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Nassim Taleb Is Angry That Not Even John Gotti Got Paid As Much As JPM's Ina Drew
Until this point virtually every pundit and financial journalist and blogger has opined on JPM, its prop trading operation (as first exposed by Zero Hedge), and its massive loss which due to its pair trade nature has potentially unlimited upside, but likely will top out at $5 billion (as also first explained by Zero Hedge over a week ago and subsequently by the WSJ). The one person who has kept silent so far was the man whose entire philosophy predicted just this epic flare out, by revolving around the assumption that humans operate under the illusion that they understand rare events: they don't (for more details read his books The Black Swan and Fooled by Randomness which by now have been read by all traders in the world, but apparently not those formerly in charge of JPM's CIO unit). Courtesy of this BBC Newsnight interview, he breaks his silence and shares his opinion, which as one may expect are far from laudatory: "JPM has 10-15 times the risk of a regular hedge fund... They should not be using my to play in something that is way too dangerous and too complicated for them... What I want [for JPM] is the following - skin in the game. People when they make money should get the upside, should get the upside; and people should be harmed when they have the downside. Hedge funds have that."
Taleb also touches on something we have been arguing for since 2009, namely that if banks are to expect bail outs whenever they blow up, they should be treated as utilities, with full caps on comp, net income, and earnings. To wit: "Banks are utilities. I don't understand why we've been bailing out banks since 1983 - they are utilities. They are de facto civil servants."
Finally Taleb loses it by comparing Wall Street to the mafia: "I am not an idealist. I am someone who doesn't want to be paying the $14 million dollars for this lady Ina Drew, which is more than John Gotti the mafioso got." Well, neither does anyone else. But, sadly, even Nassim now realizes that it is the financial mafia who owns this country and calls all the shots.
Ironically, and we are surprised Taleb does not understand this, the only thing that can lead to change is if we have 1000 Ina Drews putting on mega fat tail trades they don't understand, all of which eventually blow up in the bank's prop trading faces, leading to the final Wall Street collapse. Only this time we have a feeling that if the Wall Street controlled Congress and Senate do bailout their financial lobby friends with another under the table $28 trillion rescue operation, the results will be far more bloody and lethal for everyone involved than back in 2008, when former Goldmanite Hank Paulson was waving his coopted three page term sheet in front of the sheep in Congress, simply to save the firm he used to run.
h/t @JuradoTequila
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If people like Ina Drew were forced to have skin in the game nobody would have ever traded that book. You think she wanted that job? What happened was Jamie and the board wanted that issue traded and tried to get people to do a credible job with a project that was doomed from inception. They werre the only large holder in the iddue for Gods sake. A totally illiquid market. No risk manager would ever do that if their salary depended on it unless their salary depended on doing it because of orders from on high. So if you are going to complain, as well you might, at least complain about the people who actiually made the error which would be Diamon and the BOD not the stop loss manager Ina Drew.
good points - the business model defines those paid to work within the constraints of the model.
it's relatively easy to point fingers at the employees, when it's the system that directs from the top.
Why does she keep calling him Nicholas? Will the name 'Nassim' offend the British?
And what was he about to say about Ron Paul when he got cut off?
On another appearence he supported Ron Paul and said he was the only politician who "got it".
"Ron Paul had the right idea." [CUT! CUT! IMMEDIATE CUT]
"People when they make money should get the upside, should get the upside; and people should be harmed when they have the downside. Hedge funds have that."
Well, not really - unsuccessful managers might lose their jobs, but they get to keep bonuses from previous years. Still a huge risk asymmetry - unless they're co-investing a large chunk of their personal wealth.
True. But I would rather see the rich steal from the rich than the 99.99%. Though, of course, it's more complicated than that.
Nassim, you need to update your book. Call it The Bleak Swans
the phoenix will arise out of the ashes.
crazy is sensible and sensible is crazy. that is what is being sold world wide, politically and economically. there will be no happy ending here. there is no sense in talking about what can be done because they won't be done. this is not hopelessness. this is reality.
You know what really sucks about that video??? Here you have a really smart guy trying to tell people about important stuff that affects the lives and fortunes and futures of billions of people, and girlfriend cuts him off to talk about a dead disco singer. ala:
President Roosevelt only has 5 minutes for you, Mr. Einstein, to talk about this science stuff and the Nazis, because he has a photo op with Shirley Temple which he has to attend.
Squeeky Fromm, Girl Reporter
are there no other outlets from which Mr. Taleb can offer his opinions up without the window dressing? can he himself not orchestrate this for his fans to view?
why one expects more from the medium as it is, strange. . . or perhaps it is all working as intended, and everyOne plays their role(s).
if tyler were carlosCasteneda, this is where donJuan would turn him into a black swan
maybe for the first time in the story, or maybe to fight some strange enemy of zH sorcery which has threatened our virtual dragon of truth-seeking
or something
everybody is so jealous of ina drew. i feel left out.
What a bitch.
The media whores are running scared, I can sense it.
Keep on stacking.
Forget about losing few billions, Big Ben will replenish their coffers, I want to know who is the winner on other side?
The collapse will not be allowed to take place until the top 1% own everything. The collapse that will then take place is that of nations and democracies only to be replaced by one world bank which will be a front for the top 1% as they rule over nations which will then be known as municipalities.
I absolutely hate that chick...she's such a shill...did anyone else catch it at the end of the interview? He starts to say only Ron Paul has the courage...and she cuts him off to tell us the important news that Donna Summers died...Jesus Fucking Christ.
Catherine Austin Fitts calls TPTB a mafia, saying it functions like a mafia all of the time. She is one of the very few going public about the "black budget" that this mafia uses.
http://www.youtube.com/watch?v=0vBpByXuECE
Alex Jones also does a good, thorough interview with her: http://www.youtube.com/watch?v=6nU7wGe2A6k&feature=related
There are people speaking out all of the time, but so few people really know about them or how to hear them that TPTB can just shut them out of the mm and ignore them.
TPTB do what they do (mostly drugs, orgies, and Luciferianism). For them, it's all one big, vile party. Drug Stabbing Time:
http://www.youtube.com/watch?v=AaL_z8cK68Q&feature=related
Lyrics:
http://www.sing365.com/music/Lyric.nsf/Drug-Stabbing-Time-lyrics-The-Cla...
The world isn't black and white but shades of grey.
just because you can pay the bills with fourteen million dollars
The whole notion that someone in a "risk management" or "hedging" area would get such sums is very laughable.
You can't fool anyone Dimon - they are PROP TRADERS and that's why you pay them so well when they do well (for 3 years out of 4 anyway, but we worry about the 4th only when it happens, right?).