Friday, March 26, 2010
Greenspan: The Financial Crisis Was Caused By A 'Once-In-A-Century' Event • Taleb: Any Pilot Who Doesn't Know About Storms Shouldn't Be In the Cockpit
Greenspan's big defense is that the financial crisis was caused by a "once-in-a-century" event.
Forget about the fact that the "once-in-a-century event" couldn't have happened if Greenspan's Fed hadn't:
- Turned its cheek and allowed massive fraud
- Acted as cheerleader in chief for unregulated use of derivatives at least as far back as 1999 (see this and this)
- And for subprime loans
- Allowed the giant banks to grow into mega-banks. For example, Citigroup's former chief executive says that when Citigroup was formed in 1998 out of the merger of banking and insurance giants, Greenspan told him, “I have nothing against size. It doesn’t bother me at all”
- Argued that economists had conquered the business cycle, and that modern, technologically advanced financial markets are best left to police themselves
- Preached that a new bubble be blown every time the last one bursts
- Kept interest rates too low
- And did alot of other hinky things
More importantly, as Nassim Taleb repeatedly points out, financial experts who don't plan for rare events are like pilots who don't know about storms.
There are storms out there, Taleb says, and any pilot who doesn't know how to deal with storms shouldn't be flying. Similarly, no one should be in a position of financial leadership if they don't know about - and plan for - the infrequent event:
4 comments:
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Not to split hairs, but I think your argument s more correct than Taleb: cause produces effect. These market phenomenon are chaotic but deterministic, not statistically random.
ReplyDeletedebt saturation. the point at which no
ReplyDeletemore debt can be "profitably" dissolved into
a domain, as was implied. it appears to be that
simple. as has been said it is built into the
system at its inception and for a reason. (bad one,
control of men in debt.)
the high priest functions to conceal the reason
with incantation in reasons place and now would like
to retire with his "good" reputation. debt /guilt,
profit (ph) / salvation-forgiveness. nutralization.
.
globalization is partly exporting the physical and human limits of the solubility of debt by increasing a domain. a prehistoric reality or perhaps an earthly principle expressing a universal one. but not
of humanity or the heart and intellect, of the ego
desperately and mistakenly externalizing his search
for his bride / soul.
.
Greenspan: The Financial Crisis Was Caused By A 'Once-In-A-Century' Event
.
( we know the event, does he? terminal debt)
extreme debt or wealth, both corrosive ph's
event=debt saturation. or , it is like a wet t shirt contest. the winners and losers can only be identified when all the shirts have been saturated.
the water is turned off and the poor things are nearly naked, but beautiful.
. ...
phase transition is "rare"?, the end of a phase,
then you enter a new phase with different qualities
evident. but a. greenspan does not see the result of
a few cups of water added or unleashing the keys to the faucet to the hose men, and claims innocence.
.
debt saturation ends the power of debt to control
the behavior of man. some call it freedom some call
it chaos, some call it a phase transition or window of opportunity. or war. or revolution.
.
but not all debts are equal or "legitimate", whatever that might mean today? here the narrative war. and war. he is arguing on behalf of his legacy,
poorly. the power of incantation mumbo jumbo and easy credit does not work so well in a debt saturated
environment. or once you're all wet you can't get noticably wetter. dangerous the wet become when
in control of the water supply, wasting water.
Is there another system? Of course, it's all there (in an historical sense) on an open market buffet of actually how to do it without the crippling capitalist syphoning-off of free money (interest charged on money created out of thin air) - see 'almost nine million foreclosures' :
ReplyDeleteSovereign money, à la Colonial Scrip, Guernsey Pounds, the Greenback Dollar, the Reichsmark, the Silver Certificate, the current Brixton Pound, California's IOUs ...?
Google the North Dakota banking system and follow the links to see how many gubernatorial state hopefuls are jumping onto this bandwagon ...
See also Ellen Brown, front runner in the global currency reform movement ...
http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY
ReplyDelete.
consider link and what light this sheds on
the meaning of "bailouts". more to come?
naked transfers, treasury heist.