mess looks […]
Read more...There are some interesting things one learns in putting together a book. Blogging is a lot like working in watercolors, speed and confidence in execution are key, versus the oil-painting medium of a book. And you learn how many times you wind up scraping the canvas and reworking. I’m up to the sixth revision of […]
Read more...Submitted by Edward Harrison of Credit Writedowns. During Alan Greenspan’s tenure at the helm of the Federal Reserve, he was often accused of using monetary policy to target asset markets so as to keep the party going. In short, Alan Greenspan was seen by many, including myself, as the bubble blower-in-chief. All of this came […]
Read more...Submitted by Edward Harrison of Credit Writedowns. So, things are looking a lot brighter we are told by most economists and policy makers. The crisis is over and the banking system is on the mend. Now is the time for true reform and for bankers to get back to business as usual. While the foregoing […]
Read more...Submitted by DoctoRx, who comments on the economic and financial scenes at EconBlog Review: In thinking about Animal Spirits, I am reminded of Spencer Tracy’s comment about Katharine Hepburn in Pat and Mike: “Not much meat on her, but what’s there is cherce.” There’s not much meat on the bones of Animal Spirits, and what’s […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns. During the last generation, the economics profession has veered toward a ‘science’ model of economics and finance. The intellectual underpinnings for this development began with the Efficient Market Hypothesis (EMH) and has continued in no small measure due to what is often termed ‘University of Chicago […]
Read more...Submitted by Thomas Forest Outliers: The Story of SuccessMalcolm Gladwell, Little Brown and Company, (2008) Have you read Fooled by Randomness by Nassim Taleb? Malcolm Gladwell has, “(Fooled by Randomness) is to conventional Wall Street wisdom approximately what Martin Luther’s ninety-five theses were to the Catholic Church.” And Taleb has been reading Gladwell. For example […]
Read more...Uncharacteristically for an economist, Wolfgang Munchau questions the conventional remedy for the debt millstone: use inflation to trash its value in real terms. Bondholders so often get shafted that it’s a predictable outcome. But is it wise? Munchau argues that regardless, the piper must be paid. If the powers that be succeed in creating meaningful […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns. A recent post I published on both Credit Writedowns and Naked Capitalism, “Both initial claims and continuing claims now pointing to recovery,” has left the impression that I am a wild-eyed bull – for which I have been duly smacked about the head. This is far […]
Read more...William Black, in a lecture in Iceland, discusses how the role of fraud in the financial crisis has been virtually ignored when he contends it was a major factor, and is also overlooked in the regulation of financial institutions. He also argues that standard econometric models produces the worst possible when a financial bubble is […]
Read more...Benjamin Friedman, in a review of George Akerlof and Robert Shiller’s Animal Spirits, makes an interesting observation: As in past financial declines, what is sorely missing in this discussion is attention to what function the financial system is supposed to perform in the economy and how well it has been doing it. Today attention is […]
Read more...The Fed never met a bubble it wasn’t keen to reflate. The latest wrinkle is that it is trying to learn from its old behavior, although most of us would disapprove of the lessons it has drawn. One of the cognitive biases in the readings of past crises is to attribute failure to official intervention, […]
Read more...Nassim Nicholas Taleb gave a presentation in New York yesterday which hews closely to a recent piece of his, although his talk did include some additional interesting charts and anecdotes. The article is worthwhile, and worth your attention, but let me highlight the two things I found most interesting. First was his “fourth quadrant” construct. […]
Read more...Big name economists continue their attacks on the Obama bank rescue programs. Yesterday Willem Buiter, one of Europe’s most highly respected macroeconomists, continued his salvos, contending that the funding was woefully inadequate to recapitalize or otherwise prop up financial firms. The longer the US delays winding up sick banks, the more time wasted and good […]
Read more...One benefit of performing research is picking up interesting trivia. Adam Smith, in The Wealth of Nations, advocated usury laws (limits on interest rates) because they would promote lending to prudent borrowers and productive projects, which was better for society as a whole: The legal rate…ought not be much above the lowest market rate. If […]
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