I don’t want to take full credit for coining the term “Magoo Finance”, because others have already attached the name to the person of former Fed Chairman Alan Greenspan well before I did (see earlier). But I wonder if it might now serve as a useful shorthand for my colleagues in Big Media to characterise the kind of blind or short-sighted risk-taking that has been a feature of the past several years.

I thought it was noteworthy that the expression Value at Risk yields no useful information when punched into the BBC news archive, The [London] Times, or Daily Telegraph. The Guardian, Independent and New York Times all make mention of it, but in no systematic way, normally simply in relation to bank earnings. (The NYT yields a review of Taleb’s second book Fooled by Randomness, that is less than complementary.)

VaR is used by the banks to determine how much the bank would lose in a given day on its assets under management given a certain fall in the markets. Banks use it to calibrate their risk management. It is a pillar of the modern banking regulatory regime. Continue reading ‘magoo finance III’

Welcome to the Knackered Hack. If you're visiting in search of my paleo lunch with Black Swan author Nassim Taleb, you'll find it in three parts here. If you enjoy what you see don't forget to subscribe to the RSS feed. Alternatively, so you don't miss an important update and can more easily forward those salient posts to your friends and business contacts, sign up for my regular email service. You can follow me on Twitter by clicking here. Thanks for visiting!

Tags: , , , , , , , , , , , , , ,

(un)related posts


the knackered hack

Tim Penn
Alltop, confirmation that I kick ass

Enter your email address:

Add to Technorati Favorites

what's making me twitchy

  • @jayprich still investigating. Stochastic duel was coined by my father-in-law, the archetypal mad professor. Google tells us what he can't. 2 days ago
  • Great Bloomberg (cough/spit) podcast w Nassim Taleb http://bit.ly/4ESMPf Especially like his description of increasing complexity of life 1 week ago
  • @jayprich I think I once did Twickenham to Fleet St in that sort of time, maybe just a bit slower. Must be similar distance? 1 week ago
  • More updates...

Powered by Twitter Tools.

knackered eye view

www.flickr.com
This is a Flickr badge showing public photos from knackeredhack. Make your own badge here.

for knackered ear drums

Copyright Tim Penn 2008
Close
E-mail It
Socialized through Gregarious 42