Question/Comment: Paul, I record the NewsHour and just saw your — shall we say “sobering” — conversation. I was reminded of a radio interview — probably on NPR — I heard (while driving) sometime during the past few years. Benoit Mandelbrot responded to a final question with a reference to “a financial storm.” It leads me to ask whether or not we are in the eye of the hurricane as I write these words?
Paul Solman: As Mandelbrot mused two nights ago, Lee, who can say? As I’ve written here on numerous occasions, it will depend on what we all do in response. In that sense, there was a legitimate argument, I think, in NOT running the interview with Mandelbrot and Taleb. Might its pessimism fuel a self-fulfilling prophesy? A number of viewers (and friends of mine) felt that way. It’s obvious that we, ultimately, did not.
Taleb came of age as Beirut was torn apart by a war that few imagined. Mandelbrot escaped Nazified Poland, only to find himself in Occupied France. Both men might be said to see the world through blood-colored glasses. But they are among the only voices to have been calling the storm for years.
The main message of their work could be seen as good news, though: as the legendary Village Voice ad campaign of the ’60s put it: Expect the Unexpected; the discontinuity, that is. Right now, the most discontinuous thing that could happen would be a sudden return to prosperity.