Monthly Archives: July 2011

Dodd-Frank-Created Stats Office Comes Under Fire – Real Time Economics – WSJ

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.

’Black Swan’s’ Taleb to Advise IMF on Risk – Bloomberg

Shared by JohnH

Also! “Taleb will testify today before the U.S. Congress’s Committee on Financial Services about the establishment of the Office of Financial Research…

Nassim Taleb, author of “The Black
Swan,” will work with the International Monetary Fund on
drawing up measures to detect hidden risks in the financial
system for G-20 ministers and central bank governors.

Taleb will team up with the IMF’s Monetary and Capital
Markets department on a paper for the G-20 to develop ways to
apply his method for identifying tail risks, or the chances of
low probability, high-impact events, according to a letter from
Elie Canetti, an IMF adviser. He won’t be paid for his work and
he won’t speak on behalf of the IMF in public, Canetti said.


Shared by JohnH

HatTip to Dave Lull. From NNT’s notebook.

145 Intervention Bias


Intervention Bias


Medicine, Health

Overtreatment, bias
Steady feeding, thermal stability, etc.
Pharmaceutical addition, not  subtraction

Sicker (but longer-living)
humans, richer pharma, exposure to antibiotic resistant  bacteria


“No More Boom and Bust” (Greenspan (US), Labor (UK)), Great Moderation (Bernanke)
State interventionism

Deeper crises when they happen;
Support for established, state-friendly corporations;
stifling entrepreneurs


U.S. supporting rotten regimes “for the sake of stability”

Top-down state

Chaos after a revolution


Micromanaging forest fires

Worsening total risks


Positive advice (charlatans), focus on return not risk (what to avoid)

Richer charlatans, bankrupt businesses


Copy editors trying to change your text

Blander, more NYT style commoditized writing


The entire concept is grounded in intervention bias