1. Taleb is wrong when he says
"you may believe, say, that financial markets will probably go up, while you behave, sensibly, as if they will go down. The reason? Because you think it very likely that they will go up a little, but, in the unlikely event that they go down, you think they will go down a great deal."
2. "successful suicide bombings became even slightly more common, can we really be confident that other fundamentalists would not copy that behaviour". This is quite correct- we should be preventing these attacks, but we also need to realize that there are other serious problems. If its really our intention to save lives, rather than simply political PR, we should see where our efforts can actually save most lives. By all means, prevent these attacks, but prioritize.
3. People are tough. I have seen half-dozen attacks on Mumbai. The latest was the train atrocity. People are back on the trains now. I can't imagine the terrorists believe they are any closer to their objectives because of their crimes. That must be pretty frustrating for them, and that should help prevent this: "Potential offenders catch the idea of offending from each other. And just like a disease that starts with only a few people and becomes an epidemic, once it reaches a tipping point the amount of criminal behaviour explodes". The American and British
responses are far more encouraging to them. Why give them the satisfaction of letting them think we consider them a huge issue? They are not.
I think this article in the Financial Times is also in favor of a more low-key approach to the "War on Terror". I also think Chris Dillow makes good sense here.