Nassim Nicholas Taleb's 10 Ways to Keep (Economic) Black Swans At Bay. Excerpt:
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.
Don't know what a Talebian Black Swan is? Look here.
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I've got news for this guy; the government was taken over waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay before 2000.
Read Ellen Brown's "Web Of Debt."
Your eyes will be opened...
9. is interesting: "Citizens should not depend on financial assets or fallible “expert” advice for their retirement."
What does he suggest we depend on? Undercapitalized state and corporate pensions? A kitchen garden and their children?
What is fragile should break early while it is still small.
Wow, Rod, really? Talk about social darwinism!
Rod is right; they should never have allowed to get "too big to fail."
It's the government's fault for selling out long ago.
People who claim that the current economic mess is an example of a "black swan" are being disingenuous. The current mess was entirely predictable to those of us who saw that the real estate/financial services industries were in an unsustainable bubble. What we had from 1995-2007 was the American equivalent to the Japanese bubble of the 80's and the collapse has been identical as well. There is and never was any "black swan" at work here. Everything was and is 100% predictable.
Any institution that is "too big to fail" should be subject to anti-trust regulation and broken up.
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