This page has been archived and commenting is disabled.
"Black Swan" Fund Creator Explains Why Central Planning Has Doomed Us All
In a must read Op-Ed in the WSJ, Mark Spitznagel, founder of "fat tail" focused hedge fund Universa, where Nassim Taleb has been known to dabble on occasion, explains the fundamental flaw with central planning, and specifically why "moral hazard" or the attempt to avoid the destructive part of natural cycles, is the greatest unnatural abomination ever conceived by man. His visual explanation should be sufficient for even such grizzled academics who have no clue how the real world works, as the Chairsatan, to comprehend why what he is doing is an epic abomination of every law of nature: "Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of growth, which then invites greater destruction. About 100 years ago, the U.S. Forest Service took a zero-tolerance approach to forest fires, stamping them out at the first blaze. Fast forward to 1988 when a massive wildfire at Yellowstone National Park wiped out more than 30 times the acreage of any previously recorded fire." Another way of calling this, is what we have been warning about for years: delaying mean reversion does nothing but that. And when the Fed finally fails to offset the inevitable, and it will - it is a 100% certainty - the collapse and destruction will be unprecedented. Ironically, the only way the system could have been saved would be by letting it fail in 2008. Now, we are sorry to say, it is too late.
Spitznagel's Op-Ed from The Wall Street Journal
Christmas Trees and the Logic of Growth
The ubiquitous greenery of the season has me thinking conifers and stock market crashes. There is much to be learned from the coned evergreen trees that form vast forests across the Northern Hemisphere. As the oldest trees on the planet, the mighty conifers have survived threats of catastrophic extinction since the time of the hungry herbivorous dinosaurs.
The conifer's secret to longevity lies in a paradox: Their conquest has been largely the result of episodes of massive forest destruction. When virtually all else is gone, conifers show their strength and prowess as nature's opportunists. How? They have adapted to evade competitors by out-surviving them and then occupying their real estate after catastrophic fires.
First, the conifer takes root where no one else will go (think cold, short growing seasons and rocky, nutrient-poor soil). Here, they find the time, space and much-needed sunlight to thrive early on and build their defenses (such as height, canopy and thick bark). When fire hits, those hardy few conifers that survive can throw their seeds onto newly cleared, sunlit and nutrient-released space. For them, fire is not foe but friend. In fact, the seed-loaded cones of many conifers open only in extreme heat.
This is nature's model: overgrowth, followed by destruction of the overgrowth, and then the subsequent new growth of the healthiest and most robust, which ultimately leaves the forest and the entire ecosystem better off than they were before.
Pondering these trees, it is not too much of a stretch to consider the financial forests of our own making, where excess credit and malinvestment thrive for a time, only to be destroyed—and then the releasing of capital into markets where competition has been wiped out. The Austrian school economists understood this well, basing a whole theory around this investment cycle.
After the purge, great investment opportunities are created, from which prolific periods of growth emanate—provided that sufficient capital remains to reinvest into the fertile and now-open landscape.
Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of growth, which then invites greater destruction. About 100 years ago, the U.S. Forest Service took a zero-tolerance approach to forest fires, stamping them out at the first blaze. Fast forward to 1988 when a massive wildfire at Yellowstone National Park wiped out more than 30 times the acreage of any previously recorded fire.
What obviously occurred was that the most fire-susceptible plants had been given repeated reprieves (bailouts, in a sense), and they naturally accumulated, along with the old, deadwood of the forests. This made for a highly flammable fuel load because when fires are suppressed the density of foliage is raised, particularly the most fire-prone foliage. The way this foliage connects the grid of the forest, as it were, has come to be known as the "Yellowstone Effect."
A far better way to prevent massively destructive fires is by letting the fires burn. Human intervention in nature's cycles by suppressing fires destroys the system's natural homeostatic forces.
Strangely parallel to the Yellowstone catastrophe was the start of the federal government's other fire-suppression policy with the 1984 Continental Illinois "too big to fail" bank bailout. This was followed by Alan Greenspan's pronouncement immediately after the 1987 stock market crash that the Federal Reserve stood by with "readiness to serve as a source of liquidity to support the economy and financial system," which heralded the birth of the "Greenspan put." The Fed would no longer tolerate fires of any size.
From a forestry point of view, the lessons were learned. In 1995, the Federal Wildland Fire Management Policy stated, "Science has changed the way we think about wildland fire and the way we manage it. Wildland fire, as a critical natural process, must be reintroduced into the ecosystem."
Herein are pearls of great wisdom for central bankers today. Central banks are creating a tinderbox by keeping alive many very bad investments, fertilizing them with everything from artificially low interest rates to preferential liquidity to outright securities purchases. As these institutions and instruments overrun the financial landscape, they hamper the economic ecosystem and perpetuate the environment of low growth and high unemployment in which we currently find ourselves.
Seeing periodic, naturally occurring catastrophes as part of the growth cycle requires thinking more than one step ahead, not only longer term but, more specifically, intertemporally. This is perhaps an insurmountable cognitive challenge, both to investors and central bankers in today's news-flash world. When contemplating the forest, we may intuitively understand nature's logic of growth. Yet when we look at the seeds of destruction we have sown through current monetary policy, it is clear we are lost in the trees.
Mr. Spitznagel is the founder and chief investment officer of the hedge fund Universa Investments L.P., based in Santa Monica, Calif.
- 35726 reads
- Printer-friendly version
- Send to friend
- advertisements -


Eh? The Greeks defaulted, but just said it wasn't a default (like me making half of my mortgage payment and saying that it wasn't a default). The COMEX did default, as did the CME. The MF Global catastrophe has caused an acceleration of outflows from markets, to the point that they are no longer markets, merely scoreboards that are set by those attempting to manage expectations. The banking crisis never stopped, and the ECB didn't save anything. The Euro's decline is merely keeping pace with the dollar, there were plenty of bank runs, most recently in Latvia, and there was no growth in the US or the UK. China is a heartbeat away from a crisis so long as they keep importing our inflation.
You must have been watching CNBC rather than a real news station.
"COMEX did default, as did the CME"
And, did gold and silver spike? Let's see today's prices. Lavia was a hoax.
The most EXPECTED word in 2011. UNEXPECTED.
"unemployment Unexpectedly rose, as GDP Unexpectedly was revised downward...blah, blah, blah..."
I got to expect unexpected everytime some MSM talking head started to drone on.
And the only thing that has kept economies functioning at all- Central Bankers and Debt. I guess it can continue until it unexpectedly does not.
Negative Interest rates anyone ?
I think you're right. Just like Mr. Burns, we're indestructible.
http://www.youtube.com/watch?feature=endscreen&NR=1&v=zdp91U4USEw
Of course we are. The fact is: some or even many alarmists and doomers have a product to sell. Be honest: many had expected WW3 by now. Or at least a civil war and one of many possible collapses. But it appears that even Obama will be re-elected. Nothing changes. Boring world we live in.
Oh, don't worry! Very soon the world will become extremely NON-boring, especially if you live in the USSA or other large western gulag. Quite soon you will find yourself increasingly required to show your papers, justify the money in your wallet and/or bank account, be rounded up for random "loyalty checks" and "terrorism prevention checks", and so forth. Though the exact form your "non-boring life" will take is not known in every detail, you can be certain it is already happening, and will get increasingly obscene.
Obviously you're one of the self-loathing freaks who doesn't mind being molested by TSA thugs at the airport (and increasingly elsewhere), otherwise you wouldn't make comments like you do. Chances are, you WORK for the TSA or some other organization of government thugs.
“Central planning” doomed us ???
More nonsense.
Supposedly:
Government is bad. Private enterprise is good. If only government would not “interfere” and would let private enterprise be “free”, everything would be OK.
A fine creed to protect the interests of big business and the wealthy elite. “just leave them alone” and everything will be OK.
Once again, for the very slow:
We have not had private enterprise in this banana republic since 1913, and the events of 2008 onwards have only solidified us into crony capitalism. Government monopoly on force + intimate involvement with the current zombie banks does not equal free enterprise. This is simple fascism. Central planning by central banks (which are government supported and created) has doomed us all. There is no way to prevent the coming crack-up boom. If you can't understand this, you really haven't been paying attention to the article.
Yep, you hit the "broken fingernail" on the top :)
once again, for the even slower,
contrary to what you wrote, we have had "private enterprise" since 1913.
At its core, the private enterprise system of capitalism is based on one form or another of limited access, whether to markets, resources, or labor.
It is the ability to turn a good or service into cash flow. And this, in turn depends upon the power to exclude - the power to deny customers a valuable product , rivals from a market.
Without property “rights”, patents, licenses, captive markets, or captive labor, profits diminish. There is a built-in bias toward monopolization of resources and production, and labor arbitrage - and the symbioses with government, … all done to establish and protect privileged access.
“Capitalism is not about free competitive choices among people who are reasonably equal in their buying and selling of economic power, it is about concentrating capital, concentrating economic power in very few hands using that power to trash everyone who gets in their way.”
-David Korten
You need to watch your consciousness in action, and notice how blatantly you practice rationalization. Without government mandated FAKE "rights" like patents, licenses and the like, profits and wealth would... increase but disperse (not diminish). When everyone is able to apply the entirety of his observations of reality (including all existing products), and apply the entirety of his thought, understanding, creativity and productivity... products would advance much quicker, and profits would be constantly re-directed to producers in proportion to how many people decide their combination of features and price is most desirable. This supports a variety of players, competitors and niches, and enriches everyone.
You and others can argue about what "capitalism" is until you are all dead and burried. Whether you realize it or not, what most of us believe "capitalism" means is LIBERTY FOR EVERYONE to operate in an environment where theft and fraud are punished (forced compensation for actual damages plus cost of the "enforcement" process). What you fail to understand, apparently, is that a person with extraordinary economic power cannot harm anyone in any way outside of assault, theft or fraud - which would threaten to undo his entire game (lock him away forever and confiscate huge portions of his wealth). In such a system, the only way to become extremely wealthy is to be extremely productive... which is good for everyone. This is, of course, absolutely and completely incompatible with the fascist system of pay-for-government-favors that we have today. This only works when the entirety of government is defense of liberty, as it should be.
Only in your imagination is there a distinction between the "fake" property rights assigned by government, and the supposedly "real" property rights assigned by ... you.
Only in your imagination are your "real" property rights going to be protected without any "government mandates", and "theft and fraud"(as defined by who?) to be "punished".
Only in your imagination do supposedly "fake" property rights invoke privilege, and supposedly "real" property rights invoke none.
Only in your imagination is extreme wealth unconnected to power, abuse, and privilege, and corraling advantage.
kindly read my remarks further below.
#2008026 & #2009098
Huh? In the world of today, "extreme wealth" is almost directly connected to power, abuse and priviledge. Yes, it is possible for someone to invent a massively valuable new technology and actually earn "extreme wealth", but those cases are such extreme outliers today, they hardly even exist.
You ask questions like "theft and fraud as defined by whom". I guess the world is so screwed up today that some people, even some nominally bright people, can disagree about what constitutes "theft" or "fraud". To me, what constitutes "theft" and "fraud" is so clear that it is immediately obvious in 99.999% of cases, and only 0.001% of cases require extreme clarity and careful thought.
Your other posts make me think you are defeatist - like an animal that can escape the predators that attempt to prey upon it, but refuses to bother because "there will always be predators who prey upon us, so why bother". Well, why not kill those predators? The predators take actions against you, so why not take actions against them? Why lie down and say "governments will always be controlled by ravenous predators, so... we're screwed, and so... why bother"?
In the long run, assuming we can get our butts off this planet, the entire game of the predators will vanish like a fart in a category 5 cyclone. Once individuals and small groups of individuals can wander the solar system and live or die entirely by the consequences of their actions, the predators will starve to death (but keep their free reign on earth over people like you who remain behind and just give in to them).
In any case, your answers are just too defeatist. I mean, I agree that it is very annoying that 0.1% of the humans on this planet run absolute roughshod on the 50% or so who are productive (the other 49.9% being parasites for the most part). But annoying doesn't equal hopeless. So turn on your brain and figure out how best to destroy the destroyers.
If such policies would benefit the elite, then why don't the elite want them?
Why don't they support Ron Paul.
Examine your assumptions. At least one of them is wrong.
Ron Paul might be acceptable to them if he took the Constitution less seriously, was more corrupt, and was more pro-war and pro-police state. If he merely was for less government "interference" with the mythological "free market", he might be OK with them.
rwe2late
You forgot, sarc/
I've worked in the private sector and I work in government. Businesses do stupid stuff all the time but they have to provide enough excess wealth to stay in the black. Actually, today, normal businesses have an added burden of doing all the stupid crap that the government forces them to do. The government does stupid stuff all the time and does not have to worry about staying in the black. In fact, since the government never gets punished for wasting money, there is a natural encouragement for wasting money. The free market selects for productive work and the government selects for non-productive work. That is from first hand experience.
Private sector produces wealth by efficiency.
Government produces employment.
If you look back over the past few years, you will see that it was only government intervention that protected the interests of big business and the wealthy elite. Absent government intervention, bad actors would have been taken out and those who didn't fail (or who rose from the ashes of the failures) would have been driving recovery.
Is too big to fail a free market concept, or a central planning concept?
Big business and the elites will always use their wealth and power to capture control of government and use it to their further advantage.
The problem is the failure to recognize that’s the way it works. There is no capitalism, no market, no profits without government “assistance”, and the more the better (for concentrating “profits”). What small business sees as government “interference”, is for others the “protection” of their bigger profits and markets. Just whose lobbyists do you think write the laws?
No problem will be solved by vainly pursuing some imaginary threshold of “no government” and no “interference” in a mythological “free market”.
Those who rail simply against “gubmint” are succumbing to a fraudulent paradigm. They are missing the point how the TOTAL economy (public and private) is geared to impoverish nearly all of us.
Profit is a man-made concept. It is a limited concept. Profit does not and cannot measure by money the worth of every and all things and be the ultimate guide to human conduct. The concept nonetheless underpins the whole notion that the pursuit of micro self interests will result in the best of all possible worlds. And it is that mistaken notion which is often used to justify the worst of all outcomes, and pronounce that the solution to our miseries is to increase business profits.
Never mind the profits made by ruining forests, rivers, and oceans. Never mind the profits from destroying the fisheries and polluting the air. Never mind financial parasitism. Never mind sweatshops, child labor, and poisoned foods. Micro profit, it seems, does not measure the environmental losses to society, nor the debilitation and destruction of human beings. But yet, it is to be the ultimate arbiter of human conduct. Or so we are told.
A system based on maximizing work, maximizing production, maximizing consumption ultimately values neither leisure nor the quality of life, human or other.
The corporation is the apex profit-driven organization of a misnamed and mythological “free market” capitalism. It is autocratic and elitist, with a narrow single-minded goal, denigrating all that stands in its way.
Government, like corporations, has symbiotically evolved around the pursuit of profit. Government has become to be like corporations, autocratic, secretive, and obsessively entangled in the furthering of corporate profit-making, to the detriment of all else.
Hence the intention to diminish the scale of central banks/government and thus the scope and opportunity for crony-economics. The world is not perfect and the Framers tried to allow for that.
The model of "limited" government "interference" in business profit-making "worked" in the context of (slavery to start with), expansion, conquest, and wasteful exploitation of a virgin continent.
Calls to rejuvenate that economic model via old-fashioned "limited government" are foolish, and only serve to help propagate the myth that nothing is wrong with global corporations and concentrated wealth that less government won't cure.
The question for now is not only how to avoid the pitfalls of "big" government, but also how to avoid the destructive pitfalls of an economic system that produces big business, extremely concentrated wealth, and out-of-control wasteful and destructive profit-seeking activity.
Too big to fail should = Too big to exist.
Look at our housing market for a centrally planned failure.
New Home Sales Increase 1.6% (Slower Than Expected) – Central Banks Rates Doing Limbo Rock
http://confoundedinterest.wordpress.com/2011/12/23/new-home-sales-increa...
"Between The Fed and the Federal government throwing everything and the kitchen sink at the housing market, it is just creaking along slowly.
"With The Fed keeping short rates at near zero until 2014 and the chance for more Agency MBS purchases in the wings, how much lower can they push mortgage rates? Don’t ask."
But I ask your opinion, Snakeeyes, even if it's a throw of the dice. This is driving me and the economy to the edge of the cliff.
Ron Paul keeps walking out on fake journalists: first Sacha Baron Cohen in 2009, now Gloria Borger in 2011.
Fast forward to 1988 when a massive wildfire at Yellowstone National Park wiped out more than 30 times the acreage of any previously recorded fire."
This fire burned just under 794 thousand acres
The fire of 1910 burned just under three million acres.
Right.
So, we are therefore all too stupid to govern our own lives, we need some self appointed master to govern us. <sarcasm!>
Now, it is apparent that we need a self appointed master who will burn our asses up, because the last master didn't have enough sense to beat the ever loving shit out of us. <sarcasm!>
Dog eat dog and survival of the fittest is all fine and good....so long as you are the only one dogging others, so long as you are the only one breaking the laws, rules and social mores to attain your "sense" of survival of the fittest--your sense of entitlement due to your obvious genetic superiority. <sarcasm>
In a world where you get killed for stealing....you might not want to steal. Wait....stealing is just fine...getting caught, that is problematic? <sarcasm>
Query as to when the psychopathic and sociopathic "self appointed masters" will have the thought cross their minds that perhaps....just perhaps....they have evolved to be quite completely morally insane.
The predators-that-be and predator-class know quite clearly they are craven predators, and utterly unethical. They are self-consciously the same as other predators in the animal kingdom, they understand their place, and they love it.
On the other hand, the producers are mostly clueless. Most producers actually believe the clap-trap deceptions spred by the predators who always become their masters. This makes producers look like stupid, idiot fools in comparison, but part of that is the complexity of "real, honest, producer ethics" versus "predator ethics" (which is "get away with anything and everything you can"). The producers also suffer several disadvantages --- like "they're mostly busy focusing on reality and productive techniques" while predators spend all their time on manipulation, enslavement, theft and destruction against producers. Plus, destruction is inherently, metaphysically more potent than production.
But my main point is this. The predators know exactly what they are, and they fully embrace it.
Maybe there's another cycle we refuse to accept. That any organism with no natural predators will reproduce and multiply until 1) they consume all the sources of nutrients, or 2) they cannot survive in the waste they generated.
In some ways I don't think human beings are that much different than bacteria except we live on a much larger Petri dish.
That Sir, is a most beautiful Article thanx for posting it..;-)
"Let's see you try the water technique. The sky is high, the cloud is low. But my water technique... it's hard to think that the earth, can absorb water..."
in short, recessions are a part of life. Prevent them at your peril.
Except that recessions ARE the carefully prepared events. You can study panics recessions and depressions back as far as there is history. There is always monkey business, there is always modeling and patterning, there are always carefully crafted legal or administrative changes. Surely few actually believe that there has been something "accidental" about panics and depressions in US history.
The Egyptian 7 good years / 7 bad years is perhaps myth. But the original plan was drastically changed and those changes were made to require everyone to sell themselves into slavery.
It is more a study of psychopathic behavior than economics. Psychopaths attain power and position sufficient to allow them to really mess things up....and then they do just that. It is their nature.
Give credit where credit is due. The forest destruction part is from Diamond's "Collapse - How societies choose to fail or succeed".
Bernanke (as with Greenspan before him) is owned. You do not think that people who control billions and tens of billions in capital are wondering what Ben will be up to tomorrow, do you? Ben is a sock puppet.
The poor people (everyone who is not .01%) just dont have enough skin in the game. /sarc
Hmm, this is an interesting philosophical topic. It also is one, where *in theory* i disagree with both polarities and think that a synthesis could be most efficient (will explain that further down). Yet at the same time *practically*, i know of no approach that would work really efficient (neither the two polarities, nor my synthesis).
As for the theory: In theory most efficient would be to use coordinated design not to stop natural cycles and outcome, but just shape them a bit so that the DETAILS of how they unravel, are more fair and efficient. So, not an attempt to steer the grand scheme or make cycles work different - but instead just tweaking the details a bit. The reason why this in theory would be more efficient, is because large cycles care little about individual differences - they're fair and efficient on the macroscopic scale... but they are not neccessarily as fair and efficient as they could be, regarding individual aspects (in laymans terms, innocents can end up being punished for what other people did).
However, that is just theory. In practice, i can think of no way how the above could be implemented in a way, that isn't prone to abuse and misjudgement.
There are examples where you can intervene in late K systems, force small collapses, to return the system to an "early" K stage, where the best attributions may lie. The longer we preserve an inherently unsustainable system, the more intense and deep the collapse. That happens, it's anyone's game and the opportunists & exploiters hold the advantage.
True, but that too is theory (unless we're talking about designing one's own life), because:
Those holding the power to force "small collapses" could just as well use this in a selective way, to purge opposition, right?
In the end, as useful as such tools could be, they're tools.... what they used for, depends on intentions of those controlling such tools. And currently, everything that could be wrong with people in control of such tools, is wrong.
So, even though this stuff could be useful, currently it is all in the wrong hands, and until the intentions of those those people change, or those people are replaced, i'd rather give them as little tools as possible.
So, you are saying that an economy CAN be micro-managed. How's that working out for ya?
I'm saying that in theory there is nothing preventing the shaping of i.e. collapses, regarding demographics. I.e., regarding the banking shit, there is nothing preventing making banks and creditors suffer, while giving priority to retail account deposits (just one example).
It doesn't mean that one can with total accuracy shape cycles.... but (in theory) i see no problem with biasing collapses artificially, towards those most responsible for them.
How is it working out for me? Exactly as i predicted in my post: It IS done.... but for questionable intentions (in the case of banks, they have just recently intentionally tied their deficits, to retail accounts). Hence why i wrote, that as useful as such tools could be, they're prone to abuse.
Yes, the pristine forests...they cannot be touched or defiled by human hands.
Of course, everyone who made money off of the land was prevented from making money off of the land. Various reasons were given, mostly environmental, mostly bullshit. I suppose the enviros saw 2010 and they consider the whole world to be the planet we cannot land upon.
What they are really doing is zeroing out the value of the land. If there are no products allowed from the land, the land is essentially worthless, by definition. Then, the land in the public domain is nothing but a liability, naturally unemcumbered by any entanglements with the local economy.
Hence, when the government goes bankrupt, these lands will have to be given over to the new masters who appoint themselves to be our feudal rulers--perhaps they will use the word "privitization." Of course, at that time, all the reservations and restrictions against using the land will evaporate....as they are just illusory constructs to begin with, so that the full value of the land...the trees, the soil, the water the oil & gas and all the other mineral rights will be ripe for exploitation.
The same notions can be applied to cities and urban areas. Hell, let's just bring back sho nuf slavery and make it real good......but not the kind of slavery that weighs the master down with any responsibilities. We should all voluntarily go into slavery, as that is convenient. They waive the magic wand, postulate and manipulate something that looks like 7 good years and 7 bad years and we are supposed to be enthralled by the majestic intelligence of it all.
So, this economic war is to be a scorched earth deal--for our own good, of course!!
If you buy that shit, you are about stupid. You can bow down to the psychopaths if you wish.
Very well and very accurately said.
"cloud is low"
Start dowloading all your personal information to raise the cloud because; a paid security is better than your computer security.
A minor point to make - it was the National Park Service that followed the disastrous no-tolerance policy toward forest fires. The Forest Service had all along done controlled burns on undergrowth.
Yup, it hasn't worked well for Europe.
ECB And the $645 Billion LTRO – Opening The Floodgates Having Little Effect in Putting Out the EuroBond Firehttp://confoundedinterest.wordpress.com
Anybody intersted in the scientific articulation underlying this thinking, check out Resilience Thinking by D. Salt & B. Walker, or google "resilience science" and/or "adaptive cycle and resilience".
Also a great framework to personally design a way to live detached from all this shit.
It's too late to stop this cycle of destruction, even if Tea Party Republicans take the House and Senate and there is a Republican President - it may actually make things more difficult to reform.That means the system is broken, but that smart people should be stocking up and preparing for the bonanza after the crash.
The best way to survive this mess is to Go Galt, bullet proof your lifestyle and get out of tthe way of the crashing welfare state. http://www.futurnamics.com/goinggalt.php
Calling Mr. Banzai - how about Blackhawk Ben as Smokey the Bear?
Central Planning kills. Only sociopaths want that kind of power and, even if they were benign Angels, it is a mathematical certainty that they would make genocidal decisions despite their good intentions.
The Great Leap Forward was supposed to create steel for a Chinese industrial revolution by melting down their farm equipment. But 40 million starved, or were eaten, because the farmers could no longer grow food. And it was all for nothing because the farm tools were made of pig iron which was the wrong kind of metal for industrial use, an oversight by the central planners.
Never give up any soverignty, ever. If you give up your individual sovereignty to the central planners you are literally giving up the right to your own life.
I have a great deal of respect for Prof. Taleb, and especially honor his being one of the select few who, back in 2008, publicly stated that the banksters had taken over the White House (or the bankers had taken over the US gov't, whichever), but the framing is incorrect.
Central planning by Wall Street and the banksters hasn't worked, because it chiefly and primarily only benefits them and their scum.
Central planning within the context of an economic democracy might, and probably would, very well work!
You love self-contradiction, don't you? Sigh.
Central planning is incompatible with economic democracy, no matter how you define this vague term.
I remember well the Yellowstone fires of 1988! I was there! My family had a cabin just about 5 miles outside the park, and we worried all summer that the fires would jump the borders of the park and destroy our summer fishing cabin. We witnessed the devastation and the consequences of terrible decisions made by central planners!
This article presents a wonderful analogy to those fires and our current economy. May we all plan and prepared accordingly. Thank you for sharing such an insightful comparison!
And Merry Christmas to all!
So he's saying that we should let the economy burn to make room for the pricks?
"Ironically, the only way the system could have been saved would be by letting it fail in 2008. Now, we are sorry to say, it is too late."
2008 was too late. The correct date was 2001 after the tech bubble. That bubble was the warning shot that should have woken everyone up. All of the serious mistakes were made after that bubble popped. Looking back I am no more amazed or disgusted than I was when it unfolded.
We are now reaping the whirlwind.
excellent read,... i take it from your philosophical financial arborist 'pov' , your a pure naturalist - with a well-grounded sense of wealth?
When the value of what you own is controlled by others as it is denominated in dollars, the risk of mischief is very high. When people start playing god because they think they know better or for their own means, then the risk of mischief is very high. When the downside risk is removed from intensively aggressive and greedy speculators, the risk of mischief is very high.
Well, we have all three. This article should have been published in September, 2008. At that time the WSJ was boosting for Bennie bucks to bailout their buddies. Now they let someone print an article saying we should not have done this. Of course by now those with the means and knowledge of how to get out dodge have already done so, or are in position to pull it off in an hour or so.
Sorry Wall Street hedgie, too little too late.
sschu
Humans of the current brainfucked culture, love binary absolutisms. Unfortunatelly, they are almost never right nor true. And they with the precision of a clockwork love to totally ignore the point.
Too late?
Too late for WHAT exactly?
Was at the height of the tech-bubble it too late to prevent a.... umm, bubble? Well, of course fucking yes. That's why it's called a bubble. Was it too late to accept a correction in a sane way? No. Were the people in control even remotely willing to accept that? No!
In 2008, was it too late to prevent a.... umm, even bigger bubble? Well, uh duh! Was it too late to accept a correction and do it in a halfway reasonable way? Nope. Were the people in control even remotely willing to accept that? Hell no!
Now at the brink of 2012, is it too late to prevent a.... bigass bubble? >.> Is it too late to accept a correction and at least protect retail deposits? Nope. Are the people in power even remotely willing to accept that? HELL FUCKING NO!
There is no "too late".... there only is an ever rising price, and an ever rising risk of it happening out of control, because those in control, are ever less willing to accept the inevitable, because the price ever rises, because... (warning, i-loop detected!)
The important issue isn't "if it can be done", but what the price is, and what state of art is, regarding the accumulated price, accumulated force, accumulated corruption, and accumulated social discontent is. And currently, it appears "we're" shooting for the most boom for the most air.c
The financial system and western mindset? Biggest vacuum-colapser ever built.