To: Frank A. Coluccio who wrote (31332 ) 9/13/2009 11:31:13 PM From: axial Respond to If, then, else... three words for contingency in the programmer's lexicon. buts also motivated . We make an illogical leap:, where we know and concede that we can't model an inanimate system like weather, to betting trillions on a vastly more complex - and animate - system like economics.in the box, and the actors outside the box, who profess to be modeling everything "inside". Nope, hold it. That doesn't work, because the box doesn't exist; they're both part of the same continuum."Another harmful abstraction used in macroeconomic models to facilitate growth forecasts is to leave out the banking system and the buildup of related financial assets such as mortgage and other consumer debt. Rather than attempt to understand and model the complexities of the financial sector, economists simply assume it away." players . Are they? A bank's customers invest, speculate, and gamble. That's their business. The bank's business: to lend and protect. A banker is responsible for the welfare of others; prudence is obligatory.and systemic risk - in catastrophic events.'"Economics is just entertainment," says Naseem Taleb, a former options and derivatives trader and author of a best-seller on finance The Black Swan. Taleb has been highly critical of the risk management practices employed by financial economists at investment banks leading up to and during the recent financial crisis. Inside the banks, experts in finance were making dangerous assumptions of their own involving statistics or probability theory. These experts, with their PhDs in finance, were getting paid millions of dollars to manage risks they either did not understand or chose to ignore. They turned a blind eye to the frequency and magnitude of what Taleb calls rare events -- perfect storms in finance -- because they are difficult to model." Economics: Dismal Science or Science at All? ]financialpost.com
