Tuesday, October 18, 2011
Nassim Taleb on Wall Street Protest, Banking
Nassim Taleb, author of "The Black Swan" and a New York University professor, discusses the "Occupy Wall Street" protest and his view of the global banking system, including how to apply the principles of "Hammurabi's Code" to the banking system. I think applying "Hammurabi's Code" first to the politicians would result in a more satisfying outcome across the entire economic spectrum of activities.
As Allan H. Meltzer said: "Capitalism without failure is like religion without sin. Bankruptcies and losses concentrate the mind on prudent behavior."
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Nobody "...bails out hedge funds" ? C'mon Taleb, I'm sure you've heard of Long Term Capital Management. The whole moral hazard issue could have been stopped right there. The sad fact is ..."too big to fail" has been applied in a lot of places.
ReplyDeleteYou are right on LTCM. Too big to fail is now an expectation built into the system. It's the exception, rather than the rule, when we actually let one of the big institutions suffer the consequences of their poor choices or excessive risk taking.
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