Taleb Idiocy Watch

I hope to be credited as the person who starts this. Mark my words: More people are going to realize that Mr. Black Swan/Napoleon Dynamite has no idea what he’s talking about.

Private-equity firms and the stock market share characteristics of Ponzi schemes, “Black Swan” author Nassim Nicholas Taleb said.
Leveraged buyouts, the principal tool of private-equity investing, and buying stocks on margin should be restricted for the protection of small investors and the economy, Taleb said in a Bloomberg Television interview.
“We want economic life to be organized to be as distant from that Madoff model as we can,” Taleb said, referring to Bernard Madoff, who pleaded guilty last month to directing the largest Ponzi scheme, bilking investors of about $65 billion.
LBOs are “too close to Madoff” because “you rely on new investors to pay off the other ones,” Taleb said. “The stock market has some mild Ponzi characteristics. We have to make sure that innocent people are not harmed by this Ponzi-attribute.”
The financial system needs to be simple because regulators can’t protect investors from complex financial products, Taleb said.
“Regulators are fundamentally dumb,” he said. “Traders will go around them. I want the system where regulators can be stupid without you and I being harmed by it.”

(EP and Joe W have more).

Posted by on April 15th, 2009 at 11:05 am


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