Friday, April 17, 2009

Minsky anew

There have been several references to Minsky in the posts concerning finance; there will be more.

Today, the USA Today reports on the many Ponzi schemes that have been uncovered since the Madoff revelation. One prime cause for the exposures is the downturn that some compare to the depression.

These (see USA Today's list) are out-and-out fraud, perhaps. But, as finance is a game, we ought to keep Minsky's ideas in mind that Ponzi comes about by necessity.

The Economist, recently, had a report on the growth of the pockets of the rich, the supposedly best-and-brightest, to where a very small percentage of the populace held the vast majority of the combined value. An article (titled Minsky's Moment) in this report reviews a book that uses Minsky's ideas.

We need to, and will, take the discussion further.

The label of 'best-and-brightest' has had several uses. Of late, it applied to those who were smart enough to pull the wool over our eyes enough to riffle through our pockets (and to do so with gigantic bonuses). An earlier application of the concept was to those techies who gave us the OS's that fail with the BSOD; this state of affairs resulting from the techies seemingly rushing after features (for showing off) without due consideration for security or safety or stability or other important properties.


08/27/2009 -- Madoff exemplifies (albeit somewhat indirectly) systemic risk.

Modified 08/27/2009

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