5 points · 3 appearances · 2013–2020 · changed view
“The third point is skin in the game. When you're a banker, all right, and you have the upside, no downside, what are you going to do? Create the maximum number of loans that don't blow up often, right, and collect your bonuses. It's like selling out of the money options, and then of course you blow up. Now how do I link this to fragility? It's very simple: fragility is short volatility, you see, and selling an out of the money option is short a certain class of volatility. And what you have is, a banker has the option, he has the upside, and if you pay taxes every April 15 you're paying for his downside. That's it. They may make money, it still covers his downside. So this to me is not capitalism, it's misunderstanding of basic rules.”
