The hundred year floods happen more than every hundred years. It is related to tail risk, in the sense that people presume that some events are black swans, when they are not. Some of the problem has to do with data; some with human tendencies to overrate our wisdom and thus fall into irrationality.
Yes, I wrote about the coming depression but nobody seemed to have read the book. I remember Sir James Steuart claiming if he could redo it, he would have written a biography of his dog, which would have been twice as long and much more widely read. But I don't have a dog. I did get my hour on Bloomberg, but little chance to discuss the book elsewhere, except here. On Tue, Aug 9, 2011 at 3:57 PM, Sabri Oncu <[email protected]> wrote: > Michael: > >> Risk is when you can assign the probability, but most of the time you >> cannot. How often do 100 year floods occur? > > Now, we are talking about tail risk, that is, about the probability > with which extreme events may occur. Can we always assign a > probability to such events, I don't know. Yet, in the financial > markets extreme events such as 100 year floods occur every few years > and I am saying this from my personal experience. I got into this > finance business in 1994 and that year the global debt market > collapsed: about 10 trillion dollars evaporated in 1994 in the global > debt market as I was watching. > > Can we assign a probability to such events, I don't know. When we > cannot, they call it uncertainty in the current economics parlance, > although I am not sure if it is the right word. Maybe "unkown > unknowns" is(are) the right word(s)? However, Michael, were you not > one of those who claimed depression way before it started? So, maybe, > "unkowns" are not so "unknowns" after all, who knows? > > Best, > Sabri > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Michael Perelman Economics Department California State University Chico, CA 95929 530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
