Epiphanies from Nassim Nicholas Taleb

http://www.foreignpolicy.com/articles/2012/10/08/epiphanies_from_nassim_nicholas_taleb

The most stable country in the history of mankind, and probably the most boring, by the way, is Switzerland. It's not even a city-state environment; it's a municipal state. Most decisions are made at the local level, which allows for distributed errors that don't adversely affect the wider system. Meanwhile, people want a united Europe, more alignment, and look at the problems. The solution is right in the middle of Europe -- Switzerland. It's not united! It doesn't have a Brussels! It doesn't need one.

Nassim Taleb on JPMorgan

The interviewer should shut up and learn a thing or two, instead of constantly interrupting Taleb.


http://youtu.be/op92Wb_xmBU

The Black Swan of Cairo

http://www.docstoc.com/docs/106722411/Taleb_Blyth_Foreign-Affairs_Black-Swan

Nassim Taleb on Wall Street Protest, Banking

The author who coined and penned "The Black Swan" gives a classic rant on bankers' salaries.

http://www.bloomberg.com/video/78027552/

Welcome to the Age of Instability

http://www.oftwominds.com/blogaug11/age-of-instability-8-11.html

Why the Fed-Wall Street complex will self-destruct

http://www.zerohedge.com/article/paul-farrell-explains-why-fed-wall-street-complex-will-self-destruct-2012

Some rather scary predictions out of Paul Farrell today: "It’s inevitable: Wall Street banks control the Federal Reserve system, it’s their personal piggy bank. They’ve already done so much damage, yet have more control than ever.Warning: That’s a set-up. They will eventually destroy capitalism, democracy, and the dollar’s global reserve-currency status. They will self-destruct before 2035 … maybe as early as 2012 … most likely by 2020.

Our timeline is crucial to understanding the historic implications of Taleb’s prediction that the Fed is dying, that it’s only a matter of time before a revolution triggers class warfare forcing America to dump capitalism, eliminate our corrupt system of lobbying, come up with a new workable form of government, and create a new economy without a banking system ruled by Wall Street."

Stage 1: The Democrats just put the nail in their coffin confirming they’re wimps when they refused to force the GOP to filibuster Bush tax cuts for billionaires.

Stage 2: In the elections the GOP takes over the House, expanding its strategic war to destroy Obama with its policy of “complete gridlock” and “shutting down government.”

Stage 3: Post-election Obama goes lame-duck, buried in subpoenas and vetoes.

Stage 4: In 2012, the GOP wins back the White House and Senate. Health care returns to insurers. Free-market financial deregulation returns. Lobbyists intensify their anarchy.

Stage 5: Before the end of the second term of the new GOP president, Washington is totally corrupted by unlimited, anonymous donations from billionaires and lobbyists. Wall Street’s Happy Conspiracy triggers the third catastrophic meltdown of the 21st century that Robert Shiller of “Irrational Exuberance” fame predicts, resulting in defaults of dollar-denominated debt and the dollar’s demise as the world’s reserve currency.

Stage 6: The Second American Revolution explodes into a brutal full-scale class war with the middle class leading a widespread rebellion against the out-of-touch, out-of-control Happy Conspiracy sabotaging America from within.

Stage 7: The domestic class warfare is exaggerated as the Pentagon’s global warnings play out: That by 2020 “an ancient pattern of desperate, all-out wars over food, water, and energy supplies would emerge” worldwide and “warfare is defining human life.”

In this rapidly unfolding scenario, the Fed cannot survive. Why? Not because the Fed is at the center of America’s economic problems, beyond repair, a dying institution. But because the Fed is a pawn of Wall Street’s Happy Conspiracy, which is incapable of seeing the train wreck that it set up.

This out-of-control, conspiracy of greedy Wall Street bankers, corporate CEOs, corrupt politicians and Forbes 400 billionaires will, in the near future, trigger the third catastrophic meltdown of the 21st century, a collapse that paradoxically can transform America into a new, stronger post-capitalist economy … but only after a revolution and brutal class warfare. But few will talk about what’s coming.

Here’s Taleb’s “simple metric for judging whose economic opinions are worth his time: ‘Did someone predict the crisis before it happened” in the past? “If the answer is no, I don’t want to hear what the person says. If the person saw the crisis coming then I want to hear what they have to say” about future crises.

Taleb target No. 1: Treasury Secretary Tim Geithner, who spoke just before Taleb at the forum. Of course, experience tells us you really can’t trust anyone in government. All politicians fudge the numbers, cherry-pick data to suit their personal goals, biases and political rhetoric.

Remember Hank Paulson, Wall Street’s Trojan Horse inside Washington? Earlier he had made over half a billion as Goldman’s CEO. Back in July 2007 before the meltdown he bragged to Fortune that this is “the strongest global economy I’ve seen in my business lifetime.” Never trust anything “leaders” like him say. Never. Worse, he and our clueless Fed Chairman Ben Bernanke later lied to the public that the subprime crisis was “contained.” No, my friends, you cannot trust politicians and government insiders. Never.

Unfortunately, America is losing its capacity to reason, its common sense, its values, its vision of the future.

Government deficits are the next black swan

http://www.businessweek.com/investor/content/jul2010/pi2010078_530571.htm

As an analogy: You often have planes landing two hours late. In some cases, when you have volcanos, you can land two or three weeks late. How often have you landed two hours early? Never. It's the same with deficits. The errors tend to go one way rather than the other. When I wrote The Black Swan, I realized there was a huge bias in the way people estimate deficits and make forecasts. Typically things costs more, which is chronic. Governments that try to shoot for a surplus hardly ever reach it.

The problem is getting runaway. It's becoming a pure Ponzi scheme. It's very nonlinear: You need more and more debt just to stay where you are. And what broke [convicted financier Bernard] Madoff is going to break governments. They need to find new suckers all the time. And unfortunately the world has run out of suckers.

Debt is spreading like cancer

http://www.cnbc.com/id/37610064

The economic situation today is drastically worse than a couple years ago, and the euro is doomed as a concept, Nassim Taleb, professor and author of the bestselling book "The Black Swan," told CNBC on Thursday.

"We had less debt cumulatively (two years ago), and more people employed. Today, we have more risk in the system, and a smaller tax base," Taleb said.

"Banks balance sheets are just as bad as they were" two years ago when the crisis began and "the quality of the risks hasn't improved," he added.

The root of the crisis over the past couple of years wasn't recession, but debt, which has spread "like a cancer," according to Taleb, who is now relieved that public attention has shifted to debt, instead of growth.

Nassim Taleb on the Black Swan

This is worth twelve minutes of viewing.



http://www.youtube.com/watch?v=OVxcDgfTzuk&feature=player_embedded

Taleb is shorting US Treasury bonds

Nassim Taleb, author of "The Black Swan", who predicted the credit bubble and financial crisis in 2007, says the US Treasury bond market is the next to burst. I couldn't agree more, and have been blogging about this for over a year. Who in their right mind would lend money to a broke US government, tying their money up for 30 years, while earning less than 5% interest for the privilege of taking on that risk?

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3E4uC5VIFeo&pos=5

While it's not convenient or prudent for retail investors short US Treasuries in the futures market, the TBT ETF is a possible trade on rising long-dated bond yields. But TBT is not an efficient proxy for shorting Treasury bonds, and tends to underperform in the long-term.

However, home borrowers should lock in a low fixed-rate mortgage to protect themselves from rising yields in the 10-year Treasury bond.

See sidebar for disclaimers.

Disclosure: no position in TBT.

Black Swan author

http://www.businessinsider.com/henry-blodget-taleb-you-fools-dont-understand-that-were-doomed-2009-8

Nassim Taleb bashes our government finance officials. I can't say I disagree with him.

Ed.: Did anybody notice the silver shoots today after my blog yesterday? I may start taking myself more seriously. :-)