tag:blogger.com,1999:blog-7905515.post1237338645949957198..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Fannie Regulators Exacerbated the BubbleEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-7905515.post-6558490350070138522010-04-13T19:04:33.618-05:002010-04-13T19:04:33.618-05:00"This is the mechanism for endogenous bubbles..."This is the mechanism for endogenous bubbles, where large players increase their exposure into previously risky areas, but don't notice it because each player thinks they are actually reducing their risk by playing catch-up in some new paradigm."<br /><br />This is what happened with UBS. The shareholder report is well worth reading. http://www.ubs.com/1/ShowMedia/investors/agm?contentId=140333&name=080418ShareholderReport.pdfAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-74510999638804133982010-04-13T19:01:14.227-05:002010-04-13T19:01:14.227-05:00See the Michael Lewis book "The Big Short&quo...See the Michael Lewis book "The Big Short", or the Gregory Zuckerman book "The Greatest Trade Ever" for examples of "hedge funds or other investors that were able to assess the risks that now seem so clear".Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-34039454386623929862010-04-12T21:24:25.953-05:002010-04-12T21:24:25.953-05:00Everything you say sounds right, but I continue to...Everything you say sounds right, but I continue to wonder why the financial markets didn't more accurately assess the value of Fannie, Freddie, and other holders of what turned out to be poisonous securitized notes. In particular, from my very distant perspective, it seemed like the Wall Street Jounal's countless warnings fell on deaf ears during the runup to the meltdown. In your review of The Black Swan, you tangentially agree with Taleb's concern with risk measurments based on "historical prices." Taleb seems to go overboard in his approach, but were there any Bayesian-oriented hedge funds or other investors that were able to assess the risks that now seem so clear?lb100https://www.blogger.com/profile/12982706469476724785noreply@blogger.com