Friday, March 15, 2013

Nassim Taleb quote

“A main source of the economic crisis that started in 2007 lies in the iatrogenics of the attempt by Überfragilista Alan Greenspan—certainly the top economic iatrogenist of all time—to iron out the “boom-bust cycle” which caused risks to go hide under the carpet and accumulate there until they blew up the economy. The most depressing part of the Greenspan story is that the fellow was a libertarian and seemingly convinced of the idea of leaving systems to their own devices; people can fool themselves endlessly…..These attempts to eliminate the business cycle lead to the mother of all fragilities. Just as a little bit of fire here and there gets rid of the flammable material in a forest, a little bit of harm here and there in an economy weeds out the vulnerable firms early enough to allow them to “fail early” (so they can start again) and minimize the long-term damage to the system…An ethical problem arises when someone is put in charge. Greenspan’s actions were harmful, but even if he knew that, it would have taken a bit of heroic courage to justify inaction in a democracy where the incentive is to always promise a better outcome than the other guy, regardless of the actual, delayed cost.” –Nassim Taleb, Antifragile