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Benno Hansen

ANALYSIS-Can we predict next world crisis? | Reuters - 0 views

www.reuters.com/...idUSSP189848

risk disaster catastrophes

shared by Benno Hansen on 20 Sep 09 - Cached
  • To be able to forecast what the next global shock will be, we need to be able to make predictions about geopolitics, war, terrorism, extreme weather events, earthquakes and pandemics.
  • A growing body of theory and evidence suggests that making accurate forecasts about rare catastrophic events is inherently impossible. But it also suggests a practical solution to mitigate the dangers -- detailed scenario-planning by imaginative analysts who do not cling too tightly to mathematical models of reality.
  • Systematic forecasting requires a model that approximates reality. But is this feasible? Many models assume simple linear relationships between variables, but there are plenty of reasons to believe that in the real world, variables often react in a complex, volatile and non-linear way, particularly where extreme events are concerned.
  • ...2 more annotations...
  • Economists and political scientists have long worked on the assumption that people largely behave in a rational way that can be modelled and predicted. That assumption has been left in tatters by the global meltdown of the last couple of years.
  • Many analysts say scenario planning and risk mapping provides at least a partial solution.
Benno Hansen

Blame Nobel for crisis, says author of Black Swan | Reuters - 0 views

www.reuters.com/...idUSTRE68R2SK20100928

Nassim Nicholas Taleb economy economics risk management nobel

shared by Benno Hansen on 03 Oct 10 - No Cached
  • "I want to remove the harm from these economic models. And the Nobel is not helping. They should be held partly responsible, if not largely responsible, for the crisis,
  • a list of Nobel prize winners who make his blood boil. They include: Harry Markowitz, William Sharpe, Robert Merton, Myron Scholes, Robert Engle, Franco Modigliani and Merton Miller
  • Forecasting methods, which he discusses in detail in his book, create a false sense of security or, worse, send people in the wrong direction. Universities then compound the problem by teaching these Nobel-approved ideas as orthodoxy.
Benno Hansen

The 15 most persuasive explanations for the economic crisis. - By Jacob Weisberg - Slat... - 0 views

www.slate.com/...all

economy finance economics risk management

shared by Benno Hansen on 18 Jan 10 - Cached
  • Liberal analysts, by contrast, are more likely to focus on the way Greenspan's aversion to regulation transformed pell-mell innovation in financial products and excessive bank leverage into lethal phenomena.
  • Paul Krugman, who noted in one interview: "Regulation didn't keep up with the system."
  • excessive reliance on mathematical models like the VAR and the dread Gaussian copula function, which led to the underpricing of unpredictable forms of risk
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  • "Financial innovation + inadequate regulation = recipe for disaster is also the favored explanation of Greenspan's successor, Ben Bernanke
  • fallacies of free-market fundamentalists
  • after the West won the Cold War, capitalism could go naked
  • globalization spread the toxicity from one country's mortgage market to the rest of the world
  • the free market itself is to blame for the recent troubles
  • most libertarians and Wall Street Journal editorial page contributors continue to insist that government caused the whole ordeal
  • the economy fell prey to recurring delusions about risk and bubbles
  • Conservative economists—ever worried about inflation—tend to fault Greenspan for keeping interest rates too low between 2003 and 2005 as the real estate and credit bubbles inflated.
Benno Hansen

Author's Climate Remark Ruffles Feathers - Green Inc. Blog - NYTimes.com - 1 views

greeninc.blogs.nytimes.com/...limate-remark-ruffles-feathers

Nassim Nicholas Taleb climate change

shared by Benno Hansen on 23 Aug 09 - Cached
  • “I’m a hyper-conservative ecologically,” Mr. Taleb said. “I don’t want to mess with Mother Nature. I don’t believe that carbon thing is necessarily anthropogenic.”
  • By the “not necessarily” I meant that I don’t need expert models and proof that we are harming it to STOP POLLUTING the planet. This is part of my idea that one does not need rationalization to the edict: DO NOT DISTURB A COMPLEX SYSTEM, since we do not know the consequences of our actions owing to complicated causal webs.
  • I also said “leave the planet the way we got it”. So my “super Green” position or hyperecologist was somehow lost in translation: they probably thought “conservative” meant loves to pollute or something like that. “Perhaps the worst of this story,” Mr. Taleb added, “is the fan mail I’ve been getting from right-wing anti-environmentalists.”
Benno Hansen

Economics: What went wrong with economics | The Economist - 0 views

www.economist.com/...displayStory.cfm

shared by Benno Hansen on 17 Jul 09 - Cached
  • In the public mind an arrogant profession has been humbled.
  • Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.”
  • Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.”
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  • macroeconomics and financial economics—are now, rightly, being severely re-examined
  • No economic theory suggests you should value mortgage derivatives on the basis that house prices would always rise.
  • Macroeconomists also had a blindspot: their standard models assumed that capital markets work perfectly.
  • everybody needs to work harder on understanding asset bubbles and what happens when they burst
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