Taleb Says Investors Should Sue Nobel Panel for Losses

Here's another of Nassim Taleb's rant, and I find it interesting:

Oct. 8 (Bloomberg) -- Nassim Nicholas Taleb, author of “The Black Swan,” said investors who lost money in the financial crisis should sue the Swedish Central Bank for awarding the Nobel Prize to economists whose theories he said brought down the global economy.

“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. Sweden’s central bank will announce the winner of this year’s award on Oct. 11.

Taleb singled out the Nobel award to Harry Markowitz, Merton 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.”
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He most importantly forgets that among the Nobel prize winners are Joseph Stiglitz and Paul Krugman, both notable Keynesian bouffons, the latter one being extremely dangerous because of his connections with the US government and with the NYTimes.

As much as I love Taleb's books Fooled by Randomness and the The Black Swan (Second Edition), I believe Taleb has a complete lack of the economic reality and of the real world. He is just another of this academics who should try to explore the real world — why not read Economics for Real People.

Why? Well, first of all, he forgets that the economic crisis has been brought by a general and global credit addiction, which is more a sociological phenomenon.

The credit addiction has been enabled by partial reserve banking, fiat money, and central banking. None of which have anything to do with financial models.

Then, Bush, Obama, Greenspan, Bernanke, Summers, Geithner are the real architects of this mess, but they are not Nobel laureates — please note that I do not look for culprits. There's no single person who is responsible, the society as a whole is.

Suggesting that the citizen sue the Nobel committee or any other entity in order to make them accountable would be a big mistake and it would legitimize yet another one of this social policies. It would mean: "We have decided to delegate our pension, our future, our wealth, to incompetent people, without understanding what they were doing with it, nor what we were doing. Without even trying to understand what was going on, we over-extended ourselves by taking massive mortgages and enormous amounts of credit card debts. We didn't want to conduct our own due diligence. We decided not to turn our brains on. We didn't want to educate ourselves about what we were doing. We closed our eyes on all the issues and pretended not seeing them, and now, we want to make you believe that the Nobel committee is responsible for all this."

Why do people still listen to Greenspan, Bernanke, Obama, and so forth, given their track record? Who is the real fool?

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