Well, it’s almost Thanksgiving and, as Nassim Nicholas Taleb describes in his book, The Black Swan: The Impact of the Highly Improbable, turkeys all over the world are about to be very surprised. For a thousand or so days, the farmer comes out and feeds them. Life is pretty good and the turkey gets more […]
Written by randomfool on November 16th, 2008 with
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Well, it’s almost Thanksgiving and, as Nassim Nicholas Taleb describes in his book, The Black Swan: The Impact of the Highly Improbable
The year of 2008 has had more than its fair share of turkeys as the models, primarily those dealing with subprime default and loss severity risk, completely missed the real risk. Now comes the auto industry trying to line up for their share of the Federal bailout dollars (which we are borrowing from our friendly communist trading partners and/or cranking out of the presses at the U.S. mint) because, what a surprise, their model does not include the possibility that people might stop buying cars!
Total U.S. car and light-truck sales this year could come in at 13.5 million, 2.6 million fewer than last year. “That’s in nobody’s business plan,” says Kimberly Rodriguez, an automotive specialist with Grant Thornton. “The best planning in the world cannot survive that fluctuation.”(Is General Motors Worth Saving? Time Magazine, November 13, 2008)
So, the turkey can be faulted for not paying attention to what happened to his cage mate last year and adjusting his model that he uses to predict his future. But, he’s a turkey. So, apparently, is the U.S. auto industry.
Written by randomfool on November 16th, 2008 with
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Read more articles on General Folly.
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