In his latest iteration of "nobody knows nothing so let's ban everything," Taleb with one fell swoop wants to do away with the leveraged buyout, margin accounts and, with only a little interpretation, the market in general.
LBOs are "too close to Madoff" because "you rely on new investors to pay off the other ones," Taleb said. "The stock market has some mild Ponzi characteristics. We have to make sure that innocent people are not harmed by this Ponzi-attribute."
It seems pretty clear that the likes of Bloomberg are forever doomed to quote every snippet of Taleb's random musings no matter how intoxicant laden they may be, so we're almost tempted to give Taleb a pass on this one. Almost.
We're not sure if Taleb here means that the actual buyout is where "new investors" are paying off old investors (in which case he should object to all buyouts of whatever financial structure) or if he has some obscure "Ponziesque" connection to debt-financed buyouts in particular. Either way, we think the case is clear: Taleb's 15 minutes have been over for about six weeks.
Everyone is an idiot. We get it. Let's move on.
The fact that you've been saying for years that the big one was coming doesn't mean you predicted the big one there, big NNT. You predicted none of this other than, Nostradamus like, vaguely pointing out that crashes happen and one might "any day now" surprise us. We are not impressed. Your books make nice airplane reading on a long boring trip but once we get past "over-optimization" in network theory and "Gaussian distributions are limited," (which we got in the first month of stats class, thanks) their utility dropped to "looks smart with a little dust on it while sitting in my bookshelf" levels. At least your fellow Dr. Doom has the good grace to chase young women and throw parties for our amusement. What do you do anymore?
And as for "We're all Ponzi now," or "We're all Madoff now," we get that meme too. Even we decided to drop it months ago. Again, let's move on.
We're going to just say it: Taleb is Madoff-like. He's everywhere, his every move is reported on and he annoys everyone. Can someone just keep him away from mics and cameras for awhile? 'kthanksbye.
Taleb Calls Private Equity, Stock Market Ponzi-Like [Bloomberg]
Posted by american bandersnatch , Apr 15, 2009 12:03PM
His Black Swan book was the most self-congratulatory, narcissisitic thing I read that year. He must be happy he found true love.
Posted by guest , Apr 15, 2009 12:08PM
he is "levantine" not lebanese.
gimme me a fcking break!
-I am a US American
Posted by guest , Apr 15, 2009 12:09PM
Amen brother!
Posted by guest , Apr 15, 2009 12:12PM
"LBOs are "too close to Madoff" because "you rely on new investors to pay off the other ones,"
is he asserting that every investment outside of the public markets be illiquid? i don't understand this rationale.
Posted by guest , Apr 15, 2009 12:13PM
a bit unrelated: why is the market going up?
Posted by guest , Apr 15, 2009 12:14PM
"LBOs are "too close to Madoff" because "you rely on new investors to pay off the other ones,"
is he asserting that every investment outside of the public markets be illiquid? i don't understand this rationale.
Posted by guest , Apr 15, 2009 12:16PM
Aw, look how defensive EP gets when Taleb has the temerity to attack private equity. He'll be the first to acknowledge he didn't predict what has happened. First of all, this wasn't a black swan. Second of all, Taleb's entire ethos revolves around his inability to predict the future, or even explain the past for that matter.
So it's really Taleb is cool so long as he dare not impugn LBOs...
Posted by guest , Apr 15, 2009 12:18PM
In many ways, the human heart resembles a Ponzi scheme in that it constantly requires fresh sources of oxygenated blood to replace blood it sends out to the lungs.
These so-called "scientific doctors" who wear their ties and go to conferences refuse to acknowledge this basic fact, so I have taken to getting my medical advice from cab-drivers.
Posted by Gordon Ghetto , Apr 15, 2009 12:18PM
Taleb is a moron whose intellectual rigor is comparable to that of a conspiracy theorist. He claims that LBO's are Ponzi schemes because investors buy companies with the intention of someday selling them to other investors. By that logic, McDonald's is a Ponzi scheme because its franchisees buy hamburgers with the intention of selling them to other people. Or, as the moron would say, it has a "Ponzi-attribute."
Posted by sugardaddy , Apr 15, 2009 12:19PM
I once knew a CEO of a private firm that compared an IPO to counterfeiting money. I bet they would have a lot to talk about.
Posted by guest , Apr 15, 2009 12:19PM
Bravo, EP! Violent agreement. The best thing about a recovery (whenever it comes) will be relegating doomsayers like Taleb, and Meredith Whitney back to obscurity.
Posted by guest , Apr 15, 2009 12:21PM
"Your books make nice airplane reading on a long boring trip"
Actually, his prose is pretty terrible without the redeeming entertainment value of a Dan Brown novel. Black Swan was painful to read.
And I'm with you @1, the guy is narcissistic to the point of solipsism. Fuckin guy even has a goatee.
Posted by guest , Apr 15, 2009 12:26PM
wow all the NNT hate here wtf?? -- yes, the tone of "Black Swan" was remarkably self congratulatory and obnoxious, but the guy is not a dim bulb and makes absolutely NO claims of predictive prowess.
And that line about bankers "picking up pennies in front of a steamroller" is classic.
I detect a lot of jealousy here -- He's had his "F##k you money" in the vault since '87 and the rest of you are whining about lost bonuses
Posted by guest , Apr 15, 2009 12:27PM
EP - Methinks you give the Goateed One too much credit.
Seriously, he hasn't been doing anything more than stringing the top ten words on Yahoo! Finance Search together with "black swan" and "give me a recording contract" in front on microphones for the last two years. The man has blown so far past his natural level of incompetence that it has a sort of grandeur about it.
Bloomberg et al. are just hanging around so they get footage when he crashes and burns.
Welcome to the Age of Talebius.
TED
Posted by guest , Apr 15, 2009 12:27PM
There are two kinds of people I don't trust in thist world. People who don't drink and anyone with a goatee.
-Wildcard bitches!
Posted by guest , Apr 15, 2009 12:29PM
All I hear is:
http://www.youtube.com/watch?v=wK2I_9icxI0&feature=related
Posted by guest , Apr 15, 2009 12:36PM
Sorry: "in front OF microphones."
Epistemic arrogance, meet lexical incompetence.
TED
Posted by guest , Apr 15, 2009 12:39PM
Jumped over the shark when he started bragging about how much he hated traders and the whole market culture.
Who else buys his books and endure the gloom of these double interviews with roubini, but traders?
Posted by guest , Apr 15, 2009 12:42PM
Jumped over the shark when he started bragging about how much he hated traders and the whole market culture.
Who else buys his books and endure the gloom of these double interviews with roubini, but traders?
Posted by guest , Apr 15, 2009 12:44PM
Black Swan = unreadable narcissistic shit
Posted by guest , Apr 15, 2009 12:45PM
EP = Joe Weisenthal
Posted by guest , Apr 15, 2009 12:46PM
It is easy to say, buy otm calls and evnetually you'll make money. It is much harder to pick which ones and at what price.
It is the classic make a bold call because noone remembers if you are wrong but you can brag until the cows come home if you are right.
I guess in some way NT exposes this himself in his contention that black swans are not rare. If he is right, and they are not rare, NT will always have one to pick out and say "I told you so".
Posted by guest , Apr 15, 2009 12:49PM
I read Taleb's Black Swan way back in 2007, before he was cool, and I thought he was a pretentious, pompous ass even then.
Posted by guest , Apr 15, 2009 12:56PM
Simple answer to a simple question: no.
Posted by VOL IS KING , Apr 15, 2009 1:09PM
Ugh, Equity Private, are you really this stupid?
Taleb has been saying the WHOLE STOCK MARKET is a ponzi scheme since before the crisis started. You're correct, his whole point is any transaction that relies on someone else buying an asset from you at a later date for you to cash out has a ponzi scheme like characteristic. The problem is it relies on your ability to make inferences about the future which is why Taleb harps on the normal distribution , because that's the tool people use to make those inferences.
Its like you're stuck on stupid or something, just because people know the distribution is inadequate, it clearly hasn't stopped them from blowing themselves up. The issue, is in the structure of the trades themselves.
Yes any finance phd know the things Taleb points out, but the problem is that the model error is the most important thing about the model not a foot note that you occasionally recall from the first month of your stats class.
I've read the Black Swan and Fooled by Randomness maybe 20 times now, and the more I read it, the more insightful I realize it is.
Ok, just checking in, keep up the good work.
Posted by guest , Apr 15, 2009 1:25PM
VIK is back!
Posted by guest , Apr 15, 2009 2:02PM
Another Mohammad on TV spewing garbage is just enough....sadly both these terrorists/douches have books.
Posted by guest , Apr 15, 2009 2:02PM
A bunch of ad hominem arguments precipatated by a criticism of Taleb's word choice. Classic signs of jealousy.
If, as EP states, every financial service realized that Gaussian models were limited in their scope, why were they so unprotected in this current crisis? Certainly they knew that they needed to protect against this unknown risk.
Who cares how Taleb delivers his argument if he is right.
Next time there won't be a bailout.
Posted by guest , Apr 15, 2009 2:02PM
A bunch of ad hominem arguments precipatated by a criticism of Taleb's word choice. Classic signs of jealousy.
If, as EP states, every financial service realized that Gaussian models were limited in their scope, why were they so unprotected in this current crisis? Certainly they knew that they needed to protect against this unknown risk.
Who cares how Taleb delivers his argument if he is right.
Next time there won't be a bailout.
Posted by guest , Apr 15, 2009 2:22PM
VIK's back to torment EP, eh? play nice... she tends not to respond when she gets shut-down by you ;)
Posted by guest , Apr 15, 2009 2:47PM
VIK! I've missed you, dude! welcome back.
Posted by guest , Apr 15, 2009 3:10PM
#8 has it right. send heart surgeons to jail with madoff
Posted by guest , Apr 15, 2009 3:52PM
If he was really as smart as some believe, he would have been sitting on a pile of shorts on every asset class and would now be rich as $hit. Perhaps he has done this and just kept quiet about it, but if not, his rants should be ignored.
Posted by guest , Apr 15, 2009 4:16PM
I like Taleb, but I can save you all lots of time. Black Swan and Fooled by Randomness both make the same very good point:
many things that you think are correlated aren't really correlated.
There. Enjoy the rest of your day.
Posted by EvilBuzzard , Apr 15, 2009 4:18PM
Nassim Talib is pedantic, overrated, self-infatuated and worst of all, boring!
He spent c. 300 pages telling me I didn't know what I didn't know. Deep.
Now he has to say more and more "provacative" things to stay "cutting edge". The harder he blows, the more he becomes a blow hard.
Enough of this loser.
Posted by guest , Apr 15, 2009 4:21PM
34 But isn't that like a lot of business books? The chapter titles are suspiciously like bullet points in a PPT presentation. You could just read them and get the whole point of the book in 60 seconds.
Posted by EvilBuzzard , Apr 15, 2009 4:23PM
Good Point 36. "Say Nothing Pompously" isourgeneration's "Think and Grow Rich."
Posted by guest , Apr 15, 2009 5:03PM
Social security is the biggest ponzi scheme in the world.
Posted by guest , Apr 15, 2009 5:31PM
Who do you think gets more chicks: Taleb or Nouriel? Cuz that's what it's all about, no?
Posted by guest , Apr 16, 2009 12:10PM
33, his fund took around $1.7 billion out of the market due to the crises, and already made a mint in the 87 stock crash. So yes, he is rich as shit. Enough so that he doesn't have to do trading any more (why would you if you're already rich?).