Comments on: Creating a Black Swan

By: DreadLetterDay

DreadLetterDay — Thu, 05 Feb 2009 02:51:46 +0000

You’re describing a white swan, a completely predictable event. Maybe a grey swan.

Black Swans are completely unknown events.

By: Brian Clark

Brian Clark — Wed, 04 Feb 2009 13:18:24 +0000

I think you misunderstand the Fourth Quadrant risks that Taleb was describing with Black Swan … unknownable high risks. You’re using Black Swan as some kind of dogmatic illusion.

By: Frank

Frank — Sat, 31 Jan 2009 21:54:32 +0000

I’m not sure how the housing price myth stood up even in the face of more recent experience. The Case-Schiller data for the Comnposite 10 index – which must include a substantial amount of the housing market shows that prices did not exceed the values set in late 1989 until the spring of 1997. A substantial period of time to be underwater on your investment.

By: A.S.

A.S. — Sat, 31 Jan 2009 14:12:41 +0000

David,
Yes, I believe you are correct.

I had the Essay on Public Debt from someplace on the web, saved on my computer. I cannot find the link right now but have forwarded a copy to you separately, as it is too long for a comment.

Another link below might point in the right direction:

http://www.iep.utm.edu/h/humeessa.htm

…..In 1758 Hume compiled his essays into a two-part collection titled Essays, Moral, Political, and Literary. Part I includes the essays from Essays, Moral and Political, plus two essays from Four Dissertations. The contents of this part largely covers political and aesthetic issues. Part II includes the essays from Political Discourses, most of which develop economic themes. The total two-part collection appeared within a larger collection of Hume’s writings titled Essays and Treatises on Several Subjects. Below is a brief description of the content and bibliographical history of the Essays, Moral, Political, and Literary.

….9. Of Public Credit. This first appeared as essay 8 in PD (1752). In this essay Hume describes several unfavourable economic consequences of Britain’s national debt, and he warns of a forthcoming national bankruptcy. The worse consequence is that perhaps at some time the interests of millions of creditors may be sacrificed for the benefit of a smaller number of debtors. But even if disaster strikes, Hume argues that people will forget this tragedy and once again engage in risky credit practices

Regards,
Annette

By: P.S.

P.S. — Sat, 31 Jan 2009 10:07:17 +0000

+1 A.S.

You are so right. I wish more people were aware of Hume’s ideas. He warned of how nations could get into the exact mess we are in.

If anyone wants a consise history of David Hume, I recommend Paul Strathern’s book about Hume’s philosophy. It’s very entertaining.

By: Gary

Gary — Fri, 30 Jan 2009 23:57:24 +0000

I agree completely with you. I haven’t read enough Austrian theory but I think you can trace it to a counter-cyclical monetary policy.

I think high inflation is inevitable as Ben will do anything he can to avoid the Japan situation of home prices sliding for 20 years and the accompanying insolvent banking sector.

By: David Merkel

David Merkel — Fri, 30 Jan 2009 18:47:03 +0000

Are you referring to essays seven and eight in Political Discourses, or can you find a link to it on the web for us?

By: A.S.

A.S. — Fri, 30 Jan 2009 18:28:36 +0000

I would recommend to anyone David Hume’s famous essay “” On the Debt of Nations”", written some 250 years ago.

As to Mr. Greenspan — where is he hiding these days?