Nassim Taleb gives us Bob Hope & carries a "AA" rating!!!
Saturday, 26 March, 2011 Leave a comment
Cover of Bob Hope
Like him or not no-one can deny that NNT doesn’t have (and demonstrate) just what a quick mind he has. Interviewers or fellow panellists have to be careful not to test his, equally quick, temper. But what I have really come to enjoy in recent years is the more frequent use of his quick wit. Like the man himself it is sharp…even “spikey”.
Acerbic Aphorisms: whilst he may have some way to go before rivalling the late Bob Hope, his back catalogue of one-liners is growing. They are a cocktail of humour and wisdom. Are served “dry” and you do NOT want to be on the wrong end of too many of them as a nasty headache is assured!
“It is much easier to scam people for billions than for just millions.”
“The difference between banks and the Mafia – banks have better legal-regulatory expertise, but the Mafia understands public opinion.”
“In poor countries, officials receive explicit bribes. In DC, they get the sophisticated implicit, unspoken promise to work for large corporations.”
“In politics, we face the choice between warmongering, nation-state loving, big business agents on the one hand, and risk-blind, top-down, epistemic, arrogant big servants of large employers on the other. But we have a choice.”
“English does not distinguish between arrogant-up (irreverence toward the temporarily powerful) and arrogant-down (directed at the small guy).”
If he had to choose the lesser of the two evils – big government or big corporations – which would it be?
“Both are the enemies of progress,” Taleb says.
“Big corporations – their job is to suck up resources for themselves. I came to that conclusion after reading Marx. I’m not a Marxist, but I realized that large corporations are just in cahoots with big government.”
There may be humour but there is a clear message. Invariably one worth listening too and contemplating.
Taleb says – do not give children dynamite sticks, even if they come with a warning label.
And he makes a policy recommendation in this regard – ban complex financial instruments because nobody understands them.
“I don’t understand them,” Taleb says. “And I wrote a text book in 1987 about them. The motivation behind these instruments is regulation. Shocking but true. Regulation had the effect of having people skirt the regulation, hire an expensive lawyer, and design a complex product to get around the regulation.”
But Taleb would impose a regulation to ban them?
“I said that a product that has been traded for a long time should be traded. But a product that requires mathematical methods should not be. So, vanilla options have been traded on exchanges for hundreds of years – since Amsterdam in the 17th century – they can be traded.”
“Stocks can be traded.”
“But these complex products have no reason to exist other than to skirt regulations. They don’t need to be there. People don’t understand them. And they are designed to take advantage of people’s mental biases and misunderstandings of some classes of risk.”
But doesn’t it require big government to ban complex financial instruments?
“The government has been doing everything but what they are supposed to do. Financial regulation did nothing but help Goldman Sachs.”
But that’s because that’s how they set it up. It didn’t have to be that way.
“It was a 5,000 page law,” Taleb says. “We could write a one page law – captain goes down with the ship. Bridge engineer sleeps under the bridge. Personal liability.”
[For a complete transcript of the Interview with Nassim Taleb, see 25 Corporate Crime Reporter 1(12), January 3, 2011, print edition only.]
Here is an article from November last year where NNT talks about “too big to fail” and more…