HOW TO NEED A THREE AND A HALF BILLION DOLLAR RESCUE.

HOW TO NEED A THREE AND A HALF BILLION DOLLAR RESCUE. Taleb regards what happened to Long Term Capital Management in 1998 as a vindication of his views on risk. The principals of Long Term Capital Management included winners of the Nobel Prize in Economics for work on the evaluation of risky options. When risks went the wrong way, the Federal Reserve put together a $3.5 billion dollar bailout of Long Term Capital Management in order to reduce risks to the United States economy and other economies. Very smart people don’t risk loss on the scale of Long Term Capital Management or for that matter risk the loss of an entire $130 million dollar fund unless they think that the risk of loss is so small that it can be ignored.