Makke schapen scheren

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Ik heb het zelf over makke schapen, maar vind het wel grappig dat Richard
Bookstaber het op 2oct07 in zijn getuigenis voor de House Financial
Services Committee van het USA Congress over cockroaches heeft.

Groet / Cees


In most fields, the hand of engineering leads to lower risk. We learn from
our failures and year by year end up with safer bridges and buildings and
cars and airplanes. But this does not seem to be the case for engineering
in the financial markets. The results of financial engineering – the
increasing sophistication of the markets, the complexity and the speed
with which market events unfold and propagate – seem to be taking us in
the wrong direction.
The lowly cockroach can teach us a few things about how to structure and
regulate markets in order to better avoid systemic risk. The cockroach has
existed over hundreds of millions of years, surviving as jungles have
given way to deserts and deserts have been turned into cities. And it has
survived with a simple, coarse defense mechanism. The cockroach does not
make its escape by seeing, hearing or smelling. All it does is move in the
opposite direction of any gust of wind hitting its legs. In any particular
environment it would never win the ‘best designed insect’ award. But it
always seems to be good enough to survive. Other insects might have been
more fine-tuned for foraging or with camouflage perfectly suited to a
particular environment, but few are as robust and capable of surviving in
the face of inevitable changes.
We need to keep the cockroach in mind when we think of how to address
systemic risk. We must rethink efforts that engineer and fine tune the
markets in an attempt to seek out every advantage in the world as we see
it today. When faced with the inevitable march of events that we cannot
even anticipate, simpler financial instruments and less leverage will
create a market that is more robust and survivable.

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