Wall Street Lays Another Egg
by Niall Ferguson
Vanity Fair
Not so long ago, the dollar stood for a sum of gold, and bankers knew the people they lent to. The author charts the emergence of an abstract, even absurd world—call it Planet Finance—where mathematical models ignored both history and human nature, and value had no meaning.
I’ve only finished about half of this article, but it is quite good history. I’ve never actually read a book by Ferguson, but I know he wrote a decent one about World War I which I will read one of these days. He just wrote it and I’ve already read all the others and keep planning to write my own. He’ll just have to wait.
Books by Niall Ferguson:
- The Pity of War: Explaining World War I (2000)
- The War of the World (2007)
- The Ascent of Money: A Financial History of the World (Nov 13th, 2008)
(you can obviously see from the titles why I like Ferguson, without ever having read one of his books. I’ll leave it up to you whether he might be getting somewhat opportunistic. I will say this. Pity of War was widely criticized as over-emphasizing global financial issues regarding World War I. I haven’t read it, I wouldn’t know.)
33 comments
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November 27, 2008 at 1:54 am
Saint Bif
This is very good. I will finish it tomorrow. Thanks for posting it.
November 27, 2008 at 2:06 am
JR
Yeah, it is. There appears an article like this every month or two in one of several publications. This has been going on for as long as I can remember (or at least was following finance.
The Atlantic
The New Yorker
Vanity Fair
The New York Times Sunday Magazine
(I can name probably 3 or 4 more at least)
I won’t say any of them provide any insight or anything new (I look to Taleb for that), but they provide a good running commentary and show you where to look if you want to try to develop a sense of “prediction” yourself.
Like I say, I haven’t finished it, either, but I flipped through the rest and he gets into Black-Scholes, even shows the algebra, so I’ve got to finish it. I’ll post quotes tomorrow.
November 27, 2008 at 2:31 am
Dr.Doom
Talk about Black Squirrels, what’s up with all these terrorist bombings in Mumbai? Why are they picking on all those nice Indian folks?
November 27, 2008 at 2:42 am
JR
I’ve been thinking about that all day.
November 27, 2008 at 2:58 am
Dr.Doom
We already have a “Mumbai Terrorist Attacks” thread? JR, impressive, as usual.
November 27, 2008 at 3:04 am
JR
Oh, c’mon. I posted that weeks ago when I knew for certain the attacks would happen in the next few weeks. Don’t pretend like you didn’t notice it :)
You’ve all been so obsessed with Black Squirrels, you forgot about India.
Like I said, I need to go read CFN. Who’s good there these days (I kinda liked that Gordeaux)?
November 27, 2008 at 3:14 am
Dr.Doom
There’s a rather amusing tit-a-tat going on there between PC Destiny’s Game and our poor little defenseless dave. Otherwise, it’s the usual Bob Snowjob and dale show, with FAR and Nudge, etc. getting comments in edgewise.
November 27, 2008 at 3:17 am
Dr.Doom
Ia Taleb Indian? Land o’ de swans noire.
November 29, 2008 at 12:35 pm
nicholas
Hey, don’t forget the little link to the side, Empire Falls!
November 29, 2008 at 12:35 pm
nicholas
And, via Krugman:
http://www.gutenberg.ca/ebooks/keynes-slump/keynes-slump-00-h.html
November 29, 2008 at 2:15 pm
Dr.Doom
JR, when you remove your comments, it appears I’m talking to myself here. They were not that offensive, so I no understand.
November 29, 2008 at 8:17 pm
JR
And then when I put them back, it looks like you’re crazy. They were kind of offensive if you aren’t used to my sense of humor or don’t get tone well over the internets. I edited them and they are back. Now I only have 105 more on other threads to fix.
Not to worry. I figure If I do 10 a day I won’t get worn out.
November 29, 2008 at 8:17 pm
JR
Taleb is Christian Lebanese.
November 29, 2008 at 9:37 pm
Saint Bif
AP is reporting that a gunman captured alive by police in Mombai is from Pakistan. That is going too piss off a lot of Indian folks.
November 29, 2008 at 9:40 pm
Saint Bif
One day there’s going to be some real shit between these two countries. Its pretty scary.
November 29, 2008 at 9:46 pm
Saint Bif
Maybe India will avenge. Send in a few badass Gurkhas. One Gurkha is like a hundred of anybody else.
November 30, 2008 at 1:02 am
EEofDC
“Taleb is Christian Lebanese.”
Actually, Taleb spends a considerable amount of upfront page space in The Black Swan talking about the fact that he doesn’t consider himself Palestinian but actually Levantine (from the Levant).
He further describes the fairly peaceful co-existence for 1200+ years of the Muslims, Jews and Christians in the Levant until the breakup of the Ottoman Empire, after which the “nation-state” reinvented the area and ultimately led to a 15-year-long war between the Christians and the Muslims (his first Black Swan).
[My weird thought pattern: in my interview with Bunn Bunn earlier this week, I was excited about everyone getting to see my Squirrel-PAC, especially my black buddy. I was thinking along the lines of Black Squirrel at Lincoln Memorial equating with Barack Obama being elected POTUS. It only took me until today to get it! Black Squirrel/Black Swan…. sorry to be such a dumb bunny, BB…
November 30, 2008 at 1:27 am
EEofDC
“Maybe India will avenge. Send in a few badass Gurkhas. One Gurkha is like a hundred of anybody else.”
It’s hard to determine who’s crazier or more radical — the Pakistanis or the Indians. Don’t forget these two groups had a big pissing contest ten years ago with “nucular” bombs.
The Truth About India And Pakistan’s Nuclear Testing
The reason why the the major governments of the world did not stop India and Pakistan from conducting nuclear testing, ( they all knew well before hand that they were going to do it, despite what you are being told that our intelligence sources did not know – Israeli intelligence notified many countries of this a month before it happened ). The truth is this. India and Pakistan are providing the bulk of computer programmers to solve the world year Y2 problem, when it rolls from 1999 to 2000. Most world governments, including our own, and corporations around the world, including banking financial concerns waited too long to fix the problem. The U.S. government alone has contracted out over 90% of these needed program fixes to fix government programs to programmers in India and Pakistan. There was a worldwide shortage of computer programmers to fix the Y2 problem when governments and corporations around the world realized the severity of it. However, both governments of India and Pakistan started government programs 5-7 years ago to train thousands of their college graduates in computer programming, offering them special incentives to do so. It is estimated that India and Pakistan programmers are providing over 93% of the needed world programming changes to fix the year Y2 problem. Do I need to explain anything further as to why governments worldwide have sat idle and let India and Pakistan explode nuclear weapons that have done nothing but pollute our environment!
~ David Lawrence Dewey ~
http://www.dldewey.com/columns/indonesf.htm
November 30, 2008 at 4:53 am
Dr.Doom
EE, sounds like another tinfoil hatter to me. Once the required program fix has been worked out and coded, why would we need lots of additional programs and programmers? Uncle Remus must know the truth about Y2K.
There may be reasons why the west did not intervene between India and Pakistan, but I doubt needed Y2K programmers were it.
November 30, 2008 at 5:01 am
Dr.Doom
JR, you really are a sensitive guy. Of course tone doesn’t work well over the internet. It was a semi-private discourse, after all.
I’m a practitioner of allowing the chips to fall where they want to. Those that want to take the time to read here carefully will get it, or they won’t care, either way.
November 30, 2008 at 2:15 pm
EEofDC
Somehow, we have to see through the big lies. First is that the economy is in trouble. The economy is not in trouble. Our spirit and the culture is in trouble. We can’t build a strong economy by marketing drugs and the war on drugs into our communities. We can’t build a strong economy by making it impossible for teachers to teach. We can’t build a strong economy by permitting trillions of financial fraud and theft from the government. We can’t build a strong economy by taxing people so we can subsidize large corporations who make products that people don’t want and don’t need. If we make money by doing things that help people to fail, then our economy will fail. This is, however, a political problem. It is not first and foremost an economic problem.
–Catherine Austin Fitts
http://solari.com/blog/?p=1869
November 30, 2008 at 2:33 pm
EEofDC
” sounds like another tinfoil hatter to me. ” –Dr. Doom
For you, Doom!
November 30, 2008 at 3:30 pm
Dr.Doom
EE, old CAF is right on target with that piece. I fear that any politician willing and able to fix that list will be bucking a lot of monied and powerful folks. It should be done, of course, but the risk of assassination by those folks is great.
November 30, 2008 at 3:36 pm
Dr.Doom
Here’s a Black Swan: Obama gets assassinated. Shocked public and then protests erupt and the country is torn by revolution or at least wide-scale rioting and chaos. I think JHK has already dropped this idea, about a year ago.
Maybe it’s a Gray Swan, one that is high-impact but moderately predictable.
November 30, 2008 at 3:42 pm
Dr.Doom
I’ve always felt that the assassination of JFK was an Oz-like curtain withdrawal event, a quick peek at the real powers that run this country. Normally, they hide, in plain sight.
November 30, 2008 at 4:52 pm
Uncle Remus
Doom, I’m with you on the tinfoil hat. If I told you the truth about Y2K, I’d have to kill you.
“However, both governments of India and Pakistan started government programs 5-7 years ago to train thousands of their college graduates in computer programming, offering them special incentives to do so. It is estimated that India and Pakistan programmers are providing over 93% of the needed world programming changes to fix the year Y2 problem.”
Bollocks.
The Y2K problem stemmed largely from legacy business and government software written in older languages (like COBOL, the language I cut my programming teeth on – keypunch & mainframe) when processing power and core memory were at a premium – before most of those “thousands of their college graduates [training] in computer programming” were born.
The premium was such that even the extra bytes required in main memory for the first two digits of the year was unacceptable albeit short-sighted.
“Once the required program fix has been worked out and coded, why would we need lots of additional programs and programmers?”
Exactly. A lot of old-schoolers were brought out of retirement to work the legacy problem. And the larger Y2K concern was not limited to the 2-digit date problems we knew about, but rather the ones we could not quantify – such as the embedded stuff in the countless analog and digital controllers that operated water and sewage systems, the energy infrastructure, transportation systems and so on.
At least, that was my perspective of the situation at the time. Anything else requires the secret handshake and the passcode of the day from your decoder ring.
November 30, 2008 at 5:52 pm
EEofDC
Doom and Remus-
Thanks for your feedback. I’d forgotten about all the hubbub over the embedded controllers. For months in 1999 I recall the mainstream media publishing a constant stream of scary articles about impending disasters with sewers and water systems, airplanes falling out of the sky (I flew to visit friends in Phoenix from DC for the millenium changeover), and just about every system going berserk because of the Y2K issue.
Perhaps with the Indians and the Pakistanis the Black Swan will be the unexpected blow-up not occurring. Taleb considers something equally Black Swanny when it’s inevitable and then doesn’t happen.
November 30, 2008 at 7:40 pm
Uncle Remus
“Taleb considers something equally Black Swanny when it’s inevitable and then doesn’t happen.”
My kinda Black Swan and in my view, the meatier of the species.
November 30, 2008 at 7:51 pm
JR
When I first read Bif’s comment about India/Pakistan and the ghurkas, I thought –
if anything (absolutely anything) happens between these two countries it will certainly not come as surprise. And yet we berate the “intelligence services” at the same time for not seeing this stuff coming.
November 30, 2008 at 7:55 pm
JR
One of Taleb’s greatest example (and real) is when he was brought in to consult on risk for casinos in Vegas.
The owner/operators were worried about people cheating at cards or rigging the slots.
Taleb told them – look, you have the best security imaginable, cameras watching everything, etc., etc. -
But you haven’t given a second’s thought to the fact that your biggest moneymaker, a showbiz act, literally sleeps with a lion and a tiger in his bedroom.
November 30, 2008 at 9:37 pm
EEofDC
“But you haven’t given a second’s thought to the fact that your biggest moneymaker, a showbiz act, literally sleeps with a lion and a tiger in his bedroom.”
JR-
lolololol… Denial is not a river in Egypt.
Haven’t gotten that far yet (I’m currently slogging through TBS, Rubbish, Collapse, and Guns, Germs and Steel–went over to the library today to renew for another three weeks; they’re giggling at me for being so slow). Rubbish is pretty cool. It was written in the 1990s on the archeology of garbage after 20 years of the Garbage Project at the University of Arizona.
December 1, 2008 at 2:56 am
Dr.Doom
JR, if that be the Zigfreid and Roy act he was talking about, I’d say he was pretty prescient. Once Roy got mauled, it was pretty much over for them as an act.
December 2, 2008 at 12:17 am
tipping point
Finally had time to read the VF article- it was excellent. Please post more as you come across them.