TALEB’S BLACK SWAN WAS A BLACK SWAN
ITSELF, AND PROPHETIC, 3
MONTHS BEFORE
THE CRISIS.
Perhaps stockbrokers picked up his book and then
crapped themselves, thinking "it could happen any day",
like Chicken Little.
It's the equivalent of that butterfly in the Amazon that impudently
flapped its wings, causing a tsunami in London.
Now Taleb is big in big circles. Polticians. Bankers.
NOW PEOPLE WANT TO SUCK HIS ZEITGEIST,
THINKING IT
WILL MAKE THEM BETTER or
AT LEAST GIVE THEM STH to TALK ABOUT OVER CANAPES.
But, they won't take his advice. David Cameron talks to him.
In fact, Cameron has had Taleb as a guru since 2009.
Now papers and CNBC and assorted other lazy journalists
are choosing what of Taleb's to believe and publicise.
So, we get "Taleb thinks Europe should become more like
Switzerland". Ya, more guns and more aggressive banker
mafia stifling dissent. I'm beginning to think that Hitler should
have ransacked Switzerland and forgotten about France.
Anyway, two things: David Cameron, and then the oligarchy
David Cameron, as a well-"educated" Oxford grad knows
how to behave towards a guru. He figured out quickly how
to ingratiate himself to Taleb, so Taleb now "likes" Just Dave.
He's blowing smoke up your ass, Nassim.
He's using you for everything you can give him. And because
you want to be heard and followed, he gives you the
impression that he's following you. Of course, he isn't.
The banks? What about them? Dave's never gonna
squash the banks. Did you hear Osborne, yesterday?
anti-fragile.
their asses are fragile.
Poke them, or their
asses, and they fart.
NOW, as for the oligarchs, like the ones who invite Taleb
to speak, and he "kicks their asses and then gets paid,"
and yet they don't follow his ideas. Why?
Because of the black swan line of bull, Taleb's like
the lion that can bite your head off. To show that you're
brave, you rattle the lion's cage or make faces at it,
from a safe distance. No matter what Taleb says,
the banks keep going. So, actually they're mocking
Taleb. He's a trained circus lion with no fangs.
Secondly, and this is risky, they believe they've figured
out his logic, even if he didn't actually say it. Taleb says
that modernity is too complex, so black swans happen.
ok. What have central bankers been doing since 2008?
Every time they've found something that could cause
liquidity to stall, they've thrown money at it. Right?
Well, that's because they think they can check all
the variables, therefore, there will be no black swans.
I suppose they'll be proven wrong, but so far, they're
right. The parade is still going forward, on three wheels,
but forward.
It has required fascistic central planning, with dictats
from Washington. The Bernank and Geithner have
been orchestrating reverse-socialism and it appears
that nothing can stop them.
So, pre-2008, the only problem was that everybody
was too naive. Now they've got a stranglehold on the
economy. They decide who lives or dies.
That's they don't listen to Taleb. That, and the fact
that they all want their fat bonuses and bribes, so
they never , EeeeeVER considered choking the banks.
Here's the Observer article, with notes by me:
Checkit:
Observer
Nassim
Taleb: my rules for life
The
controversial thinker who predicted the 2008 financial crisis hates bankers,
academics and journalists. He's also a man of mystery – he eats like a caveman,
and goes to bed at 8pm. We took the risk of meeting him
Carole Cadwalladr
Saturday 24 November 2012
12.30 GMT
How
much does Nassim Taleb dislike journalists? Let me count the ways. "An
erudite is someone who displays less than he knows; a journalist or consultant
the opposite." "This business of journalism is about pure
entertainment, not the search for the truth." "Most so-called writers
keep writing and writing with the hope, some day, to find something to
say." He disliked them before, but after he predicted the financial crash
in his 2007 book, The Black Swan, a book that became a global bestseller, his
antipathy reached new heights. He has dozens and dozens of quotes on the
subject, and if that's too obtuse for us non-erudites, his online home page
puts it even plainer: "I beg journalists and members of the media to leave
me alone."
Antifragile: How to Live in a World We
Don't Understand
by Nassim Nicholas Taleb
He's
not wildly keen on appointments either. In his new book, Antifragile, he writes
that he never makes them because a date in the calendar "makes me feel
like a prisoner".
So
imagine, if you will, how keenly he must be looking forward to the prospect of a
pre-arranged appointment to meet me, a journalist. I approach our lunch
meeting, at the Polytechnic Institute of New York University where he's the
"distinguished professor of risk engineering", as one might approach
a sleeping bear: gingerly. And with a certain degree of fear. And yet there he
is, striding into the faculty lobby in a jacket and Steve Jobs turtleneck
("I want you to write down that I started wearing them before he did. I
want that to be known."), smiling and effusive.
...In
print, the hating and despising is there for all to see: he's forever having
spats and fights. When he's not slagging
off the Nobel prize for economics (a "fraud"), [Amen- Costick67] bankers ("I have a physical
allergy to them") and the academic
establishment (he has it in for something he calls the "Soviet-Harvard
illusion"), he's trading blows with Steven Pinker ("clueless")[Full marks- Costick67],
and a random reviewer on Amazon, who he took to his Twitter stream to berate.
And this is just in the last week.
And
yet here he is, chatting away, surprisingly friendly and approachable. When I
say as much as we walk to the restaurant, he asks, "What do you
mean?"
"In
your book, you're quite…" and I struggle to find the right word,
"grumpy".
He
shrugs. "When you write, you don't have the social constraints of having
people in front of you, so you talk about abstract matters."
.... and a plate of
"pasta without pasta" (though strictly speaking you could call it
"mixed vegetables and chicken"), and attacks the bread basket
"because it doesn't have any calories here in Brooklyn".
But
then, having read his latest book, I actually know an awful lot about his diet.
How he doesn't eat sugar, any fruits which "don't have a Greek or Hebrew
name" or any liquid which is less than 1,000 years [OF HISTORY. no, he's not stashing 1000-year-old wine- Costick67] old. Just
as I know that he doesn't like air-conditioning, soccer moms, sunscreen and
copy editors. That he believes the "non-natural" has to prove its
harmlessness[Monsanto. full marks- Costick67]. That America tranquillises its children with drugs and
pathologises sadness. That he values honour above all things, banging on about
it so much that at times he comes across as a medieval knight who's got lost
somewhere in the space-time continuum. And that several times a week he goes
and lifts weights in a basement gym with a bunch of doormen.
He
says that after the financial crisis he received "all manner of
threats" and at one time was advised to "stock up on
bodyguards". Instead, "I found it more appealing to look like
one". Now, he writes, when he's harassed by limo drivers in the arrival
hall at JFK, "I calmly tell them to fuck off."[LIMO DRIVERS HAVEN’T
BEEN IN A WAR- Costick67]
Taleb
started out as a trader, worked as a quantitative analyst and ran his own
investment firm, but the more he studied statistics, the more he became
convinced that the entire financial
system was a keg of dynamite that was ready to blow. In The Black Swan he
argued that modernity is too complex to
understand, and "Black Swan" events – hitherto unknown and
unpredicted shocks – will always occur.
What's
more, because of the complexity of the system, if one bank went down, they all
would. The book sold 3m copies. And months
later, of course, this was more or less exactly what happened [THE BOOK WAS
THE BLACK SWAN. ONE FISH WHO SWAM AGAINST THE CURRENT- Costick67]. Overnight, he went from
lone-voice-in-the-wilderness, spouting off-the-wall theories, to the great seer
of the modern age.[STRANGE HOW SAYING THE OBVIOUS TO THE OBLIVIOUS OCCASIONALLY
MAKES YOU FAMOUS- Costick67]
Antifragile,
the follow-up, is his most important work so far, he says. It takes the central
idea of The Black Swan and expands it to encompass almost every other aspect of
life, from the 19th century rise of the nation state to what to eat for
breakfast (fresh air, as a general rule).
As
you might suspect, it's a great, baggy, idiosyncratic doorstopper of a book.
Reading it, I spend the first 200 pages or so mildly confused. "I couldn't
figure out what genre it was," I tell him. "Forget the genre!"
he says. I'd been expecting a popular science-style read, a Freakonomics or a
Nudge. And then I realised it's actually a philosophical treatise [and everything in his knicker drawer- Costick67].
"Exactly!"
says Taleb. Once you get over the idea that you're reading some sort of popular
economics book and realise that it's basically Nassim Taleb's Rules for Life,
it's actually rather enjoyable. Highly eccentric, it's true, but very readable
and something like a chivalric code d'honneur for the 21st century. Modern life
is akin to a chronic stress injury, he says. And the way to combat it is to
embrace randomness in all its forms: live true to your principles, don't sell
your soul and watch out for the carbohydrates.
What's
more, for all the barmy passages involving an invented character called Fat
Tony engaging in a Socratic dialogue with another invented character called
Nero Tulip (a very thinly disguised Taleb), and the fact that at one point he
does actually seem to compare himself to Jesus – they're both prophets who came
from the east – he does talk a lot of what I can only describe as sense.
His
justification for all this is that "experience is devoid of the
cherry-picking that we find in studies". More than anything else, he
believes in having "skin in the game". When, for example, he warned
about the fragility of the banking system in The Black Swan, "I was
betting on its collapse". His point is that he's always put his money
where his mouth is, and it's this principle – and the lack of it – that is
still, he believes, the fundamental problem with the entire banking system.
In
the book he calls this "Hammurabi's
Code", a 3,800-year-old Babylonian law that stipulated that if a building
collapses and kills someone, the builder should be put to death. Whereas,
for bankers, "there
is no downside". The bonus system means that "they're paid
billions in compensation". And if their bets lose, it's the taxpayers who
pay.
He
cites, not unadmiringly, the tradition in Catalonia
where they would "behead bankers in front of their banks". So,
what's changed, I asked, since he wrote the book, and the system collapsed?
"Nothing.
Nothing has changed. Zero. Now
I switch to writing technical papers. There is some hope, the Bank of England
wants to implement antifragility.[THEY’RE PULLING HIS DICK- Costick67] Mervyn King
[the governor of the Bank of England] spoke about it at the LSE. And I've done
work for the IMF…"
But
nothing's changed?
"I
no longer care about the financial system. I gave them my roadmap. OK? Thanks,
bye. I've no idea what's going on. I'm disconnected. I'm totally disengaged.
People read 3m copies of The Black Swan. The bulk of them before the crisis.
And people love it. They agree with it. They
invite me to dinner. And they don't do anything about it.[THEY’RE JUST INTO
SUCKING THE ZEITGEIST, and they are listening, or so they think. They took his
idea that modernity is too complex and cannot be controlled. Now they’re trying
to control everything. That’s why they’ve become ever more fascistic. Ever more
central planning- Costick67]
"You
have to pull back and let the system destroy itself, and then come back. That's
Seneca's recommendation. He's the one who says that the sage should let the
republic destroy itself."
But
doesn't that frustrate you? [awesome question to ask a big ego. Oscar! & Pulitzer. Next thing you'll ask him if his farts change the trade winds- Costick67]
"It
did. Now it doesn't. But if you continue talking about it I will get frustrated
so let's switch."
He
means it too. There's a bit of an edge to the statement, so I ask him about
David Cameron instead and he immediately relaxes. "He's a great guy,"
he says. There's some sort of mutual appreciation which goes on between the
modern Conservative party and Taleb. He name-checks Steve Hilton (Cameron's
former head of strategy) and Rohan Silva (one of his special advisers) and says
they're "buddies".
"We
had lunch once and realised we were talking the same language and it went from
there. I never mention it in anything."
Well,
actually, I say, you mention it in the book.
Fraser
Nelson, the editor of the Spectator, says that Taleb "is probably the
closest thing Cameron has to a guru". Why does Taleb think that is?
"Because
they care about risk. Labour don't care." [THEY’RE LYING TO TALEB, &
SUCKING UP TO HIM- Costick67]
...The
"arguments" are that size, in Taleb's view, matters. Bigger means
more complex, means more prone to failure [ESP. SINCE EVEN BIG COMPANIES ARE HAVING TROUBLE GETTING A LOAN. GOTTA HAVE SOMEONE ON THE INSIDE- Costick67]. Or, as he puts it,
"fragile". It's what made – still makes – the banking system so
vulnerable, in his view. It needs to be more "antifragile". This
isn't the same as robust, he explains, which means it can simply take the
knocks. "Antifragile" is when something is actually strengthened by
the knocks.
He
gives all sorts of examples of this in the book. A clerk in a large company is
fragile as he has only one source of income. A taxi driver is antifragile. A banker is fragile. A prostitute is
antifragile. General Petraeus is fragile: a single indiscretion was enough to
destroy his career. Boris Johnson is antifragile: a whole string of scandals
has actually enhanced his reputation. "He's smart enough to present
himself as sort of 'This is how I am'," says Taleb. London, too, seems to
be antifragile. The global financial crisis was just another boost: a safe
haven for foreign real-estate cash.
In
Taleb's view, small is beautiful. Corporate
mergers never work. "It's not a good idea being large during difficult
times." And, when companies think otherwise, it's the "hubris
hypothesis". After reading this section of the book I flick to the
cover to check who printed it: Allen Lane, an imprint of Penguin. Which has
recently merged with Random House to create one big mega-publishing company.
"Your
publishers haven't actually read your book, have they?" I say. "If
they're smart enough they can keep the companies separate," he says, not
very convincingly. And anyway, there's really no evidence that they are smart
enough.
In
The Black Swan, one of Taleb's great examples of "non-linearity", or
Black Swan behaviour, was blockbusters. There's no predicting what will be the
next breakout success, or next year's 50 Shades of Grey, but when they take
off, they fly off the charts, as The Black Swan did. The book itself was a Black Swan phenomenon. As Taleb is fond of
pointing out – and as the small print beneath advertisements for mutual funds
states – past performance is no indicator of future growth. Penguin seemed to
have overlooked this point too since they paid him an astonishing $4m advance
for this book.
"They
made a lot of money from Black Swan so to them it's not too bad a risk,"
he says, but I feel it's more a guest's politeness towards their host than
anything else. Anyway, the money was not, he says, "a major part of my
income at the time". In 1987 he made a great deal of money shorting the
financial crash, and millions more during the 2008 meltdown. It's his
"fuck you" money that allows him to do exactly what he wants, when he
wants, beholden to no one.
... Taleb doesn't actually seem to be
one of them. Most people, however wealthy, like to be paid for doing their job.
But not Taleb. He doesn't actually take a salary from NYU. "Well, I keep
the minimum. I give back the rest. So if, tomorrow morning, they say 'fuck
you', I'm gone."
Then
again this may be because as well as hating journalists and bankers, he's
almost as damning about academics.
"But
you are one!" I point out.
"Not
really. I'm an independent scholar, practically speaking."
He's
also largely an autodidact. He has higher degrees but most of his working life
was spent outside academia, and much of his thinking is rooted not in
21st-century mathematics but the classics. He quotes them endlessly, hero-worships Seneca and refers to himself
as a "stoic".[THAT’S HOW Classically-trained CAMERON GRABS HIM BY THE NOSE- Costick67]
Not
everyone, it has to be said, is a fan of the high style. Jamie Whyte in
Standpoint magazine reflects the criticism of many when he accuses Taleb of
"inflating" the significance of his observations with "an
absurdly combative and grandiose writing style", and points out that
publishing a book of aphorisms, as Taleb did last year, is "usually
completed by someone else after one's death".
But
Taleb is not someone who lacks confidence. He was born and brought up in
Lebanon, his family rich and influential Greek Orthodox believers, a minority
religion even in a country of minority religions. His grandfather and
great-grandfather were deputy prime ministers, and his great-great-great-great
grandfather was the governor of Ottoman Mount Lebanon.
In
Antifragile he tells a story about his father, a doctor, a scholar and man with
"a large ego and immense dignity who commanded respect". At some
point during the civil war, he stopped at a checkpoint where a militiaman
treated him disrespectfully. "My father refused to comply and the gunman
shot him in the back."
It's
a pretty astonishing story, and when I ask Taleb about it, he says: "I
have very similar stories, too, but I chose not to tell them." What do you
mean? He prevaricates and then talks about "personal stories about taking
a stand but I don't want to wander into near-eastern politics".
....It's
too neat a formulation to ascribe Taleb's Lebanese upbringing and his
war-scarred teenage years as the source for his theories on randomness and
instability. Malcolm Gladwell profiled him in the New Yorker more than a decade
ago, and attributed his belief in Black Swans to having experienced them (not
just in the Lebanese war but also in a bout of non-smoking-related throat
cancer).
But
Taleb shakes his head. "That article was wrong about me," he says.
"That's why you think I'm gloomy."
...When
the financial journalist Michael Lewis profiled a collection of individuals
who, like Taleb, saw the crash coming and shorted the market, he described them
as "social misfits". It takes a certain sort of personality to stand
apart from the herd. And Taleb's cantankerousness, his propensity for picking
fights, and for taking stands does also seem to be the source of his greatest
triumphs. It was horrible, though, he says.
"Really
horrible. Between 2004 and
2008 were the worst years of my life. Everybody thought I was an idiot.
And I knew that. But at the same time I
couldn't change my mind to fit in. So you have this dilemma: my behaviour
isn't impacted by what people think of me, but I have the pain of it.
"People
made fun of me. I don't know if you can still find it on the web but you would
not believe how much crap was written about me. The finance industry hates me
with a passion."
You
must have felt incredibly vindicated?
"Vindication doesn't pay back. Nobody likes
you because you were right. This is why I'm glad I made the shekels."
Anyway,
Taleb is a fighter. And like the Roman generals, he believes in going into
battle, leading from the front. It's why he thinks Tony Blair is a coward and a
knave: "He's a very dishonourable fellow [historically-important corruption- Costick67]. Gordon Brown is an idiot [Goal!- Costick67]. But
Blair was dishonourable." He believes that people should be banned from making money from having been in public
office. And he especially despises journalists who made the case for war on
Iraq, like the New York Times's Thomas Friedman, "a serial criminal"
who he says makes him feel physically sick.
It's
back to his "skin in the game" beliefs. If you're going to make the
case for war, you need to have at least
one direct descendant who stands to lose his life from the decision[NOT THE
PARADE OF ROYALS IN GRAND OCCUPATIONS. WILLY HAS HANDLERS BOTH WITH AND BACK
HOME. MORE STRATEGY FOR HIS PLACEMENT THAN MOST OF THE WARS HE FINDS HIMSELF
IN. NOTE THE SHOCK WHEN A BOMB WAS THROWN OVER THE WALL AT THE CAMP IN
AFGHANISTAN, SOME DOZENS OF METRES FROM HARRY- Costick67]. And while some may wonder why
they need a lecture on ethics from an ex-city trader, it's hard to argue with.
Though it's easy enough to argue about more or less anything else. He won't
confirm or deny the existence of a Mrs Taleb. And he has a son and daughter
"who are exactly like me" – but that's all he'll say about them.
"I'm a private intellectual, not a public one."
But
you write about parenting at one point, I say. And you've written a book about
how to live.
"Exactly.
Here's how to live: keep your public life separate from your private
life."
He
makes me order tiramisu and then eats half of it, but then no food has passed
his lips for about 17 hours, he says.
Incorporating randomness into his life has led him to adopt the style of eating
known as "paleo". Roughly speaking, this means that if a caveman
wouldn't have eaten it, then you don't. Except tiramisu. And intermittent
fasting is recommended as a way of mimicking the effects of, say, failing to
catch a sabre-toothed tiger.
...But
isn't it hypocritical to be so anti-artsy fartsy when you are artsy fartsy?
"I'm
not. I'm mathematical not artsy."
"But
you go on about your private library. You say you spend at least 30 hours a
week reading. You love the classics."
"Yes,
but it doesn't mean I'm artsy. I don't hang around with artsy people. I have
zero literary friends."
I
wouldn't want to get into a Twitter catfight with Nassim Taleb. Or be a banker
in the audience when he gives one of his talks. "They pay me tens of
thousands of dollars to come and rip them apart."[THAT’S BANKERS’ FEAR
THERAPY. LION’S MOUTH, IF GOVERNMENTS LISTENED TO TALEB. BANKERS REALISE IT’S
JUST WORDS AND THEY’RE STILL STANDING.-Costick67]
