Taleb sightings
I’ve been reading him for over a decade, but Nassim Taleb is probably the most re-discovered personality of the financial crisis (maybe along with Nouriel Roubini).
So its not suprising to see him pop up in the news cycle quite often these days. Two recent sightings are however particularly interesting given the state of our world.
First, at the New Yorker Summit, he made the provocative point that the interconnected-ness in the world today makes it less likely to tolerate leverage.
We have to be a lot more careful going forward, because we have globalization, the internet, and operational efficiency — which cannot accommodate debt.
Second, there is his recent paper that postulates that large financial institutions are more susceptible to ‘black swans’, the large but improbable risks. It uses a non-linear loss function to show that the risks of aggregation are usually hidden but often outweigh the classical economies of scale.