Salient to Investors:
Nassim Taleb says there’s a simple mathematical basis for why governments continually miss their deficit targets. The problem is that the economic data forecasts the government uses are taken as a given and not looked at as mere probable likelihoods. The government tends to underestimate the damage when things get worse than they initially expected. For example as unemployment increases, it begins to have a larger and larger effect on the government’s budget deficit.