Tell the Big Lie

There was virtually nobody who saw that low-probability event as a possibility.” – Robert Rubin.”

This is such an outrageous falsehood, such a breathtaking counterfactual and moral abdication, that I feel it is on a par with one of the “big lies” from the mouth of Goebbels. If you feel that’s a little OTT: just consider the amount of pensions for old people annihilated, the amount of economic damage world-wide, the effect on poor people and the planet that this institutional and structural irresponsibility that this represents. And now the capo-di-tutti-capos for this state-sanctioned international ponzi-scheme (consider that Rubin has earned over a hundred million) are not only covering their asses, but are likely to get US cabinet positions? We are all Latin-Americans now.

Mike “Mish” Shedlock –
http://globaleconomicanalysis.blogspot.com/2008/11/rubins-arrogance-and-denial-is.html
as well as Nassim Taleb –
http://www.fooledbyrandomness.com/
were two of the many who saw this coming, and who were loudly and intelligently proclaiming it.

Nassim Nicholas Taleb (”The Black Swan: The Impact of the Highly Improbable”) has been yelling about this coming for some years.

He regards the mathematical models used by most empty-suits as intellectual charlatanism that is little more than a way for institutions avoid to responsibility en masse.

One of my favourite quotes of his is:

“Anybody invested in the Stock Market who is critical of religion is a hypocrite… stock market analysts are worse than useless…”

There is a briliant clip of him in full swing on BBC Newsnight at:
http://uk.youtube.com/watch?v=ABXPICWjFIo

This is a Stalinist airbrushing of history, and deserves to be condemned – loudly – from the rooftops. This is inexcusable, and these people need to be publicly and repeatedly called out.

Citigroup’s risk models never accounted for the possibility of a national housing downturn… when examiners from the Securities and Exchange Commission began scrutinizing Citigroup’s subprime mortgage holdings after Bear Stearns’s problems surfaced, the bank told them that the probability of those mortgages defaulting was so tiny that they excluded them from their risk analysis…
NY Times, hat-tip to Scott McConnell

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