Yes, you're right. We've had more than our share o...

2008-12-05T16:34:00.000-05:00

Yes, you're right. We've had more than our share of black swans in the last decade. I count 4, without thinking hard: Asian Contagion/LTMC; dot-com crash; 9/11; real estate market/Lehman/AIG/bailout/2008 recession. I think we've found out the hard way that deregulation leads to excessive risk-taking. Lookit how it was the unregulated players, the structured finance investment bankers, who got us into trouble. Their regulated brethren, in commercial banking activity, in corporate finance (post-Sarbanes Oxley), and classical insurance, are relatively blameless. The massive exception in the insurance world is AIG's CDS-writing arm. I guess that activity is walled off from the insurance underwriting business. We have some important regulation writing to do as a country; let's hope that's done well. It's great to have a guy like Obama coming in, an administration that respects expertise.

The other culprit though is the distribution of income and wealth. The American middle class was counted on by the world's financial community and they turned out to be a lousy bet. That's teh biggest challenge going forward. How to repair the balance sheets of the millions of households in debt up to their eyeballs and weak earning power?

Comments on Fund My Mutual Fund: Nassim Taleb on Charlie Rose; Credit Default Swaps...

Yes, you're right. We've had more than our share o...