Skip to main content

Taleb and (guru) Mandelbrot together on Credit Crunch

THIS ACTUALLY TOOK PLACE AT PBS STUDIOS some five months ago when the $700bn bail-out package aka Troubled Asset Relief Program (TARP) was announced at the U.S. Senate. Nassim Taleb features here with his Guru Benoit Mandelbrot in this joint interview by Paul Solomon titled 'Experts Examine Future of Credit Crunch'.

For anyone new to Mandelbrot and Taleb or the subjects of Chaos theory and randomness that they deal with, this shall provide a good introduction (and a starting point to what could become a very interesting journey. I have been meaning to post these for a few months now. Finally, the cat is out of the draft.).

Below are two excerpts from the talk, followed by the direct PBS podcast:
The increased concentration among banks seems to have the effect of making financial crises less likely. But when they happen, they are more global in scale and hit us very hard. True, we now have fewer failures, but, when they occur, I shiver at the thought. -- Nassim Taleb in his book The Black Swan

Mandelbrot, after talking about the Butterfly-effect, elaborates that:
[The Butterfly-effect creates turbulences] The word "turbulence" is one which actually is common to physics and to social scientists, to economics. Everything which involves turbulence is enormously more complicated --not just a little bit more complicated, not just one year more schooling-- just enormously more complicated. [...] That is not well-understood. In fact, that is misunderstood for which tools have been developed which assume that changes are always very small. If one of them comes, nothing bad happens. If several of them come together, very bad things have happened...
And, so it goes.


  • See also:
  • Go here for the podcast download, and here for the full transcript of the interview.
  • Go here for the video of the show. I didn't embed it directly for I found it rather ominous for an introduction to show Taleb laughing over a grim topic.

Comments

  1. Okay.. Back to normal and *functional* comment system of Blogger.

    ReplyDelete

Post a Comment

Popular posts from this blog

Change, Catch Words of Consulting II

Continuing from the previous post , following are a few more Catch Words of Consulting: Q x A = E : Q uality of Solution x A cceptance = E ffectiveness of Change. Q is good most of the time. The Key differentiator is Acceptance and Adaptability for a successful Change management. Passive Resistance: is nodding the head, but not actually going to participate in change; civil disobedience of a personal kind; dragging the feet with a smile. Planning vs Plans: D. Eisenhower once said, "In preparing for battle I have always found that plans are useless, but planning is indispensable." Planing is so important that PMBOK devotes the largest of its five process groups entirely on planning. See also: Related post: Change, and Catch Words of Consulting I

Clay Christensen: How Will You Measure Your Life?

A tribute to Clayton Christensen, the Harvard professor who  introduced "disruption" in his 1997 book  The Innovator's Dilemma , which, in turn, led  The Economist  to term him "the most influential management thinker of his time."  Even more influential  for some would be his 2012 co-authored book How Will You Measure Your Life? . [try here ]. Christensen  passed away in Boston on Jan 23, 2020.

The Pygmalion vs. The Golem Effect

There are two kinds of self-fulfilling prophecies. They are broadly defined by wiki as follows: The Pygmalion effect , or Rosenthal effect, is the phenomenon in which the greater the expectation placed upon people, the better they perform. On the other hand is the Golem effect , in which low expectations lead to a decrease in performance. In ancient Greek mythology, Pygmalion fell in love with one of his sculptures, which then came to life. The theme was in the main stray of many English literary works during the victorian era. One of which is George Bernard Shaw's play titled "Pygmalion" from which Rosenthal effect gets its name. In Shaw's play, the protagonist, a professor of phonetics Henry Higgins makes a bet that he can train a bedraggled Cockney flower girl, Eliza Doolittle, to pass for a duchess at an ambassador's garden party by teaching her to assume a veneer of gentility, the most important element of which, he believes, is impeccable speech. (The pl