Taleb has just appeared on BBC2 Newsnight. Some of the points he made are probably right but in talking about "not being able to learn from the past" he talks about past crises. Paradox.
In our terms a large transient corresponds to a rare event (John Waters and I were just talking about infinite impulse response, modelling and estimating models). VSM is better than Taleb alone would suggest- even though he is Mr Time Series Analysis in many respects.
"How do you analyse a system?" I once said to Stafford back in the seventies. "Perturb it" he said. So we have the transient perturbation, the slope and step response of management. We would quickly find out something was wrong because we were measuring it in real time. The current problem seems to stem from the fact that the exposed risks weren't known (and we're not talking about rare events here). Insuring depositors seems to be the right recovery strategy- as in so many professions removing perverse incentives seems to be the ultimate cure. That means more accountability- Taleb's remarks about Medicine (in the mp3) are particularly poignant there (doctors have few cures but plenty of remedies that can injure). I must say Taleb's remarks (on Newsnight) about mounting complexity seemed insufficient and the idea that buying a shirt (made in China) puts up the price of protein was obscure to me if not plain wild can anyone explain? Could this be one of Stafford's rubbish correlations? Mind you all events are at least weakly correlated.
One thing is for sure speculators agreements to trade exist and can be analysed. Some are sitting, silently, on piles of cash, some are shaking in their boots with no cash. Who are they? For all we know Al Qaeda just found a better way to destroy infidel civilization other than by bombing.
Too much apocalyptic talk when all we need to do is firmly reform world Terms of Trade with the aim of Justice for producers and consumers through greater accountability: what products actually are, their provenance and, possibly, end user certificates. Indeed real time reporting on the web of how producers perform was recommended by International Auditors two years ago http://cybsoc.org/#realt
There was a time when as serfs we had to go the landlords house to bake bread, use a blacksmith and even suckle his children. Do we need centralized banks anymore in real-time webworld? They seem to be standing in the way of Fair Trade.
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