Shared by JohnH

HatTip to Dave Lull.

Mr. Taleb’s critique of the OFR, on the other hand, is directed at the whole concept of creating a body to try to measure risk in the financial system. Mr. Taleb gained fame for his book “The Black Swan,” which suggested consequential, and unpredictable, events in financial markets are more likely than most investors believe.

In his testimony, Mr. Taleb said that “[f]inancial risks, particularly those known as Black Swan events cannot be measured in any possible quantitative and predictive manner; they can only be dealt with [in] nonpredictive ways.” He argued that trying to do what the OFR is designed to do could actually increase risks, in part by increasing “overconfidence” in the information’s ability to predict the next crisis.