
Deep Read: Nassim Taleb (The Black Swan Guy) : Planet Money - joelhaus
http://www.npr.org/blogs/money/2010/08/18/129276793/deep-read-nassim-taleb-the-black-swan-guy
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timr
After listening to this, I'm more convinced than ever that Nassim Taleb is the
most overrated phenomenon in business/economic literature. His books are vague
and trite, and while his arguments touch on currently popular memes (i.e.
"debt is bad, because it exposes you to downside risk"), his thoughts go no
deeper than the level of analysis you can glean by watching five minutes of
CNBC.

It was still interesting to hear this interview, because it's clear that when
he's pressed by a moderately intelligent interviewer, Taleb has nothing to
fall back on other than repetition of sound bites. By the end of the
interview, his logic degenerates into the repeated invocation of a weak
metaphor comparing US spending with the Madoff ponzi scheme.

Hopefully this guy's five minutes will be up soon.

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idoh
His style tends to be hyperbolic but he does have interesting things to say.
For example how he can't predict the (financial) future with respect to what
will happen or when, but he can predict to whom it will happen to.

He makes some reasonable points on debt and leverage. He didn't seem vague to
me - reduce debt, prefer equity over debt, build robustness by spare parts or
by functional redundancy. That all seems pretty reasonable, specific and not
really a view that's advocated by the main stream financial press.

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timr
His comments may be reasonable (for some value of the word), but you and I
have very different definitions of "specific". I can reduce the entire talk to
a one sentence summary ("debt is risky; redundancy is less risky."), with
little loss of information.

More importantly, nearly everything the man says about debt or deficit
spending revolves around a cartoon charicature of statistical reasoning, and
boils down to the thesis that debt is always riskier than surplus, because the
downside is larger. That's fine, but it's basically just folk wisdom. Even the
notion of the "black swan" is just a goofy way of saying what every third-rate
insurance agent knows: given a long enough outlook, improbable events are
_guaranteed_ to occur. But the important question (the _relevant_ question)
is: do you actually care? That's a far more interesting discussion (one that
plays a prominent role in everything from insurance contracts to option
pricing), but one that eats away at the simplistic appeal of his thesis.

His remarks about "spare parts" and "functional redundancy" are so vague as to
be meaningless...sometimes, "spare parts" means cash surplus, but other times,
they mean having more than one marketable skill. Maybe he means both. When you
speak in glittering generalities like Taleb does, it's easy for other people
to project their thoughts on to your words. I suspect that's what makes him so
popular.

