BULL IN A CHINA SHOP

by Jim Quinn, The Burning Platform:

“So the modern world may be increasing in technological knowledge, but, paradoxically, it is making things a lot more unpredictable.” – Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder

“Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.” – Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder

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I had read Nassim Taleb’s other best-selling tomes about risk, randomness and black swans – Fooled by Randomness & The Black Swan. They were not easy reads, but they were must reads. He is clearly a brilliant thinker, but I like him more because he is a prickly skeptic who scorns and ridicules academics, politicians, and Wall Street scumbags with gusto. There were many passages which baffled me, but so many nuggets of wisdom throughout each book, you couldn’t put them down.

When his Antifragile book was published in 2012, the name intimidated me. I figured it was too intellectual for my tastes. When I saw it on the shelf in my favorite used book store at the beach, I figured it was worth a read for $9. I’m plowing through it and I haven’t been disappointed.

His main themes are more pertinent today than they were in 2012. He published The Black Swan in 2007, just prior to one of the biggest black swans in world history – the 2008 Federal Reserve/Wall Street created financial collapse. His disdain for “experts” like Bernanke, Paulson, and Wall Street CEOs, and their inability to comprehend the consequences of their actions and in-actions as the financial system was blown sky high, was a bulls-eye.

As usual, all of Taleb’s warnings and rational analysis of how the world really works have been forgotten or ignored, as the actions of the captured Fed, corrupt DC politicians, and greedy Wall Street shysters propel the nation and the world toward another historic financial collapse. The “experts” will be proven to be knaves and fools once again.

“The problem with experts is that they do not know what they do not know”– Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder

As I was reading passages of his Antifragile analysis of the real world, I was struck by how his concepts of fragility and antifragility become more relevant as this relentless bull market in stocks, bonds, real estate and government debt reaches nose bleed heights only seen twice before in financial history. When something is fragile it breaks easily.

Interventionist monetary actions by the Federal Reserve, non-enforcement of financial regulations by the Federal Reserve, introduction of unregulated indecipherable derivatives, repeal of the Glass-Steagall Act, mass Wall Street collusion in the largest control fraud in history, and delusional expectations of ignorant investors created extremely fragile housing and stock markets which were certain to break.

“Complications lead to multiplicative chains of unanticipated effects.”  – Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder

And break they did. There was no specifically particular catalyst which caused national housing prices to fall 30% or the stock market to fall 50%. Their extreme fragility made it certain they would break. The “experts” who declared the housing market strong and the stock market not overvalued provided a myriad of retrospective causes after the financial system collapsed.

They never provide prospective warnings before things break. Their job is to mislead, while the Wall Street pillaging machine does its work. Were lessons learned from this horrific man-made debacle? Based on the actions taken by those in power, no lessons have been absorbed. The authorities have done the exact opposite of what needed to be done to make the financial system less fragile. Their reckless self-serving debt spawning scheme has guaranteed another far worse collapse.

“If something is fragile, its risk of breaking makes anything you do to improve it or make it “efficient” inconsequential unless you first reduce that risk of breaking.” – Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder

As the ill-gotten profits of criminal Wall Street banks evaporated during late 2008 and early 2009 the very survival of these Too Big To Prosecute behemoth owners of the Federal Reserve was in question. They were effectively bankrupt, as the toxic mortgage debt and busted derivatives blew gaping holes in their balance sheets. With 30 to 1 leverage, they were dead shysters walking.

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