Taleb Watch

Joe Weisenthal spots bigmouth Nassim Taleb in the news again.

“Bernanke, Geithner and Summers didn’t see the crisis coming so why are they still there?” Taleb told a group of business people in Hong Kong. Bernanke is like “a pilot who didn’t see a hurricane,” he added.

Joe shrewdly notes, “We thought prediction was basically impossible.” Not only is Taleb’s comment silly, which they usually are, but this time Taleb’s metaphor shows a fundamentally misunderstanding of what a central does. And as far as predictions go, Taleb isn’t doing so hot. Just five months, he was saying that today’s crisis is “vastly worse” than the Great Depression.
Now that it looks like the recession has past, the GDP numbers will soon reveal how far off the market Taleb was. He also chimed in on financial regulation.

Many people, such as traders, benefit from these black-swan events and it’s up to regulators to ensure rules and disincentives are in place to discourage them from triggering these occurrences, he said.

That’s exactly the wrong approach. The problem is that our regulators have tried to design a system that’s impossible to break. Instead, their focus should be on making a system that’s easy to fix.

Posted by on September 28th, 2009 at 10:03 am


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