George Orwell on totalitarianism, force and fraud

A society becomes totalitarian when its structure becomes flagrantly artificial: that is, when its ruling class has lost its function but succeeds in clinging to power by force or fraud.

~ George Orwell

Mike Green on evolution, fragility and survival of the least fit

People think about evolution as progress.  Evolution's not progress.  Evolution is fitness within an environment.  And it actually breeds its own fragility, right?  If I'm a finch who happens to inhabit the Galapagos Islands and nobody has a beak that's seven inches long that can reach into a particular pine cone, then I can grow a beak that is first 1 1/2", then 2", then 3", and eventually it's 7"; it provides a huge advantage.  But if that environment changes, a 7" beak becomes an extraordinary disadvantage and I go extinct almost immediately.

What we have done is create a system that is so stable and where the focus itself becomes stability -  preserving the status quo - that we've created all the problems of specialization and fragility and inequality associated with it, where very few members of our society control so much of the resources and are actually in a position to defend those resources...  That sort of environment needs to be disrupted.

~ Mike Green, "The End Game Ep. 3," The Grant Williams Podcast, 1:25:35 mark

Andy Grove on crisis and business

Bad companies are destroyed by crisis, good companies survive them, great companies are improved by them.

~ Andy Grove

Jim Grant on ZIRP and "a compromise in the corporate immune system"

For ten years, or thereabouts, central banks of the world have taken it into their power to guide - indeed some might say (Grant's has said) - to suppress or to manipulate what is arguably the most sensitive or most important rate in capitalism, which is the rate at which we discount future cash flows, measure financial risk, and set investment hurdle rates.  That rate of interest, on average, has been under the thumb of our, to be sure, dedicated public servants.  Arguably, the price set by the central banks has been - certainly it's a controversial price - on the evidence of the massive buildup in financial leverage in the corporate and financial sectors - not the banks, mind you, but elsewhere - that price has been too low.  And is it not possible that the consequence of the manipulation of the rate of interest has led to as it were, since we're all epidemiologists now, a compromise in the corporate immune system such that an exogenous shock like this has dealt a blow to finance - has instituted a panic - such that might not have occurred had risk been priced in the market and rather than through administrative means?

~ Jim Grant, Grant's podcast interview with Mervyn King, March 27, 2020

Kevin Duffy on the coronavirus, economic stimulus and fragility

Why is the financial system so vulnerable to a shock like Covid-19? It's natural immune system has been depleted by decades of stimulants and painkillers.

Kevin Duffy, tweet, March 20, 2020

Hyman Minsky on stability

Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.

~ Hyman Minsky

James Montier on the fragility of corporate debt

A huge amount of corporate debt creates a systemic vulnerability. Half of the outstanding corporate debt is now rated the lowest investment grade, which really is quite worrying. At some stage, we’ll encounter a downturn. As an equity investor, you’re junior to this paper that needs to be paid.

~ James Montier, strategist, GMO, "In Defense of Modern Monetary Theory," Barron's, July 27, 2019

Katniss Everdeen on fragility

It must be a fragile system if it can be brought down by just a few berries.

~ Katniss Everdeen, Hunger Games (written by Suzanne Collins)

Nassim Taleb and Mary Blythe on suppressing volatility

Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks.

~ Nassim Taleb and Mary Blythe

Katniss Everdeen on centralized systems

It must be a fragile system if it can be brought down by just a few berries.

~ Katniss Everdeen, visit from President Snow in Catching Fire

Nassim Taleb on error's relationship to fragility and robustness

For the robust, an error is information; for the fragile, an error is an error.

~ Nassim Taleb, The Bed of Procrustes, p. 72

Nassim Taleb on the fragility of politicians

Robust is when you care more about the few who like your work than the multitude who dislike it (artists); fragile when you care more about the few who dislike your work than the multitude who like it (politicians).

~ Nassim Taleb, The Bed of Procrustes, p. 71