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“The crisis came from debt and you don’t escape it with more debt,” Nassim...

“The crisis came from debt and you don’t escape it with more debt,” Nassim Taleb says. “My fear is if we don’t stop [the U.S. government] now, they’re going to create hyperinflation,” adding, "Nobody has confidence in a guy like Bernanke."
Comments (36)
  • rayzmdAKArrtzmd
    , contributor
    Comments (222) | Send Message
     
    ...I wouldn't give two hairs off a sick rat's ass for what Taleb thinks!...seriously, how big is his yacht?...his "black swan" arrived but what good did it do him except for turning him into a pundit?...how did his investment strategy perform as a consequence of the "black swan"?...did his portfolio show a dime of profit?...no one ever gets around to asking him that...
    10 May 2010, 09:59 AM Reply Like
  • zorrow
    , contributor
    Comments (846) | Send Message
     
    "Taleb, a professor at New York University who also advises Universa Investments LP, a $6 billion fund that bets on extreme market moves,. . ."

     

    And the social value of that is? This guy is a shill for a bookie. Remember all the "nobel laureates" who fronted for quant funds that failed.
    10 May 2010, 10:37 AM Reply Like
  • Alex Filonov
    , contributor
    Comments (1412) | Send Message
     
    Crisis did not come from debt. And you can escape debt with more debt: companies and governments do it all the time. It's all about trust. If creditors trust you, you can take more debt, if not, well, you are history.
    11 May 2010, 03:58 PM Reply Like
  • razorthin
    , contributor
    Comments (115) | Send Message
     
    You've got debt and credit confused, Alex. Credit is good and debt is bad. No sovereign nation is a revenue engine that therefore cannot be compared to a corporation. Therefore, their deficits are DEBT - bad, bad, bad. The only way to escape it is to allow the inevitable deflationary spiral to happen - otherwise you inflict max pain with hyperinflation first.
    Taleb is correct.
    11 May 2010, 04:19 PM Reply Like
  • Mr. Big
    , contributor
    Comments (390) | Send Message
     
    "And you can escape debt with more debt: companies and governments do it all the time. It's all about trust. If creditors trust you, you can take more debt, if not, well, you are history. "

     

    Oddly enough.....this is true. Debt is like a game of musical chairs. Everything works well, as long as the music continues to play. The problem compounds when you add more players (debt) to the game, but no extra chairs (equity). But as long as the music (trust) doesn't stop we can all go on our merry way......

     

    Unfortunately, there is a limit before the trust quickly breaksdown.
    11 May 2010, 04:21 PM Reply Like
  • Wurstbrot
    , contributor
    Comments (35) | Send Message
     
    It really depends on the GDP growth which might be achieved (partly) via the debt. If the debt keeps growing faster than GDP we are in for trouble.
    11 May 2010, 06:06 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    Razorthin: thank you for making that point. Credit is debt at the beginning of the business cycle, when growth is kicking in. Debt is credit at the end of the business cycle, when deflation is kicking it. Taking on more debt during a deflation era and a contraction in growth does not jumpstart the machinery, it guarantees default.
    12 May 2010, 10:57 AM Reply Like
  • Diggintunnels
    , contributor
    Comments (331) | Send Message
     
    How about we pop the bubble in the public sector. It's way overheated and needs some cooling...
    12 May 2010, 06:55 PM Reply Like
  • Alex Kaplan
    , contributor
    Comments (215) | Send Message
     
    Taleb is a genius, anyone who read his book and genuinely understands it would acknowlege that....but I don't think he is anymore behind the crash than the first guy who went to withdraw funds caused a rush on banks.

     

    There's the first straw, there's the last straw but the real question is all the straws in between and why can't the system handle all of these straws...I always end up with the short straw...hay hay
    11 May 2010, 04:22 PM Reply Like
  • SHIBUMI
    , contributor
    Comment (1) | Send Message
     
    THE SOCIAL VALUE OF ALL THIS ? NOW THAT IS COMICAL
    11 May 2010, 04:34 PM Reply Like
  • AdamGaglio
    , contributor
    Comments (30) | Send Message
     
    Who cares if it has "social value?" What is "social value" anyway?
    11 May 2010, 04:48 PM Reply Like
  • zorrow
    , contributor
    Comments (846) | Send Message
     
    What is social value. It's the basis of civilization itself. You live in a society. You come into this world as a helpless baby. You depend on the social values of the society for your very existence. In Sparta, for instance, you could just be left on a mountain to die. Is that the kind of society you want. You will always have some kind of society. It will always have some social values. So why do you act like its a mortal sin to question the social value of an industry that can adversely affect so many lives?
    11 May 2010, 07:25 PM Reply Like
  • AdamGaglio
    , contributor
    Comments (30) | Send Message
     
    The basis of civilization is individual rights-- not 'social value'. And you babbled on about how important it is, but still never defined it.
    12 May 2010, 10:57 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    I have to admire your response. Yes, rugged individualism gets you somewhere; but I don't think it's really where we want to go as a civilization. If you have no heart as a people, as you just have dog-eat-dog, you will become a civilization of mad dogs.
    12 May 2010, 11:00 AM Reply Like
  • zorrow
    , contributor
    Comments (846) | Send Message
     
    It takes two, at least, to tango. All religions, cultural taboos, customs. laws have to do with the interaction among people (social values). Individual rights are what the society, in the aggregate, believes should be preserved for the individual. Hence the Bill of Rights, the Magna Carta. People have always lived in groups. We have no record of any persons living as "individuals". there is a goofy sophomoric political philosophy called libertarianism, that is just a cover for acting like a selfish (individual) child. It has never been tried or worked anywhere. but it gives losers and refuseniks political cover.
    12 May 2010, 03:45 PM Reply Like
  • AdamGaglio
    , contributor
    Comments (30) | Send Message
     
    Ok, no need for silly attacks on libertarianism. Both of you make the mistake of believing there are only two ways to live life: sacrifice yourself to others, or others to yourself. There's actually a third way: don't sacrifice! To be selfish means to act in your self interest. A truly selfish person wouldn't want to hurt other people or act like a child (ie irresponsibly). People have a moral right to live there own lives and achieve happiness. Social value and sacrificing your life for others be damned.
    12 May 2010, 09:00 PM Reply Like
  • zorrow
    , contributor
    Comments (846) | Send Message
     
    I forgot how hard college professors have to work to prepare young people to take their role in, yes, society. But our society values education; and sometimes it works. So we keep paying taxes to support all the fine young cannibals in our universities, in the hopes that maybe someday they'll understand Rousseau's social contract.
    12 May 2010, 10:57 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    We've just went through a totally selfish era: look at us now.
    15 May 2010, 12:01 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    The things we forget about 'education' is that it opens doors to individuals so they can keep learning for the rest of their lives. That can happen without formal education too -- but a higher education requires that you open doors, so interests are more likely to develop.

     

    If all we want from education is to get a job, go to trade school. If we want a 'higher civilization' we have to support 'higher education'; if we want a lower civilization, we can be practical and stoic and keep our intellectual needs basic and closer to the soil. If depends what we want.
    15 May 2010, 12:03 AM Reply Like
  • AdamGaglio
    , contributor
    Comments (30) | Send Message
     
    Selfishness is not 'doing whatever you feel like doing.' It's doing what is in your interest. If you call the era we just came out of "selfishness," I think you need to redefine what is in your interest because I know that an economic collapse isn't in mine. You're once again confusing selfishness as sacrificing other people to yourself. A society that sacrifices people is NOT in your self interest!

     

    And please don't bring up the social contract. I guess you believe the holocaust was OK because of the social contract between the German people. Yeah right...
    15 May 2010, 03:38 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    It's in my interest to cheat my neighbor out of a hundred bucks when I sell him my used stereo system. That's business. Cheat a little here, cheat a little there. Put your own interests first.

     

    That's why religion never dies. "Treat thy neighbor as you would have him treat yourself." That is a religious concept -- not a principle of business (and putting your own needs first).

     

    We've had WAY TOO MUCH OF AYN RAND. This crash and the social chaos that is coming is what you get when you have too much Ayn Rand in power.
    19 May 2010, 12:56 AM Reply Like
  • AdamGaglio
    , contributor
    Comments (30) | Send Message
     
    If you think that it's in your interest to cheat your neighbor in a business deal, I don't want you in my business. What kind of business would survive with that reputation? And you clearly don't know anything about Ayn Rand. She was NOT about cheating people and the fact that you claim that selfishness is about cheating people merely highlights the fact that you have NO idea what you're talking about.

     

    Here's Ayn on honesty in business: "an attempt to gain a value by deceiving the mind of others is an act of raising your victims to a position higher than reality, where you become a pawn of their blindness, a slave of their non-thinking and their evasions, while their intelligence, their rationality, their perceptiveness become the enemies you have to dread and flee—that you do not care to live as a dependent, least of all a dependent on the stupidity of others, or as a fool whose source of values is the fools he succeeds in fooling—that honesty is not a social duty, not a sacrifice for the sake of others, but the most profoundly selfish virtue man can practice"

     

    Quit smearing Rand when you don't know anything about her or her philosophy.
    19 May 2010, 03:34 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    I really don't think it's in my best interest to cheat my neighbor on a business deal. That's because I try to remember that life has a real spiritual dimension. But for life with no real spiritual dimension, with dog-eat-dog personal gain as the true ethic, with 'self-interest' being the only criteria for ethical judgment, and monetary gain is the primary gauge of success, cheating in business seems to be a positive value. You wouldn't use the word 'cheating' -- but 'getting an advantage' is the essence of business success. You want to sell your neighbor a used stereo for $150. You ask $200. He comes down to $175. You agree on $175.

     

    You run a business and you make a higher profit if you pay your workers less. It is in your best interest to make a higher profit so you can keep expanding your business. It is actually in your best interest to send the manufacturing jobs of China where you can make even a higher profit. So you do this, because your own 'best interest' is the spiritual gauge you use to measure your life.

     

    Is this gauge best for the society? Perhaps; perhaps not. Americans lose their jobs and eventually desperate workers animate for revolution, and for an end to the rule of the 'aristocrats of talent' who seem to care only for their own selfish needs and ends. Sometimes it is hard to tell what one's own best interests really are, long-term versus short-term.

     

    Ayn Rand. She spoke out against totalitarianism -- but was a totalitarian through and through. She seemed to believe the Donald Trumps of the world were gods and should run the world. And that the Donald Trumps of the world should be able to use the 'lower humans', the workers, any way they wanted. She seems to have been an Old World aristocrat who felt feudalism was closest to the ideal -- and a kind of modern feudalism would serve the world best wherein the talented elite ran everything and were left alone by everyone else. Kind of like Europe before the Jews and merchants began animating for equal rights.

     

    In an earlier post, you suggest that I supported the holocaust and because I 'might' resort to a 'social contract' argument.

     

    Rand seems to me to have been an intellectual with too much self-love and too little heart and soul. Many Nazis were like that. The greatest evils the world has known have been perpetrated by intellectuals with no heart.
    30 May 2010, 08:19 AM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    Leave it to Wall Street to point blame at the guy who tells it like it is and has been for many years.

     

    Taleb was telling the average investor not to trust the markets before the crash, that it was coming, and he was right.

     

    Wall Street and Washington engineer a debt crisis but the man who warned them about the immorality of it, the danger of it, who is making peanuts compared to GS and the Bailout Banks, is to blame?

     

    Rubbish.
    11 May 2010, 05:10 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8340) | Send Message
     
    Great comment, Eb.
    19 May 2010, 12:57 AM Reply Like
  • Preferred Research
    , contributor
    Comments (682) | Send Message
     
    I don't think anyone is blaming Taleb. The WSJ just pointed out that the selloff may have been exacerbated by his large, out of the money, put purchase which caused brokers to sell shares to hedge.

     

    Anyway, the entire market decline of Thurs and Friday has been erased.

     

    P&G is $61.68, 3 cents below the close last Tues May 4.
    Some idiots sold it last Thursday below $40.
    11 May 2010, 06:40 PM Reply Like
  • Mark E. Bachmann, CFA
    , contributor
    Comments (119) | Send Message
     
    Nassim Taleb is an interesting man with an interesting background and interesting ideas. Furthermore, Black Swan was the right book at the right time. It sensitized many of us to a market dynamic that was about become even more important than we could have realized when the book appeared. Mr. Taleb is also quite right in his characterization of new debt in the current environment as a painkiller that's probably precluding a cure for our disease any time soon. Having said all that, however, and having a fairly high degree of respect for Mr. Taleb, I do believe that he's allowing his newfound celebrity to go to his head. He's smart and he's entertaining, but he's not qualified to be lecturing to central bankers.

     

    Mark Bachmann
    11 May 2010, 09:23 PM Reply Like
  • theodds
    , contributor
    Comments (21) | Send Message
     
    Taleb makes good valid points in his books. It has good wisdom for not being short sighted and having tunnel vision. You can learn from the guy and his black swan/randomess thinking.

     

    However it doesn't mean you continue to support his views. Take the good and leave the rest.
    11 May 2010, 09:24 PM Reply Like
  • javos
    , contributor
    Comments (7) | Send Message
     
    We can learn something from everyone, including Taleb. This is a trader's market, and they've done well on the upside since 3/09, taking some of us along for a good ride. At some point they will do well on the downside, too. Taleb simply advises to be vigilant and prepared for the turn when (not if) it happens.
    11 May 2010, 11:04 PM Reply Like
  • razorthin
    , contributor
    Comments (115) | Send Message
     
    It's been a thrilling GIFT to pick up a few TZA shares each day on this volume-less bounce.
    12 May 2010, 02:42 PM Reply Like
  • dinkys
    , contributor
    Comments (15) | Send Message
     
    it is ok to take more debt, to pay maturing debt, but when an exponential US Debt is exploding, ......rating Agencies should flah
    a Storm Flag, and start downgrading US Treasurie's.......it is
    going to be "Subprime 2"..................watch out.....
    12 May 2010, 04:18 AM Reply Like
  • Kevin Mjaatvedt
    , contributor
    Comments (8) | Send Message
     
    nt is an incredibly smart and original mind, and i have not read one word from his mouth that hasn't been thought out and intelligent ... when he spells out his strategies he is fully disclosing the risks. I wish I could say this about more people in the industry
    12 May 2010, 09:57 AM Reply Like
  • birder
    , contributor
    Comments (1140) | Send Message
     
    That is exactly what the government wants--hyperinflation. It is its only hope of paying back its borrowings.
    12 May 2010, 10:44 AM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2393) | Send Message
     
    (1) Lets hope dead Black Swans start washing up, oil soaked, in Louisiana real soon.

     

    (2) :Like global warmingism, Black Swans are an oracle from the Goricle that just won't die.
    12 May 2010, 11:54 AM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6775) | Send Message
     
    What he's saying is just common sense. Unfortunately, it's too "common" to make "sense" to most people in power.

     

    Because they are "too clever by half."
    12 May 2010, 01:24 PM Reply Like
  • jabailo
    , contributor
    Comments (70) | Send Message
     
    Inflation yes, but only in wages for those making under $100,000.

     

    Gold? Kaput!

     

    NASDAQ and DOW will both equal 4000.
    13 May 2010, 02:04 AM Reply Like
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