Word: problem
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...said that this current market crisis isn't necessarily a black swan event. People did see this coming.It is a white swan, but very few people saw it coming, I guarantee. Nobody saw the real cost. And let me tell you the problem. The system used to analyze risk is completely defective, and actually could not keep up with the complexity of the financial products that are involved. You have what I call a geometric or exponential increase in risks. For example, if the market drops 10% you lose $100 million. But if the market drops...
...beyond that besides widening your margins of risk?Eliminating leverage. If you don't have leverage, you don't have that problem. We have a faulty risk management system that underestimated probabilities while giving people the illusion of understanding them. It gave people the illusion of comfort. If I give you a number, you're going to take more risk. Regardless of the confidence you have in the number. It's psychological. If I ask you to write down the last 4 digits of your social security number, and then take you out to lunch and ask you how many...
...people's money.That's the point, with society's money. Banks are gambling with society's money, funds are gambling with investors' money - it's one layer better. So we should have more risks taken by funds and less risk taken by banks, because banks have a severe agency problem. ... When I trade I don't have an agency problem; I have my neck on the line. When a bank or banker trades, it's not his neck on the line. He has an agency problem, and like [former Merrill Lynch CEO] Stanley O'Neal, if you follow the strategy...
...time like this, [alumni] just won’t pledge—that’s a problem we didn’t have,” Kagan said...
...survey of 2,406 Americans between the ages of 18 and 24, nearly seven in 10 respondents said that political engagement is an effective solution to the nation’s problems. By contrast, IOP polling in the fall of 2006 found that 60 percent believed in politics as a way of problem-solving...