Nassim Taleb on Debt

Nassim Taleb says in this interview that the debt problems of 2010 are worse than those of 2008, he has re-released his now famous book ‘Black Swan’, and his core belief presently is that recession is not the issue, debt is the issue. Fragility is exacerbated by high levels of debt – we can see that from an Irish context on Sovereign Debt/Bank Debt (whether the problem is real or perceived).

One of the most poignant things Taleb talks about is the failure of stimulus, and he rightly points out that Greece is not being asked to ‘stimulate’ their way out of their debt issues, they are being asked to look for austerity solutions, perhaps Keynesian beliefs might be shunted once again into history?

The point holds true in our opinion, high levels of debt are a wealth destroyer and inhibitor to prosperity, the drag on economies, in particular our own, will be evident for many years to come.

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Pete Peterson formerly of Blackstone, CFR, Lehman and Secretary of Commerce

Pete Peterson is a fascinating individual, he came from humble beginnings and went on to work at executive levels in some of the most well known finance houses in the world. He mentions some of the deficit fears that have been laid out in this blog many times in the past and the inflationary risk that comes with it, Peterson is in agreement with Volcker that there is a serious dollar risk forming.

Peterson is also a human, he is one of the few Wall St. legends to come out and admit that he needed psychotherapy in the past, this interview is absolutely worth watching and learning from.

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Uncharted territory – or maybe we just can’t see ahead?

Often companies and economists make forecasts and predictions about the direction of the economy, so it is interesting that two of the largest banks in the UK, Nationwide and Halifax, have decided to scrap any forecasts for 2009. They will continue to give their monthly figures regarding house prices and statistics but gone are the predictions. Halifax said they couldn’t give predictions because of their merger with Lloyds, Nationwide were more brutally honest ‘We can’t because we are finding it too difficult at this time’.

The interesting date in the near future for UK banks is the 16th of January, because that is the date that the FSA have set for the end of the short-selling ban, this will result in one of two things. First is that short sellers will pile in and sentiment with order backlogs will cause a brief spike in prices -if shorts are not naked ie: you are actually paying to hold the option to buy/sell …

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Uncharted territory – or maybe we just can't see ahead?

Often companies and economists make forecasts and predictions about the direction of the economy, so it is interesting that two of the largest banks in the UK, Nationwide and Halifax, have decided to scrap any forecasts for 2009. They will continue to give their monthly figures regarding house prices and statistics but gone are the predictions. Halifax said they couldn’t give predictions because of their merger with Lloyds, Nationwide were more brutally honest ‘We can’t because we are finding it too difficult at this time’.

The interesting date in the near future for UK banks is the 16th of January, because that is the date that the FSA have set for the end of the short-selling ban, this will result in one of two things. First is that short sellers will pile in and sentiment with order backlogs will cause a brief spike in prices -if shorts are not naked ie: you are actually paying to hold the option to buy/sell …

Read More →