Excellent book I’ve been reading for a bit: Turing’s Cathedral: George Dyson

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“Perhaps the consciousness of animals is more shadowy than ours and perhaps their perceptions are always dreamlike,” physicist Eugene Wagner recalled in 1964. “On the opposite side, whenever I talked with von Neumann, I always had the impression that only he was fully awake.”

Von Neumann compensated for these superhuman abilities with an earthly sense of humor and a tireless social life, and tried, mixed with success, to blend in on a normal human scale. “You would tell him something garbled, and he’d say, ‘Oh, you mean the following,’ and it would come back beautifully stated,” says former protégé Raoul Bott. “He couldn’t tell really very good people from less good people,” Bott adds. “I guess they all seemed so much slower.”

No point in being perfectly accurate if you’re completely wrong. @nntaleb on building philo-stochasticity into policy in The Economist

This intrinsic limit to predictions is here to stay with us. It will not go away thanks to hard work by zealous researchers or more funding, more data, more computing power and more complicated theories. For unpredictability is part of any system that is prone to “fat tails”, that is, one whose properties are dominated by rare events—what I have called “black swans”. Don’t imagine that complexity, chaos theory, agent-based modelling or some other fad narrative will deliver better, more usable predictions than those failed economic methods we are still teaching our university students.

The truth is that selling a precise prediction to an anxious investor is like offering water to a parched explorer lost in the Sahara desert. Predictions are good therapy, arising from a human thirst for certainty. That might have been reasonable in some ancient world, but is hardly right for today’s.

No point in being perfectly accurate if you’re completely wrong. @nntaleb on building philo-stochasticity into policy in The Economist

Swap finance with ‘economic future’ / Finance: A new ice age? | The Economist

With the Fed also committed to buying $40 billion of mortgage-backed bonds every month until unemployment falls, and with the European Central Bank (ECB) potentially buying “unlimited” amounts of Spanish and Italian government bonds, central-bank policy will be a major influence on market movements in the coming year.

It’s all a matter of confidence. The existing sets of bailouts / fiscal/monetary policies are good, but perhaps simply not big enough. Big enough by what standard? Big enough by the standard of the multiples we were looking at firms earning pre-2008. Firms (and/or shareholders and managers) want the same (or growing) margins, they want the same (or larger) bonuses/dividends. The problem is not that the money is itself not enough, but that the money is juxtaposed against expectations that are even greater.

The easiest way out is perhaps the institution of special economic development zones and loosening of immigration policy in the major countries. It’s probably the best way out of the crisis — new jobs and new industries by those willing to take the risk.

Risk-appetite is paramount. Confidence is liquidity, and liquidity is confidence. Impossible is merely the lack of imagination and incentive.