Never heard of "yippy skippy" before -- I had to google it -- a very miscellaneous cluster of references, including a muppet and folk songs -- but I take it you mean a mental state of intentionally self-induced non-compos insouciance and unreasoning exhiliraton?
If you do it reminds me of all the financial bubbles I recall -- the deregula…
Never heard of "yippy skippy" before -- I had to google it -- a very miscellaneous cluster of references, including a muppet and folk songs -- but I take it you mean a mental state of intentionally self-induced non-compos insouciance and unreasoning exhiliraton?
If you do it reminds me of all the financial bubbles I recall -- the deregulation of banking in the eighties, the tech bubbles of the 90's, the incredibly obvious real estate bubble and the 2008 crash, and of course bitcoin mania... and all the others before my time -- the tulips, the South Sea, the roaring 20's... all of which entailed an infectious, metastatic, self-induced intentional blindness to the inevitable. Once ignited, it can become a self-amplifying firestorm. Because the inevitable comes tomorrow, while today the ground is strewn with loose treasure. Those who rush out to scoop up as much of it as they can right now become the canny ones, and those who hold back begin to question their own caution. The longer it goes on the more it seems that this time it really might be different. And in any case, until it finally does stop being different, only those who benefit are those who discount the long run down to zero.
The problem with insurance is that it combines a present assured stream of sure wealth transfer to the underwriters., while the only certain thing about the future is it hasn't happened yet and might not happen for an indefinitely long time.
You would think, if as Johnny von Neumann et al posited, homo economicus really exists -- a rational actor driven by mathematically predictable self-interest looks at the game in the short run and the game in the long run. These are very different games. The payoff for six-chamber Russian roullette is zero for six trials, but can be positive for one. And if you know that eventually you are going to be shot anyway...
Also -- reinsurance both reduces and intensifies risk. Once you can buy risk short term and sell it off long term, while collecting revenue from each transaction, the business changes. The real estate frenzy of the mid 2000's became a firestorm because it changed-- from originating loans in order to own the loan, to generate transaction fees by originating loans and selling the loan to someone else as quickly as possible. In other words, a sort of sales commission business.
Insurance is different of course from mortgage origination but it's perhaps a bit the same.
If you can get someone else to re-insure what you have insured you are in a position to leverage your premium income stream. And if there is one eternal truth about finance -- when times are good, the rewards of leverage are irresistable.
"self-induced non-compos insouciance and unreasoning exhiliraton" - I had to read that one closely. It would help the reader to put a comma between the two adjectives but I got it. It's apt.
Thank you for mentioning the tulips, capitalism's first asset bubble.
Never heard of "yippy skippy" before -- I had to google it -- a very miscellaneous cluster of references, including a muppet and folk songs -- but I take it you mean a mental state of intentionally self-induced non-compos insouciance and unreasoning exhiliraton?
If you do it reminds me of all the financial bubbles I recall -- the deregulation of banking in the eighties, the tech bubbles of the 90's, the incredibly obvious real estate bubble and the 2008 crash, and of course bitcoin mania... and all the others before my time -- the tulips, the South Sea, the roaring 20's... all of which entailed an infectious, metastatic, self-induced intentional blindness to the inevitable. Once ignited, it can become a self-amplifying firestorm. Because the inevitable comes tomorrow, while today the ground is strewn with loose treasure. Those who rush out to scoop up as much of it as they can right now become the canny ones, and those who hold back begin to question their own caution. The longer it goes on the more it seems that this time it really might be different. And in any case, until it finally does stop being different, only those who benefit are those who discount the long run down to zero.
The problem with insurance is that it combines a present assured stream of sure wealth transfer to the underwriters., while the only certain thing about the future is it hasn't happened yet and might not happen for an indefinitely long time.
You would think, if as Johnny von Neumann et al posited, homo economicus really exists -- a rational actor driven by mathematically predictable self-interest looks at the game in the short run and the game in the long run. These are very different games. The payoff for six-chamber Russian roullette is zero for six trials, but can be positive for one. And if you know that eventually you are going to be shot anyway...
Also -- reinsurance both reduces and intensifies risk. Once you can buy risk short term and sell it off long term, while collecting revenue from each transaction, the business changes. The real estate frenzy of the mid 2000's became a firestorm because it changed-- from originating loans in order to own the loan, to generate transaction fees by originating loans and selling the loan to someone else as quickly as possible. In other words, a sort of sales commission business.
Insurance is different of course from mortgage origination but it's perhaps a bit the same.
If you can get someone else to re-insure what you have insured you are in a position to leverage your premium income stream. And if there is one eternal truth about finance -- when times are good, the rewards of leverage are irresistable.
https://en.wikipedia.org/wiki/Theory_of_Games_and_Economic_Behavior
"self-induced non-compos insouciance and unreasoning exhiliraton" - I had to read that one closely. It would help the reader to put a comma between the two adjectives but I got it. It's apt.
Thank you for mentioning the tulips, capitalism's first asset bubble.