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The Masked Tulip

Goldman Sachs' Lloyd Blankfein On Probabilities

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Blankfein, who's been Goldman CEO since 2006, steered it through the fallout of the global financial crisis of 2007-2008. He said the experience had taught him to accept that the worst thing you can imagine will inevitably happen.

"Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen," said Blankfein.

"The definition of infinity is that you wait long enough, everything happens."

Blankfein said in his view, the major problem during the financial crisis was that ordinary people were banking on the fact that the scenario they feared the most, the collapse of real estate prices, was not a possibility.

"Once you think that something is improbable and everybody thinks it, people modify their behavior in a way that makes it more probable," said Blankfein.

"Everyone thought it was so improbable that so many people would default on real estate, it actually created a greater probability that it would [happen] because more capital flowed into that sector."

Read more: http://www.cnbc.com/id/100915696#ixzz2aHuOaTAb

So if we all think it is highly improbable that he will be tarred and feathered then it will actually happen?

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Of course, if Blankmind and his half-educated company of pretend scientists had taken the trouble to familiarise themselves with the real probabilities of tail-end risk then perhaps they wouldn't have made quite so many one-way, wrong-way leveraged bets on the price of real estate in the first place?

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Blankfein, who's been Goldman CEO since 2006, steered it through the fallout of the global financial crisis of 2007-2008.

The only reason Goldman's still exists is because AIG was bailed out by the US taxpayer- the only steering Blankfein did was to drive the company into the subprime ditch.

Why does anyone take these welfare queens seriously any more- by their own actions they demonstrated utter and catastrophic incompetence.

In a free market Goldman Sachs would have failed in 2008- so the only thing they know about capitalism is how to rig it.

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"The definition of infinity is that you wait long enough, everything happens."

No.

For example, the probability of a 3 dimensional (infinite) random walk returning to its starting point is less than 35%.

For higher dimensions the probability of return is less still.

See:

http://www.amazon.co.uk/Random-Walk-Introduction-Cambridge-Mathematics/dp/0521519187/ref=sr_1_1?ie=UTF8&qid=1374965346&sr=8-1&keywords=lawler+random

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"The definition of infinity is that you wait long enough, everything happens."

But time is not infinite - in fact it runs out quite quickly, especially when considering one's lifetime or the financial world.

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"The definition of infinity is that you wait long enough, everything happens."

No.

For example, the probability of a 3 dimensional (infinite) random walk returning to its starting point is less than 35%.

For higher dimensions the probability of return is less still.

See:

http://www.amazon.co.uk/Random-Walk-Introduction-Cambridge-Mathematics/dp/0521519187/ref=sr_1_1?ie=UTF8&qid=1374965346&sr=8-1&keywords=lawler+random

Which is just as well for us lot. A photon takes around 800,000 years on average on its 3-d random walk from production in the sun to the surface, before covering the much greater distance to Earth in 8 minutes.

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Read more: http://www.cnbc.com/...6#ixzz2aHuOaTAb

So if we all think it is highly improbable that he will be tarred and feathered then it will actually happen?

He's just repeating what Ben told him after he turned GS into a bank so they could access the FED discount window.

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Blankfein said in his view, the major problem during the financial crisis was that the banks were banking on ordinary people were banking on the fact that the scenario they feared the most, the collapse of real estate prices, was not a possibility

Corrected in bold text etc - nearer to what actually happened.

Just saying that's what the banks banked on and they knew how ordinary people behaved before the bust.

Is he trying to say it's some sort of amazing revelation to him.

Edited by billybong

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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