I agree with you - there is really no need to be talking about black swan events, it's simple math. Over the last few years people (especially in the US) have been borrowing like crazy based on the value of their homes. These were inflated because of banks being willing to loan to people that really couldn't afford it, thus driving up the price. A simple but vicious circle that ends the day someone yells "the emperor has no clothes on". And that time is now.
If you look through all the bank-yadayada and think for yourself it's both very simple and inevitable. And the only thing that will fix it is bringing prices and spending back to their natural level, which is well below what it is today.
Re:Taleb - the new sage of Wall Street |
by calambrac on Tuesday October 07, 2008 @06:50AM
(#325615)
I think you misunderstand what a "black swan" event is. It isn't necessarily an amazingly rare or complicated thing; actually, kind of the opposite. It's an event that is thought to be rare based only on the flawed reasoning that it hasn't been seen yet - the danger of a black swan comes from people betting so heavily on that perceived rarity.
No, this scenario has been seen often before and should be well understood by anyone who knows their history. Or have any common sense.
Taleb's book deals (among other subjects) with the reasons why, in the real world, nearly all of us - regardless of common sense and knowledge of history - continue to be surprised with such events.
Re:Taleb - the new sage of Wall Street |
by calambrac on Tuesday October 07, 2008 @01:34PM
(#325854)
A complete lockup of the global financial system has been seen often before? Come on.
As for whether or not the scenario should be well understood by anyone who has common sense: yes, that's the point. People were blinded by their faulty statistical models, and stopped acting in a sensible way.
Re:Taleb - the new sage of Wall Street |
by antiismist on Monday October 06, 2008 @02:06PM
(#325148)
Well, it all seems so simple and inevitable now, but we have the benefit of hindsight. A year ago trillion dollar losses, nearly trillion dollar bailouts, and general financial collapse was not so obvious.
How about 8 years ago?
http://www.city-journal.org/html/10_1_the_trillion_dollar.ht...
Re:Taleb - the new sage of Wall Street |
by furiouslol on Tuesday October 07, 2008 @05:06AM
(#325569)
You are spot on. All these manifestations are the by-products of deleveraging
It's happening everywhere. Housing, equity, bond, commodities etc.
The term "There's always a bull market somewhere" is no longer relevant at this period of time.
Re:Taleb - the new sage of Wall Street |
by helveticaman on Tuesday October 07, 2008 @10:22AM
(#325703)
Of note is that in Japan, houses fell by 90%, and office space fell by 99%.
Re:Taleb - the new sage of Wall Street |
by albertcardona on Monday October 06, 2008 @02:45PM
(#325182)
Everybody knew that 'debt unwinding" was coming. What nobody could predict, and everybody was betting against, was when.
DEBT UNWINDING
the world has flooded itself in debt, far more than any economic expansion or confidence can handle. there is always an inflection point where confidence in debt unravels. this is why even the govt can't stop the debt unwinding.
until a significant de-leveraging takes hold, all markets will stay in the toilet
for de-leveraging to take place, assets need to be repriced
we are now in a period i will call
THE GREAT REPRICING
all assets will be repriced. you see stocks reprice quickly now because they are the most liquid asset. bonds are next. houses will continue to fall. in the end, houses will fall by a minimum of 50%. i say this as a homeOWNER, i have already made peace with the fact that my home (in desirable bay area) will fall by 50%. in some places they have already fallen 50%
this is the exact experience of the japanese in the 90s. even 0% interest rates could not induce more consumption and debt. it took them TEN YEARS to work it off