An insightful and timely commentary.

Timeline:

• why debt leads to fragility (5:16)
• the importance of “skin in the game” to a properly functioning financial system (10:45)
• why large banks should be nationalized (21:47)
• why technology won’t rule the future (24:20)
• the value of studying the classics (26:09)
• his intellectual adversaries (33:30)
• why removing things is often the best way to solve problems (36:50)
• his intellectual influences (39:10)
• why capitalism is more about disincentives than incentives (43:10)
• why large, centralized states are prone to fail (44:50)
• his libertarianism (47:30)
• why he’ll never take writing advice from “some academic at Cambridge who sold 2,200 copies” (51:49)

- hat tip: zerohedge -

There is an extremely high level of complacency across almost all markets such that pricing on tail-risk on the short-end (where we invest) is cheaper now than what it was at its cheapest in 2006 during Greenspan’s Great Moderation.  The result is that bleed risk for the strategy is minimal and at its lowest whilst upside potential is unprecedented (as detailed in our most recent monthly fund commentary).  The short-end of the implied volatility curve has been crushed as market participants have sold short-dated vol to buy vol just past the debt ceiling cliff.  The extreme cheapness of short-dated vol is markedly contrasted by rich medium- and long-term vol.

Source:  Zerohedge