Tail Risk Killers: How Math, Indeterminacy, and Hubris Distort Markets

CHAPTER 10Japanification: Some Asset Behaviors When the Government Is at War with the Natural Order of the Universe

Reducing risk should be a primary objective because Japan’s economic situation is a likely history of future. Not just for the United States—the whole world. There are market forces bigger than any government action in play now, and in fact, policymakers trying to save the world only cement the difficulties. Some call it the “new normal.” I call it “Japanification”—the slow entropy of leverage in semicontrolled reverse. The alternative is to let it all go in one smoldering champagne supernova. But all the hyperspeed money printing and World War II–grade stimulus just falls in a financial black hole so strong that not one penny will ...