Nassim Taleb has a nice list in FT on the lessons from this financial crisis and how we can avoid them. Some snippets I liked:
- Nothing should ever become too big to fail
- Do not let someone making an “incentive” bonus manage your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.
- Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. We need to be in a position to shrug off rumours, be robust in the face of them.
- Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalizing the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
- A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.
