Economics

The Most Highly Improbable Lawsuit Threat of All?

|


Nassim Nicholas Taleb, author of the hip and happening business and econ theory book The Black Swan: The Impact of the Highly Improbable, wants to see more accountability in…well, not exactly sure…in loaning your prestige to an idea that might have influenced someone into committing an act that led to the value of an asset falling? At any rate, he's full of the sort of vim, vigor, and outrage that's as rare as…hm, not sure what metaphor I'm groping for here.

Anyway, Bloomberg has the scoop:

"I want to make the Nobel accountable," Taleb said today in an interview in London. "Citizens should sue if they lost their job or business owing to the breakdown in the financial system."

Taleb said that the Nobel Prize for Economics has conferred legitimacy on risk models that caused investors' losses and taxpayer-funded bailouts…..

Taleb singled out the Nobel award to Harry MarkowitzMerton Miller and William Sharpe in 1990 for their work on portfolio theory and asset-pricing models.

"People are using Sharpe theory that vastly underestimates the risks they're taking and overexposes them to equities," Taleb said. "I'm not blaming them for coming up with the idea, but I'm blaming the Nobel for giving them legitimacy. No one would have taken Markowitz seriously without the Nobel stamp."…

"If no one else sues them, I will," said Taleb, who declined to say where or on what basis a lawsuit could be brought.

Wired did an interesting cover feature on high-end math and financial risk last year.